MCA moves to reduce compliance costs for small private limited companies
26 November 2019
The ministry of corporate affairs (MCA) has been taking various initiatives on a continuous basis to provide less stringent regulations, including measures with respect to filing requirements for small companies, One Person Companies (OPCs) and start-ups, union minister of state for finance and corporate affairs Anurag Thakur informed the Lok Sabha in a written reply on Monday.
- Credit Rating Agencies (CRA) to segregate the activity other than the rating of financial instruments under the respective guidelines of a financial sector regulator or any authority as may be specified by Sebi;.
- MD/CEO of a CRA shall not be a member of rating committees of the CRA;
- Rating committees of a CRA shall report to a Chief Ratings Officer (CRO);
- One third of the board of a CRA shall comprise of independent directors, if the board is chaired by a non-executive director. In case the board of the CRA is chaired by an executive director, half of the board shall comprise of independent directors;
- The board of a CRA shall constitute the Ratings Sub-Committee and the Nomination and Remuneration Committee;
- The Chief Ratings Officer (CRO) shall directly report to the Ratings Sub-Committee of the board of the CRA;
- The Nomination and Remuneration Committee shall be chaired by an independent director;
- CRAs shall meet the audit committee of the rated entity, at least once in a year, to discuss issues, including related party transactions, internal financial control and other material disclosures made by the management, which have a bearing on rating of the listed Non-Convertible Debentures (NCDs);
- Minimum net worth requirement of CRA increased from existing Rs. 5 Crore to Rs25 crore.
- The promoter of a CRA to maintain a minimum shareholding of 26per cent in the CRA for a minimum period of 3 years from the date of grant of registration by the board.
- A CRA shall not, directly or indirectly, have 10 per cent or more shareholding and/ or voting rights in another CRA and a CRA shall not have representation on the Board of any other CRA.
- At least one woman independent director in the top 500 listed entities by market capitalization by 1 April 2019 and in the top 1,000 listed entities, by 1 April 2020;
- Separation of CEO/MD and chairperson (to be initially made applicable to the top 500 listed entities by market capitalization with effect from 1 April 2020;.
- Enhanced disclosure of related party transactions (RPTs) and related parties to be permitted to vote against RPTs;
- Reduction in the maximum number of listed entity directorships from 10 to 8 by 1 April 2019 and to 7 by 1 April 2020;
- Enhanced role of the Audit Committee, Nomination and Remuneration Committee (NRC) and Risk Management Committee;
- Disclosures of auditor credentials, audit fee, reasons for resignation of auditors, etc;
- Disclosure of expertise/ skills of directors;
- Mandatory disclosure of consolidated quarterly results with effect from FY 2019-20;
- Secretarial audit to be mandatory for listed entities and their material unlisted subsidiaries;
- Minimum six directors in the top 1,000 listed entities by market capitalisation by 1 April 2019 and in the top 2,000 listed entities by 1 April 2020;
- Quorum for board meetings (1/3rd of the size of the board or 3 members, whichever is higher) in the top 1,000 listed entities by market capitalization by 1 April 2019 and in the top 2,000 listed entities, by 1 April 2020.;
- Top 100 entities to hold AGMs within 5 months from the end of FY 2018-19, ie, by 31 August 2019; and
- Webcast of AGMs to be compulsory for top 100 entities by market capitalisation.