The Ministry of Corporate Affairs (MCA) has introduced a new policy that requires regulators to conduct pre-legislative consultations and a full review of existing rules and regulations.
The policy aims to increase transparency, engagement with stakeholders, and efficiency in the rule-making process. It was introduced with retrospective effect from 1 January 2024.
The policy will apply to various legislation that falls under the MCA, including the Companies Act, 2013, the Limited Liability Partnership Act, 2008, and the Insolvency and Bankruptcy Code, 2016.
In the past, the MCA has conducted public consultations for creating or changing primary laws. However, this approach was not consistently adopted across different regulators. Some regulators, like the Insolvency and Bankruptcy Board of India, adopted consultative practices while others, like the Competition Commission of India, did not consult with the industry until recent amendments were made to the Competition Act.
The new policy aims to standardise consultation practices and fill gaps based on recommendations from the legislative department and the directives outlined in the budget speech of 2023-24.
Regulators have until the end of the financial year 2024-2025 to complete a thorough review of existing regulations. This review will involve analysing feedback from stakeholders and regulatory bodies to simplify compliance by reducing the need for complex forms.
By providing clear guidelines for consultation and comprehensive review, the ministry hopes to meet demands of the current economic landscape, ensure a robust regulatory framework, and create a more inclusive and responsive regulatory environment.
