Need of the hour is to make Corporate Affairs Ministry “Fit & Proper”

An able and effective Corporate Affairs Ministry can redefine the country’s growth trajectory. Corporate sector forms the backbone of a capitalist economy. Therefore, a dedicated regulatory body, like Ministry of Corporate Affairs (MCA) in India, is a prerequisite to efficient corporate governance.

As a governance epithet, the above fits the bill perfectly. However, when a government goes out of the way to justify corporate decisions overriding its own laws, the dread of executive tyranny gets invoked, as in the NSEL case. What’s absolutely shocking is the merger order of the defunct NSEL with 63 moons passed by the MCA on grounds that it is in larger public interest. So what would you consider a larger public interest – 63,000 shareholders who are objecting the merger or 13,000 so-called investors who have supposedly lost their money?

There is no way the merger works as a solution. One, it’s an unrighteous burden of Rs 5,600 crore on around 63,000 shareholders who pinned their hopes on the company that gave India its prized commodity exchange MCX and was the first of its kind to perpetuate commodity software in India.

Two, the merger breaches all known tenets of limited liability which risks India’s hold on its FDI channels as foreign investors, who’ve realized the prospect of growth in India, definitely do not see this positively.

Three, it’s becoming clear with SEBI investigations making a head way that colluding brokers at NSEL could pull it off by way of recourses like client code modification, channelizing black money, false assurances and much more, which puts serious questions on our regulatory radar.

As a lot of months have already been consumed by investigations headed nowhere and executive mishandling; now is the time for MCA to redeem itself as India’s corporate regulatory body with the ability to invoke rational decisions that actually stem from ‘public interest’ and not the other way round. Will the Government able to take a decision which is in actual interest of the public (in this case, the 63,000 shareholders) or will it bend to the unwarranted pressure to make an example out of a company that has not been accountable to the law?

For more information check 63 Moons.