Firms to get automatic alerts on compliance failures from regulator

The idea is to put on autopilot mode the enforcement of compliance for which specific timelines are provided in the law. This would cover instances such as issuing notices when a company defaults on filing annual returns, fails to report details of corporate social responsibility performance or when annual returns are not filed for two consecutive years which warrants removal of the company’s name from records.

The changes will come into force when the advanced version of MCA’s compliance management system is rolled out in about three months, according to a person privy to discussions in the government. “In the new IT framework, the system itself will be able to trigger showcause notices and human intervention will come down. Also, when firms default on filing forms and documents, the system will be able to send an alert,” said the person who spoke on condition of anonymity.

The revamped compliance management system is part of the strategy to infuse a heavy dose of technology into regulatory oversight of corporations which also entails use of artificial intelligence and data analytics for early detection of worrying trends in governance.

An email sent to the corporate affairs ministry spokesperson on Friday remained unanswered at the time of publishing.

Increasingly, various aspects of regulation including grant of company registration and related services such as opening of bank accounts are being made available on the same day of making the application with the idea of improving ease of doing business. Enforcement of compliance under Companies Act will be done with less of human intervention and subjectivity.

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