STP System - Reason for triggered rate of false certification
Ministry of Corporate Affairs has first implemented the Straight through processing system in the Annual filling and shifted their majority of the burden on the professional’s shoulders. Ministry of Corporate Affairs’ Annual filling Instruction kit is not clear till today, there are several important things missing in it like Form 23ACA’s
i. Power and Fuel – which Manufacturing Companies are using for manufacture of goods OR Other companies are using for their vehicles/office items like Computer, Light, etc. OR both (because Power and fuel amount will be material in case of Manufacture companies only and not for other companies).
ii. Insurance Expense – which Employee’s Insurance OR Stock OR Keyman Insurance OR Marine OR Fire OR anything else or everything. (because IT & Factory Companies have material amount in Employees’ Insurance amount, Export oriented companies have material amount in Fire Insurance, Trading companies have material amount in Stock Insurance and so on).
iii. Rent – Which Rent paid or Rent received (Only two person can write the figures correctly, 1.who hasn’t applied any logic and just entered the figures of rent paid or 2. Who knows the Rule of ejusdem generis)
Ministry of Corporate Affairs might think that Annual filling STP scheme was effective, but, I am sure they have never looked at the filling done by the professionals. Most of the listed companies Annual returns are defective in presenting the List of shareholders. Private companies don’t care about filling. Those who are filling, many a times provide the false data.
Then after Ministry of Corporate Affairs implemented the STP system in DIN also, But after a week of its implementation, we start seeing notice on MCA website about generation of notice to professionals, who are guilty of false certification. Ministry of Corporate Affairs came to know that its STP system was failure in case of DIN and plan to shift the responsibility on professionals’ shoulders is worthless, still they have done a daring job to introduce it in other segments like Incorporation of the Company (including Name approval), Major routine type of E-forms, etc. instead of looking into the facts of Annual filling STP system. We can interpret this decision in Gujarati Bapu’s Language (વાયડીનાઓની નકામી હોશિયારી!!).
Ministry of Corporate Affairs’ weakness as per their Strategic plan:
i. Ineffective law not acting as a deterrent against corporate frauds (How it will act, If you don’t enforce the major provisions like Appointment of Company Secretary and provides a simplified clearance system for Non-attachment of subsidiary’s balance sheet, Managerial remuneration, etc).
ii. Creation of large number of inoperative companies by stakeholders (Still you want to create more and more company in 24 or 48 Hours, instead working on re-functioning of that companies).
iii. Poor level of ethics in companies/ professionals [Have you ever think about Ministry’s own ethical system, Gujarat’s ROC (Highest authority of Gujarat) is caught in Corruption case, If he is corrupt, who else will not be corrupt?].
iv. Initial Act is old which needs rapid changes in the emerging environment (We always hear that in this monsoon, winter, summer, etc. session it will be tabled before the parliament, actually when it will be tabled before?).
v. Inability to track down and punish the companies and individuals involved in Corporate Frauds (How will you track down, if you have STP system everywhere and Reliance on professionals only).
I have applied under the Right to Information Act, 2005 for the details of Forms filed by the CS, CA and CWA and marked as the “Waiting for user clarification” and/or “Required Resubmission” for the period of one year, But Ministry has provided the data for only 1 day and at that time there were 238 E-forms in Gujarat-ROC only having that status.
If at the end of 1 day these much forms are defective, then how many at the end of 1 year and how many at the end of 1 year across India???
CAclubindia
