Capital Markets: Challenges and Developments

SEBI, MCA sign pact for more data scrutiny


From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Curbing corporate frauds

  • The Securities and Exchange Board of India (SEBI) and the Ministry of Corporate Affairs (MCA) signed a MoU to facilitate seamless sharing of data and information for carrying out scrutiny, inspection, investigation and prosecution.

A move for data scrutiny

  • The MCA has the database of all registered firms while SEBI only regulates listed entities that may have unlisted subsidiaries, with the MCA having access to all the data of such unlisted entities.
  • The MoU comes in the wake of increasing need for surveillance in the context of corporate frauds affecting important sectors of the economy.
  • As the private sector plays an increasingly vital role in economic growth, the need for a robust corporate governance mechanism becomes the need of the hour.

Impact of the MoU

  • Incidentally, there is already a protocol of sharing of data between the capital markets regulator Ministry and, in many cases; the regulator has also sent its orders against various entities to the MCA for further action.
  • The MoU will facilitate the sharing of data and information between the regulator and the MCA on an automatic and regular basis.
  • It will enable sharing of specific information such as details of suspended companies, delisted firms, shareholding pattern from the SEBI and financial statements filed with the Registrar by corporates, returns of allotment of shares and audit reports relating to corporates.
  • The MoU will ensure that both the MCA and the SEBI have seamless linkage for regulatory purposes.
  • In addition to regular exchange of data, the two will also exchange with each other, on request, any available information for scrutiny, inspection, investigation and prosecution.
  • A Data Exchange Steering Group will meet periodically to review the data exchange status.
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