The much-awaited amended companies Bill, which will give more statutory powers to the Serious Fraud Investigation Office (SFIO) to tackle corporate fraud, will be placed before Parliament tomorrow, Union Minister for Corporate Affairs Sachin Pilot said today.
“The Bill, which was in the making for almost a decade, will be placed before Parliament on Monday. In order to avoid corporate fraud before it happens, SFIO will be given more statutory powers. Moreover, there will be better tie-ups between investigative agencies at the state and Centre, the income tax department and the information technology ministry with SFIO,” Pilot said while addressing an event here. He added the process of taking action would not fall in “between various regulatory bodies”.
With the passage of the Bill, the government is looking to avoid corporate frauds like that at Satyam Computer Services. An understanding has already been reached between the wing of information and technology ministry that handles online frauds and SFIO on sharing database, the minister said.
Hyderabad-based Satyam Computer shook India’s corporate world in early 2009 as its founder-chairman Ramalinga Raju confessed to fudging the software company’s accounts.
Under the new regulations, SFIO is expected to get powers to file cases, take action against culprits and coordinate with other investigative agencies such as the Central Bureau of Investigation and the enforcement directorate in case of any corporate fraud.
Seeking more cooperation from state investigative agencies in this regard, Pilot said: “There has been cases of financial frauds in states like West Bengal, where some companies, chit funds and ponzi schemes have taken away hard-earned money of small investors. Our primary objective is to protect small investors.”
Recently, the Reserve Bank of India had raised concerns regarding the flouting of rules by chit funds in West Bengal. Meanwhile, the corporate affairs ministry is planning to launch an awareness campaign among investors about these financial schemes.
“The Centre looking into the issue, we would also encourage state governments in taking necessary action against these firms. These firms are currently misusing the loopholes in law,” the minister said. Pilot further highlighted that states such as Assam, Sikkim, Maharashtra and Madhya Pradesh were facing similar issues.
The Companies Bill, 2011, will replace the Companies Act of 1956, which was amended several times. The Bill aims to make corporate social responsibility compulsory, corporate governance more transparent and independent directors more accountable.
