Business Daily from THE HINDU group of publications
Saturday, Oct 03, 2009
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Business Daily from THE HINDU group of publications Saturday, Oct 03, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Corporate
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Company Law Industry & Economy - Economic Offences Cos Bill for more powers to Govt in probing offences The Bill proposes to grant more powers to the Government to directly order an investigation in ‘public interest’ against any firm Arun S. New Delhi, Oct. 2 The new Companies Bill aims to totally change the manner of handling offences relating to companies. It proposes more powers to the Government in launching a probe, stiffer punishments and a dual-track judicial set-up. The Bill proposes to grant powers to the Government to directly order an investigation in ‘public interest’ against any firm, official sources told Business Line. At present the Government should have a court order or a Company Law Board order, or a Registrar of Companies’ report or plea from the company’s members to launch a probe. There are other provisions in the Bill that strengthens the Government’s powers. To speed up the probe, it is proposed that inspectors need not get a Magistrate’s order to search and seize a company’s documents and books. The Companies Act, 1956 stipulates a Magistrate’s order in this regard. Those found not cooperating with the inspectors would be sentenced to a six month jail-term and fined between Rs 25,000 to Rs 5 lakh with additional fine of Rs 2,000 per day for any delay. Unlike the present Companies Act, this offence is non-compoundable (where imprisonment cannot be converted to compensation or financial penalties). Falsification or mutilation of documents or evidence is also made a non-compoundable offence and will attract three year jail term and fine between Rs 25,000 and Rs 5 lakh. The other offences newly made non-compoundable are mis-statements in prospectus and fraudulently inducing people to invest in a company. The Bill also mandates State Governments and the Centre to support the inspectors. There is a special provision on freezing assets of a company under probe through the proposed National Company Law Tribunal’s (NCLT) order. The Bill proposes powers to the Government to enter into agreements with another country regarding an ongoing investigation. Mr Som Bathla, Associate, with corporate law firm Luthra &Luthra said, “the regulator needs to have powers to regulate the corporate sector, especially after scams like Satyam and Harshad Mehta. But while initiating the probe, the regulator should have reasonable justification.” The Bill has proposed a two track judicial set-up — Special Courts for criminal offences regarding the Companies Act, and NCLT for matters regarding mergers and acquisitions, capital reduction, restructuring, winding up of a company and its rehabilitation, oppression and mismanagement as well as removal of directors and managing directors of a company. Standing committee to deliberate on Cos Bill ‘New Cos Bill will pave way for more flexibility’ Cos Bill in post-Budget session More Stories on : Company Law | Economic Offences
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