Serious Fraud Investigation Office (SFIO) formed through a Government Resolution is an Investigating Agency under Ministry of Corporate Affairs (MCA), which was given statutory recognition under the Companies Act, 2013 (the Act). This was stated by Union Minister of State for Corporate Affairs Shri Rao Inderjit Singh in a written reply to a question in Rajya Sabha today.

The Minister stated that the Central Government orders and assigns to SFIO, investigation cases involving many companies where alleged fraudulent activities by corporates are reported which includes cases of misappropriation of funds by the promoters / top management and cheating the lenders.

Giving details of cases ordered and assigned to SFIO, the Minister stated:

The Minister stated a number of measures the Government has taken to curb and prevent corporate frauds as under:

1. Fraud as a substantive offence has been introduced in the Act;
2. Stricter norms of Corporate Governance have been provided in the Act;
3. It has been made mandatory for every existing or prospective directors to obtain a “Directors Identification Number” (DIN);
4. In case of incorporation of a new company or change of address of an existing company, the Ministry of Corporate Affairs (MCA) has made it mandatory for professionals to verify details of the company and to personally visit their premises and certify that the premises are at the disposal of the company.
5. MCA has also undertaken pre-emptive measures aimed at sensitizing people through investors awareness programs which are organized regularly in association with the three professional institutes namely Institute of Chartered Accountants of India (1CA), Institute of Cost Accountants of India (ICoAI) and Institute of Company Secretaries of India (ICSI) in various cities.
6. Section 143 (12) has been introduced in the Companies Act, 2013 by which an auditor of a company in the course of the performance of his duties as auditor, if he has reason to believe that an offence of fraud involving such amount(s) as may be prescribed, is being or has been committed in the company by its officers or employees, the auditor shall report the matter to the Central Government.
   
   Section 143 (14) provides that the above provision shall mutatis mutandis apply to the cost accountant conducting cost audit under section 148 or the company secretary in practice conducting secretarial audit under section 204.
   
   Section 143 (15) provides that if any auditor, cost accountant or company secretary in practice do not comply with the above provisions then he shall be liable to penalty.
    
7. MCA has set up Central Scrutiny Cell (CSC) which became effective from 23.03.2021 where Straight Through Process (STP) Forms are scrutinized.
8. SEBI has advised Stock Exchanges to set up a surveillance mechanism to monitor the periodic filings and disclosures made by listed companies to find out probable financial reporting irregularities & non-disclosures and generate early warning signals on possible misrepresentations in financial statements.

MCA Press Release 22nd March 2022

More than 4,000 cases admitted for corporate insolvency resolution process since FY 2016

359 cases resolved with realisable value of more than Rs 2 lakh crore for creditors

Posted Date:- Mar 22, 2022

As per the information provided by Insolvency and Bankruptcy Board of India [IBBI, the Regulator under Insolvency and Bankruptcy Code, 2016 (IBC)], the following is the year wise details of number of cases admitted for corporate insolvency resolution process under the Code:

This was stated by Union Minister of State for Corporate Affairs Shri Rao Inderjit Singh in a written reply to a question in Rajya Sabha today.

Giving more details, the Minister gave Year-wise details of the number of cases resolved along with total amount of admitted  claims and realisable value for creditors in such cases as following:

Under the Special Drives taken by Registrar of Companies, 3,82,875 number of companies ware struck off u/s 248 (1) of the Companies Act till the financial year 2020-21. This was stated by Union Minister of State for Corporate Affairs Shri Rao Inderjit Singh in a written reply to a question in Rajya Sabha today.

Explaining further, the Minister stated that there is no definition of the term “Shell Company” in the Companies Act, 2013 (the Act). It normally refers to a company without active business operation or significant assets, which in some cases are used for illegal purpose such as tax evasion, money laundering, obscuring ownership, benami properties etc. The Special Task Force set up by the Government to look into the issue of “Shell Companies” has, inter-alia, recommended the use of certain red flag indicators as alerts for identification of suspected Shell Companies.

The Minister stated that the Government has undertaken Special Drives for identification and strike off Companies by invoking the provisions of section 248 (1) of the Companies Act.

Giving more details, the Minister stated that the Registrar of Companies (RoC) struck off those companies after following the due process of law from the Register of companies when RoC has reasonable cause to believe that those companies are not carrying on any business or operation for a period of two, immediately preceding financial years. The RoC also verifies that such company has not made any application within such period for obtaining the status of a dormant company under Section 455 of the Act.

Pune ROC Adjudication order for violation of Section 173(1) of CA 2013 (Gap between 2 BM-more than 120 days) in the matter of SENSIA ENERGY PRIVATE LIMITED

Company Law Adjudication & Appeal

PUNE ROC Penalty order for violation of Section 177 (Audit Committee) of the Act in the matter of Precision Automation and Robotics India Private Limited

The applicant company and its officers, who have defaulted the provisions of section 177 of the Act as the company has defaulted in appointment of Independent Directors on the board and has failed to constitute proper balance of Executive and Non-Executive Directors on Board of the Company which resulted in default in constituting Audit Committee as per Section 177 of the Companies Act, 2013 r/w rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and are liable for penalties under section 178(8) of the Act w.e.f. 01st April, 2015 to till date.

Dear Sir,

Please find below YouTube video link on “Net Profit” calculation for CSR & Managerial remuneration II Net Profit as per Section 198 of CA 2013

Regards,
Bipul Kumar