The Shradul Shroff Committee, constituted by the department of company affairs (DCA) to suggest measures against erring corporates, is set to recommend that the fine for irregularities should be equal to the magnitude of the frauds.
As of now, for listed companies, a breach of clause 49 of the listing agreement of the Securities and Exchange Board of India (Sebi), which specifies corporate governance norms, attracts a small fine of Rs 1,000 under the Securities Contract Regulation Act.
The penalty would be ad-valorem, with the extent of punishment being linked to the size of the offence, committee sources told Business Standard. The five member committee would submit its final report to the DCA by this month-end.
The report is likely to recommend more teeth for the National Company Law Tribunal by vesting it with criminal jurisdiction. This would mean speedy justice as there would be no need to refer the cases to district courts.
The committee is also of opinion that a company should not be held responsible for its employees
