The DCA proposes to involve chambers, like the Federation of Indian Chambers of Commerce and Industry (Ficci), and national bodies, like the institutes of Chartered Accountants, Company Secretaries and Cost and Work Accountants, in its fight against the non-banking finance comp-anies that have not re-paid the public deposits collected by them.
The proposal to involve national level bodies arises from the fact that most of the companies that have been identified as `vanishing companies' are their members.
Out of the total of 142 companies identified as `vanishing', Gujarat tops the list with 42 such companies. The second position is taken by Delhi with 24 companies, and Maharashtra stands third with 18 companies.
More From This Section
Andhra Pradesh and Karnataka have six companies each, Punjab seven, Madhya Pradesh nine, Bihar five, West Bengal eight, Uttar Pradesh four, Tamil Nadu (Coimbatore) five, Tamil Nadu (Chennai) five, Orissa two and Kerala one company.
Also, with a view to make laws more stringent against defaulting companies, a provision to this effect had been made in the Companies (Second Amendment) Bill, 1999. An approval from Parliament regarding the same is pending.
The provision states that, "The director of a public company which fails to file annual accounts and returns for three consecutive years or repay deposits will not be eligible to be a director in a public company for five years."
The action taken so far by the DCA involves the constitution of seven task forces region-wise at Delhi, Mumbai, Chennai, Ahmedabad, Calcutta, Bangalore and Hyderabad to identify the vanishing companies of their region.
The convenors for the task forces are the regional directors/registrars of companies and the members are drawn from representatives of stock exchanges. The task forces are monitored by a central co-ordinating committee co-chaired by the DCA secretary and the Sebi chairman.
The DCA has also instructed its field organisations to enlist the help of the state governments, income-tax office, financial institutions/banks and general public to ascertain the whereabouts of such companies.
Meanwhile, by the insertion of new Section 45QA of the RBI Act, 1934 the Company Law Board (CLB) has been empowered to deal with cases relating to non-payment of deposits by NBFCs with effect from January 9, 1997.
The CLB is a quasi-judicial body headquartered in New Delhi, statutorily made independent on May 31, 1991. The Companies Act, 1956 empowers the Company Law Board to monitor, regulate and control the affairs of companies towards good corporate governance.
The capital markets had witnessed a boom between 1993 and 1995, when many new companies collected funds from the public issues through issue of shares/ debentures and fixed deposits. Many of these companies have defaulted in their commitments and some are not even traceable.