The government will consult stakeholders and incorporate changes in the new Companies Bill to prevent recurrence of Satyam-like frauds before reintroducing it in Parliament, a move welcomed by experts, who said SFIO must be made a part of the new legislation.
"We will consult stakeholders before re-introducing the Companies Bill... A lot has happened since the introduction of the Bill," Minister of State for Corporate Affairs (Independent Charge) Salman Khursheed told PTI.
"The government should include Serious Fraud Investigation Office (SFIO) in the Act as legal requirements without corresponding deterrent for enforcement is of no use," said Diljeet Titus, senior partner of law firm Titus and Co.
Having SFIO as part of the Act, he added, was much better than subjecting violations of companies law to the normal criminal justice system.
Pleading for more powers to SFIO, Aseem Chawla, partner of law firm Amarchand Mangaldas said, "it (SFIO) should be given requisite powers under various statutes to examine and investigate exceptional situations".
Too many agencies, he felt, "may result in over regulation and under enforcement unless properly coordinated."
The Companies Bill 2008, which was introduced by the then Corporate Affairs Minister Prem Chand Gupta in Lok Sabha in October 2008, lapsed following dissolution of the Lower House and would have to be re-introduced by the government.
A re-visit to the proposed legislation seeking to replace Companies Act 1956, becomes important in view of the multi- crore rupees Satyam scam which came to light in January following admission of accounting fraud by the founder Chairman of IT company B Ramalinga Raju.
Re-introduction of the Companies Bill formed part of the 100-day priority of his ministry, Khursheed said, adding a lot of effort has already gone into it.
"My absolute urgent attention will be given to the Companies Act for the reason that a lot of effort and work is involved in it and it is a central point of reference for all regulation and corporates," he said.
Elaborating on his priorities, Khursheed said, "Broadly there are three (major) areas — one is Satyam, Companies Bill and area of outreach of corporate governance issue — where we must get into dialogues with the concerned stakeholders."
Making a case for inclusion of SFIO in the new legislation, Titus said, "companies will avoid taking advantage of loopholes and gray areas. There will always be a fear that SFIO could look into violations."
Besides, he added, the proposal would also strengthen the hands of Registrar of Companies by giving them the option to get discrepancies and violations inquired by a body comprising of experts.
