RoC to probe firms raising Rs 10 cr plus

The company affairs ministry has directed its regional directorates (RDs) and registrar of companies (RoCs) to carry out detailed scrutiny of books of companies raising Rs 10 crore and above from the market.

"RoCs of metropolitan cities have been asked to submit inspection reports of at least two companies in a month. Other RoCs should complete at least one inspection every month," a senior ministry official said. Delays would reflect poorly in their performance appraisal.

The ministry has directed the RDs to carry out 'qualitative' technical scrutiny so that prosecution cases are based on well documented evidence.

The RDs and RoCs have also been directed to speed up their replies on queries raised by the department on the inspection reports.

The department files cases based on inspection reports and investigations done by the RDs under the Companies Act.

While the government refers major cases to the Serious Fraud Investigation Office (SFIO), the SFIO cannot take cases suo-moto and, therefore, technical scrutiny by the RDs and RoCs is the first line of check where compliance with the requirements under the Companies Act are monitored.

The government has also directed immediate conclusion of inspections pending for more than one year. Coming down heavily on shoddy investigations, the ministry has directed the RDs to avoid shoddy reports and complete inspection report in all respects along with documentary evidence.

Besides scrutiny of companies raising money from market, the ministry has also directed detailed scrutiny of companies accepting deposits of more than Rs 10 crore.

Cases related to investor protection, like the one filed against Morepen Laboratories, at the Company Law Board (CLB) are based on investigations by the RDs.

With the government planning to set up National Company Law Tribunal, which is expected to have far wider powers in comparison to the CLB, the government wants to overhaul the working of the RDs.

What lies beneath

---

Regional directorates (RDs) and registrar of companies (RoCs) to scrutinise books of companies raising Rs 10 cr and above from the market

With the government planning to set up National Company Law Tribunal which is expected to have far wider powers in comparison to the CLB, the government wants to haul the working of the RDs

RDs to carry out 'qualitative' technical scrutiny so that prosecution cases are based on well documented evidence