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Companies Act, 1956 Then, What Now?

JIP Report

Using  (believe it !) established in era of Cold War, Closed Economy, Iron Curtained, era/s of Quota, Permits, Licence, Quotas, Permits, Companies act, 1956, the Government is probing against as many as 76 companies — the highest number of firms against which investigations were ordered for frauds in a single year till now – in the current fiscal so far.
(This has taken the number of total cases currently under investigation to 134 which include 58 cases related to chit fund activities in West Bengal and other states.)
“During the last three years, the Ministry has ordered investigations under … The Companies Act, 1956, in 134 cases of corporate frauds through the Serious Fraud Investigation Office (SFIO),” previous Minister for Corporate Affairs Sachin Pilot himself disclosed in the Lok Sabha during the last days of the UPA Governmenrt.
In 2013-14 fiscal, investigation has been ordered against 76 companies for alleged frauds, according to the year-wise details provided by the then Minister.
Probe had been ordered against 46 firms in 2012-13 and 12 companies in 2011-12.
On government measures to deal with increasing cases of corporate fraud, according to Pilot, Government then initiated a number of steps including stricter norms of corporate governance and their implementation under the new companies law and conferring statutory status to the SFIO.
According to the Corporate Affairs Ministry insiders, government has brought in amendments to securities laws enabling market regulator Sebi “to deal effectively to violations of laws by companies and individuals including those running Ponzi schemes”.
The government has also increased the application of technology to help detect potential frauds through data mining and forensic audit technique, he said.
Citing a study by Thought Arbitrage Research Institute, frauds in companies occur “due to factors like inadequate internal control procedures, diversion of funds by promoters/ top management, failure of auditors in detection of frauds, etc”.
“These factors are in any case widely recognised causes of frauds in companies,” Pilot added.
Concerned Corporate Insiders, their respective God Fathers in US etc, Corporate Affairs Ministry insiders, PMO, those directly-indirectly connected with Corporate Affairs are now zeroing in on changing the Companies Act, 1956. Believe it !

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