SFIO probes should be on par with police reports: Panel

Last Updated: Tuesday, August 31, 2010 - 22:29

New Delhi: The Corporate Affairs Ministry`s
proposal to grant statutory powers to its corporate fraud
probing body SFIO, and treating its investigation reports on
par with police reports in courts, has found favour with a
Parliamentary panel.

It has also agreed to clearly define SFIO`s role in the
new Companies Bill, which was introduced by the ministry in
the Lok Sabha in August 2009.

The Serious Fraud Investigation Office (SFIO), the
investigation arm of the MCA, at present doesn`t have
statutory powers. The body gained prominence for its role
in investigating the Rs 14,000-crore fraud at Satyam Computer
Services by its founder B Ramalinga Raju.

The panel has also agreed with the ministry`s proposal to
separate of the office of chairman and managing director and
chief executive officer, besides capping the number of maximum
directorships to be held by an individual to 20 for private
as well as public companies.

The panel has also agreed with the MCA to ensure that a
Whistle Blower Mechanism be put in place to safeguard against
the victimisation of employees who report misdeeds of their
companies.

"The Committee hope such an internal mechanism without
external regulation or control will enable a company to evolve
over time a process to encourage ethical corporate behaviour,"
the panel said.

The report of the Parliamentary Standing Committee on
Finance, which was scanning the provisions of the Companies
Bill 2009, was presented in Parliament today.

It noted that the post of independent director is
critical for ensuring good corporate governance and has
suggested their rotation every five years.

The new Bill also seeks to mandate companies to provide
for a cash flow statement and consolidated financial
statements.

Further, with regard to inter-corporate loans or
investments, the Bill provides that no company shall directly
or indirectly give loan to any person or other corporate.

The MCA, the report said, has accepted suggestions made
by the Committee in about 500 cases and even suggested revised
formulation formulations in about 125 cases.

PTI



First Published: Tuesday, August 31, 2010 - 22:29

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