SFIO probes should be on par with police reports: Panel

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.