• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Richa Mishra

NEW DELHI, Feb. 17

THE Department of Company Affairs (DCA) is examining various aspects to plug the loopholes relating to transfer of funds among group companies. The department has set up a five-member committee to recommend steps to check such abuse by companies.

The committee comprises nominees from the Institute of Chartered Accountants of India (ICAI), Securities and Exchange Board of India (SEBI), as well as DCA, among others, according to official sources.

The move has been prompted following a report submitted by the market regulator, SEBI, to the Joint Parliamentary Committee (JPC) probing the market scam. The report suggests that the Companies Act as well as the other regulatory Acts be amended to check companies from indulging in circular trading, negotiated deals and also buying their own shares.

DCA will be examining whether appropriate changes can be made in the Companies Act to avoid such situations in the future. DCA and SEBI are working in close co-ordination with each other in the ongoing investigations into the security scams, sources said.

Out of the 98 companies against which investigations have been initiated by the department, DCA has received reports on 69 companies. "A common finding visible in the reports so far received has been that the companies under scrutiny seem to have indulged in circular trading at one time or the other,'' sources said.

Based on the reports received, the department has been ordering prosecutions against the erring companies. The department has also been holding meetings with all the concerned authorities to this effect, sources said.

Send this article to Friends by E-Mail

Stories in this Section
Gesco board clears plan to bid for SCI stake

Copyright © 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line