Financial Daily from THE HINDU group of publications
Friday, Sep 02, 2005
Corporate - Fixed Deposits
Government - Policy
Govt to tighten disclosure norms for company deposits
New Delhi , Sept. 1
IN its continued efforts to protect the interests of investors and dissuade companies from defaulting on repayment of deposits, the Ministry of Company Affairs (MCA) proposes to tighten the disclosure norms for acceptance of deposits.
The Ministry has identified such cases on priority basis and initiated necessary action including inspection in certain cases, a senior official said.
This comes on the heels of the Ministry initiating such a step for monitoring the Nidhi companies.
In a communication to his officers, the Minister of State (Independent Charge) for Company Affairs, Mr Prem Chand Gupta, has said that the companies should be asked to give simultaneous information to the Registrar of Companies (RoCs). If there is no such existing legal requirement, then the Government could consider incorporating it in the proposed new Company Bill, he said.
Under the existing Act, every company, which accepts deposits is required to inform the Company Law Board (CLB) in case of any default in repayment or interest, within 60 days from the date of the default.
According to the official, this would enable the Government to take prompt action including mandatory inspection of such companies in a time-bound manner. Except in cases where matters are pending in higher courts, the Government has initiated prosecution against the defaulting companies for non-compliance of CLB orders, the official said. As per the Ministry figures, there are about 38 defaulting companies.
These include Duncan Industries Ltd, Morepen Laboratories Ltd, Shamken Multifab Ltd, Shamken Spinners Ltd and Shamken Cotsyn Ltd, Nuchem Ltd, First Financial Services Ltd, Sterling Holiday Resorts India Ltd, Sterling Financial Services Ltd, Nagarjuna Finance Ltd, Madhu Industries Ltd, and Nath Seeds Ltd.
Regarding the measures taken by the Government in the interest of small investors, the official told Business Line that besides introducing the system of online filing of complaints against the companies by the investors and depositors, the Ministry has set up Investor Protection Cell to take prompt action.
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