Protection of Investors
An elaborate regulatory framework is in place to deal with incidents of corporate fraud. This framework provides for statutory disclosures about the affairs of companies intended to inform the stakeholders the truth about the state of affairs of companies under the Companies Act. To facilitate making of such disclosures by companies, and for stakeholders and regulatory agencies to easily access and view them, Government has set up an electronic registry with round the clock access through internet. The Government has powers of inspection of the books of accounts of companies and also to investigate their affairs, if need be, under the Companies Act, 1956. In addition, the Act provides for appointment of independent, statutory auditors to audit the accounts, and report to the shareholders. Such audited accounts are also displayed on the electronic registry for general viewing. While the reporting requirements are regulated under the Companies Act, 1956, the conduct of auditors is regulated under the Chartered Accountants Act, 1949. In addition, for listed companies, compliance with these statutory requirements is required to be certified by a company secretary in practice, who in turn is regulated under the Company Secretaries Act, 1980. Government has amended the Chartered Accountants Act, 1949 and the Company Secretaries Act, 1980 in 2006 to provide for a more effective disciplinary mechanism to deal with cases of misconduct by Chartered Accountants and Company Secretaries respectively. In 2006, the Government has notified Accounting Standards to enable accounts of companies to be drawn up and disclosed on the basis of fair, transparent and internationally accepted principles. Government proposes to reintroduce the Companies Bill, 2008 as the Companies Bill, 2009 which seeks to make more stringent provisions in case of frauds by companies, their directors and auditors etc.
This information was given by Shri Salman Khurshid, Minister for Corporate Affairs, in the Lok Sabha today in a written reply.
