Financial Daily from THE HINDU group of publications
Wednesday, May 15, 2002
DCA experts' panel reviewing accounts inspection norms
NEW DELHI, May 14
INSPECTIONS of books of accounts and statutory records of companies conducted in the last few years have prompted the Department of Company Affairs (DCA) to review the provisions prescribed under the Companies Act.
DCA has set up an expert group to examine the issues pertaining to Section 209A of the Act, rationalisation of compounding provisions and re-examining the provisions with regard to officers in default, and the question of exempting the independent directors from prosecution under certain sections.
The need to make inspections under Section 209A of the Act more effective, including the possibility of inducting professionals as inspecting officers, has been highlighted time and again.
"The inspections carried out in stock broking companies - involved in the recent stock market scam - showed that there was a need to outsource investigating officials, as such firms required specialists for examining their accounts," sources told Business Line.
So far the Act did not allow such a move, sources said, adding that, inspection officers also needed to be imparted specialised training in different industries and should not be frequently transferred. At present, the officers are transferred in a few years thus breaking the continuity of the whole process.
Besides, the provisions of compounding of offences and even the process involved for the same have to be examined. "There is a need for rationalising the whole process. This can be done either by amending certain provisions of the Act or by bringing out procedural norms," sources said.
The need for confining the proceedings against directors with reference to the definition of "officers in default" under Section 5 of the Companies Act, which has been a cause of concern to the corporate sector is also being re-examined.
The move to set up an expert group to examine the said provisions was based on a suggestion of the Company Law Advisory Committee. The expert group is expected to submit its report in a prescribed time frame.
The committee comprises Mr Shardul Shroff, convenor, Mr Salil Bhandari, Mr Amarjit Chopra, Mr Virendra Ganda, Joint Secretary, DCA, as members, a Director or Joint Director of DCA as member secretary.
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