The Hindu Business Line : Concept paper for curbing SEBI powers in inspecting co accounts

THE Securities and Exchange Board of India's (SEBI) powers to inspect the books of accounts of a company may be curbed if the Government accepts the suggestions in a concept paper on the revamp of Company Law.

The concept paper has suggested that the inspection powers of SEBI be restricted to those sections of the Company Law that have been delegated to the market regulator, i.e., those that relate to issue and transfer of securities and non-payment of dividend.

Further, these powers would be administered by SEBI in cases of listed public companies and those that plan to get listed.

Under the existing law, the capital market regulator enjoys vast powers to inspect the books of accounts, on par with any other officer of the Central Government.

According to Section 209A of the Companies Act, the books of accounts of every company would be open to inspection by the Registrar or such officers authorised by the Central Government, as well as any SEBI officers deputed by it. Section 89 of the concept paper empowers the Registrar or any such officer as may be authorised by the Central Government to scrutinise or inspect the books of accounts and other books and papers of every company. The said section is, however, silent on SEBI officers.

"The market regulator anyway enjoys vast powers under the SEBI Act/ regulations. Hence, this is a welcome move as it would curb the existing overlap between the two regulators," industry insiders told Business Line.

A section of corporates were, however, of the view that SEBI powers under Company Law should be dropped altogether.

Commenting on the provision, Mr Harish Vaid, President and Company Secretary, Jaiprakash Associates Ltd, and former Council Member of Institute of Company Secretaries of India (ICSI), said: "Rationalisation of powers is a positive approach. But the concept paper clearly spells out the matters to be administered by the SEBI. In the current context, when the SEBI itself has got vast powers to look into books of the companies, this provision could be revisited."

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