PAN check for directors number to help curb fraud

Written by Neha Pal | Neha Pal | New Delhi | Updated: Jul 30 2011, 07:07am hrs
To weed out the problem of duplicate and fake directors in a company, the ministry of corporate affairs (MCA) has tied up with the ministry of finance to cross-check the Permanent Acccount Number (PAN) of the director before issuing him the Director Identification Number (DIN).

The MCA has tied up the with the finance ministry for cross-checking the authenticity of PAN cards as there is an increase in the number of companies that get DIN on the basis of a duplicate PAN card, an MCA official said. This would help in curbing corporate frauds, he added.

The ministry is also working on an early warning system and is in talks with the Serious Fraud Investigation Office (SFIO) to take necessary steps for preventing corporate frauds. Minister of corporate affairs M Veerappa Moily had said that vanishing companies were one of the main concerns of his ministry and that they should not be allowed to run away with the public money.

The official said, At present, many fraud companies are following this practice wherein they obtain a fake PAN card and get a DIN on the name of a director that does not exist. Later, when the company declares itself bankrupt, it becomes difficult to catch hold of the accused.

The MCA has integrated its online system with the finance ministry, which will enable cross-checking and tracking of PANs of the directors in a company, the official said.

Talking about the Companies Bill, which is aimed to bring stringent laws for protecting investors, the MCA official said, The final draft of the Companies Bill is ready and will be tabled before Parliament in the coming session.

The ministry has also written to the finance ministry to allow more sectors to form Limited Liabilty Partnerships and simplify them further.