The proposal, mooted by the corporate affairs ministry, can be part of the new companies Bill that is set to be introduced in the Winter Session of Parliament. According to officials, the government is looking to strengthen the mechanism of investigation and probe, an area that falls directly under the jurisdiction of the RoC.
As per the current laws, under section 234 of the Companies Act, the RoC can initiate a thorough probe into the books of accounts of companies, however, it is not empowered to issue search orders. Following a probe into the company books the RoC can recommend to the corporate affairs ministry an investigation under section 235 of the Companies Act or can resort to a judicial process under section 209 of the Act. In order to tighten the screw on companies we would allow RoC to issue search ordersa proposal that has found support, an MCA source said. He added that since the regional RoCs have complete information about companies that fall under their jurisdiction it was prudent to empower the regional directorate offices to issue search warrants as and when required. This power, however, has to be used sparingly. We are trying to create an independent mechanism for their working whereby once a case is forwarded to the RoC they can use all the powers under them to submit the requisite details within a fixed time period, sources said.
The move comes close on the heels after the parliamentary standing committee (PSC) headed by former finance minister Yashwant Sinha recommended that all RoC investigations should be time bound. Sources said that the MCA is likely to accept this recommendation and fix the total time period from 18 to 24 months.
The RoCs powers came under scrutiny during the IPL fiasco when the government had directed their regional offices to conduct a detailed probe into the books of accounts of the IPL franchisees. According to the directions the RoC offices had to cull out exhaustive details on companys ownership patterns, sweat equity and list of company directors.
The government is also likely to give statutory powers to the Serious Fraud Investigation Office (SFIO), which is one of the recommendations of the PSC. The committee has said the government should clearly define the role of the SFIO in the new Companies Bill apart from giving the investigation body statutory powers, a proposal which has already found support in the MCA.