In an effort to pull the plug on erring companies, the ministry of corporate affairs (MCA) is planning special executive powers to the Registrar of Companies (RoC) to conduct a comprehensive probe into defaulting firms. According to sources, MCA has mooted a proposal to allow RoC and its regional directors the power to issue a ?warrant? to the promoter if the company do not furnish the requisite details at the time of investigation.
As per the current norms under Section 209 of the Companies Act, 1956, the RoC can only initiate prosecution charges against the promoters for which they have to move a local court first. An MCA source told FE on conditions of anonymity that the process is not only very complex but often gets very time-consuming. ?The warrant will be like a legal direction wherein the company will be given a few days to respond?failing which the promoters can be arrested,? the source said.
The Companies Bill that is pending with the standing committee headed by former union finance minister Yashwant Sinha is going to take a final call on this. Last month, senior government officials had met Sinha and proposed the idea of giving special executive powers to RoC. The Bill is expected to be presented in Parliament in the Winter Session.?Often the RoCs are seen merely as a data collecting body of the government with very little real power. This needs to change and companies have to respond to RoC notices at the earliest,? the source added. The proposal forms a part of MCA?s efforts to speed up the investigation process and create a level of transparency in the operations of companies following the Rs 8,000-crore Satyam scam. As per the recommendations of the high-level committee that the ministry set up last year, MCA?s investigative body ?SFIO ? is all set to get additional powers to conduct searches in company headquarters if the situation demanded.