Action Against Vanishing Companies
Provisions in laws and Rules have been made to ensure that companies function/raise money in a manner which is transparent, accountable and is in accordance with the provisions of the Companies Act and other enactments like SEBI Act and the Prize Chits & Money Circulation (Banning) Act etc. Giving this information in written reply to a question in the Rajya Sabha today Shri Sachin Pilot, Minister of Corporate Affairs, said that the Government has also been taking action against companies (and their directors) which disappear after raising money from public. A Central Coordination and Monitoring Committee (CMC), co-chaired by Secretary, Ministry of Corporate Affairs and Chairman, Securities and Exchange Board of India (SEBI), monitors efforts to identify ‘vanishing companies’ and take stock of action taken against them.
Shri Pilot informed the House that the Committee identified 238 companies as ‘vanishing companies’; 151 such companies have been traced (including 32 under liquidation). As on 31.3.2012 there were 87 companies which remained untraced after having raised funds through IPOs.
Acton against such companies has been initiated for violation of the provisions of the Companies Act, 1956 by filing complaints u/s 159/220 of the Companies Act, 1956 apart from filing of prosecutions u/s 63/68 and 628 of the Companies Act, 1956 besides seeking assistance of police authorities and filing FIRs. The Committee also receives feedback from all the stakeholders and makes suitable procedural adjustments on a continuing basis and carries out, the Minister said.