Regulators to take call on corporate law violations by IPL: Khurshid

April 19th, 2010 - 5:41 pm ICT by IANS  

New Delhi, April 19 (IANS) Corporate Affairs Minister Salman Khurshid Monday ruled out suo-motu action by his ministry to probe alleged violations by the Indian Premier League (IPL) and its franchises and said it was for the regulators to take a call and ask for any action.
“Why should there be any suo-motu action from the ministry?” Khurshid posed a query to reporters here after the finance ministry started a thorough probe into the affairs of the cricketing extravaganza that went beyond mere tax violations.

“There are regulators for everything. If they refer something to us, we will look at it. We look only at filings and the appropriate dates of filing. If we find any deficiency, then only we take action,” he said, referring to the corporate disclosure norms.

“If there are violations, these are to be judged by the Registrar of Companies, since they are the ones who monitor companies. It is their jurisdiction.”

Khurshid’s comments came on a day when the government said parallel probes by virtually all its economic intelligence units had been ordered to determine the source and use of funds by franchises of IPL and unearth possible tax evasions and flouting of rules.

A probe by the tax department had first started with the Kochi franchise of IPL after a major political row last week on allegations that Tharoor’s friend Sunanda Pushkar had received sweat equity from the company called Rendezvous Sports World.

According to officials in the corporate affairs ministry, among the issues that could be examined is whether free equity was issued to people after following the guidelines spelt out by the government, based on the provisions of the Companies Act, 1956.

They said what could come under the probe is whether due permission, indeed, was sought from the corporate affairs ministry while issuing the sweat equity, as under law such shares can only be allotted to employees or directors of a company.

They said sweat equity could also be issued only if a company has been in existence for more than a year and also authorised by a special resolution by the board of directors.

For unlisted companies, the guidelines also require a “valuer” to determine the monetary worth that the intended recipient of sweat equity proposes to bring in after consulting relevant experts, the officials said.

But more importantly, if the value of such sweats equity exceeds 15 percent of the paid-up capital or Rs.5 crore, it also requires prior permission of the central government.

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