India proposes tough action against corporate fraud
December 19th, 2011 - 9:20 pm ICT by IANSNew Delhi, Dec 19 (IANS) India will soon have a new regulation that would ensure stringent punishment for corporate fraud and make independent directors more accountable, Corporate Affairs Minister M. Veerappa Moily said Monday.
“Based on the experience gained over the years, existing provisions regarding inspection, enquiry and investigation are proposed to be strengthened in the Companies Bill 2011, introduced in the current session of Parliament,” Moily said in written reply to a question in the Lok Sabha.
In the existing act, corporate fraud is not explicitly defined. Corporate frauds are covered under the Indian Penal Code.
He said the proposed regulation would ensure “more effective action against companies and their officers who indulge in fraudulent actions of non compliance with law”.
“The role of key managerial personnel, board committees, audit committee, remuneration committee and stakeholders relationship committee, independent director and auditors is being made more accountable in the management of company,” Moily said.
The definition of “officer in default” would also be revised to make it more relevant in the present corporate and economic environment, he said.
The new companies bill was introduced in the parliament Dec 14. Once approved by the lawmakers, the new legislation will replace the 55-year-old Companies Act, 1956.
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