Date:12/04/2005 URL: http://www.thehindubusinessline.com/2005/04/12/stories/2005041201010400.htm

Back Ministry of Company Affairs may widen investigation base

Richa Mishra

New Delhi , April 11

IN no mood to leave any stone unturned in addressing investor grievances, the Ministry of Company Affairs (MCA) is considering expanding its investigation base so that not only the defaulting company but also other companies in the Group being investigated are also likely to be under scanner.

"It has been found that when the investigation is just limited to the defaulting entity then the scope of getting back the investors money is limited, if the company goes into liquidation. But, if the investigations are conducted on the other profit making group companies then the chances of addressing the investor grievances is more," Mr Prem Chand Gupta, Minister of State (Independent Charge) for Company Affairs, told Business Line.

Though the Ministry has been taking initiatives such as registering first information reports under the Indian Penal Code against the companies, their promoters and directors, as well as taking action under the Companies Act, but it was found that the promoters continued to enjoy the same lifestyle while the small investors suffered, the Minister said.

Therefore, to ensure that the promoters don't go free, the Ministry is seriously considering the idea of investigating the other group entities.

The Group companies of Morepen Laboratories Ltd, DCM Financial Services Ltd, and DCM Ltd, are likely to come under investigations.

Currently, the Ministry has filed prosecutions against Morepen Ltd and DCM Ltd, while the case of DCM Financial Services Ltd has been forwarded to the Reserve Bank of India.

The Ministry is also looking at making default in repayment of deposits as a cognisable offence.

"Special emphasis has been laid on the measures to protect investors interests in the concept paper for a new companies Bill. However, the Ministry is taking action against defaulting and vanishing companies as a priority," the Minister emphasised.

Constant review of the ongoing actions against vanishing companies (those companies who came up with public issue during 1993-94 and 1994-95 and vanished with public money) is being undertaken.

The Ministry is in constant touch with the other regulators such as the Securities and Exchange Board of India (SEBI), the Reserve Bank of India and the income-tax authorities for further probe from their angle.