Lok Sabha Question No. 243 (STARRED), answered on 2018-08-03
Subject: Corporate Governance
Ministry: CORPORATE AFFAIRS
Asked by: BHARTRUHARI MAHTAB, SANJAY SHAMRAO DHOTRE

## MINISTRY OF CORPORATE AFFAIRS

## GOVERNMENT OF INDIA LOK SABHA

## STARRED QUESTION NO. 243

ANSWERED ON FRIDAY, THE 3RD AUGUST, 2018

[SHRAVANA 12, 1940 (SAKA)]

## CORPORATE GOVERNANCE

## QUESTION

*243. SHRI BHARTRUHARI MAHTAB: SHRI SANJAY DHOTRE :

Will the Minister of CORPORATE AFFAIRS कारपोरेट कार्य मं त्री be pleased to state:

- (a) whether cases of violation of corporate governance requirements as prescribed by the Companies Act, 2013 have come to the notice of the Government during each of the last three years and the current year;
- (b) if  so,  the  details  thereof,  company-wise  and  the  reasons therefor along with the action taken against such companies so far;
- (c) whether cases of corporate scams/ scandals have increased in the country during the said period;
- (d) if  so,  the  details  thereof,  company-wise  and  the  reasons therefor along with the nexus unearthed between bureaucrats and corporate houses in such cases, company-wise; and
- (e) the  steps  taken/being  taken  by  the  Government  to  ensure strict compliance of corporate governance requirements and protect minority stakeholders from the ill-effects of poor corporate governance?

## ANSWER

THE MINISTER OF CORPORATE AFFAIRS       (SHRI PIYUSH GOYAL)

कारपोरेट कार्य मंत्री

- (a) to (e)  A statement is laid on the Table of the House.

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STATEMENT  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  TO  (e)  OF  THE STARRED QUESTION NO.243 FOR ANSWER IN LOK SABHA ON 03.08.2018:

(a)  &  (b):  Yes,  Madam.  The  Companies  Act,  2013  (the  Act)  contains  an elaborate  framework for  dealing  with  minor  and  major  violations  of  the Act. There are 114 sections dealing with defaults as detailed below:

| Nature of violation     |   No. of Section(s) of the Act |
|-------------------------|--------------------------------|
| Adjudication (In-House) |                             18 |
| Compoundable            |                             81 |
| Non Compoundable        |                             35 |

The  major  compliances  related  to  Corporate  Governance  include compliance with accounting and auditing standards; compliance relating to  statutory  filings  under  various  provisions  of  the  Act;  discharge  of duties assigned to the Board of Directors and Board Committees such as Audit  Committee,  Nomination  and  Remuneration  Committee;  duties  of Independent  Directors  and  Statutory  Auditors;  mandatory  disclosures with reference to related party transactions; other disclosures required in Annual Report and Financial Statement; disclosures to the shareholders etc.  Based  on  complaints  received  details  of  inquiries,  inspections  and investigations  instituted  by  the  Government  during  the  last  three  years and current year are as detailed below:

| Year    |   Inquiries |   Inspections |   Investigations |
|---------|-------------|---------------|------------------|
| 2015-16 |         402 |           155 |               02 |
| 2016-17 |         456 |           127 |               03 |
| 2017-18 |        1822 |            56 |              119 |
| 2018-19 |         271 |            39 |               83 |
| Total   |        2951 |           377 |              207 |

Further, details of prosecutions filed by the Registrars of Companies (RoCs) during aforesaid period are as follows:

| Year                      |   Total number of prosecutions filed by RoCs for various violations of the Act. |
|---------------------------|---------------------------------------------------------------------------------|
| 2015-16                   |                                                                            1830 |
| 2016-17                   |                                                                            4522 |
| 2017-18                   |                                                                            4124 |
| 2018-19 (Upto 30.06.2018) |                                                                             399 |

Contd…p/2

(c) & (d): Government has established Serious Fraud Investigation Office  (SFIO)  to  look  into  serious  corporate  frauds.  The  details  of investigations assigned to SFIO and reports submitted by it and prosecutions filed by it are as detailed below:

| Year                      |   Total Investigation cases assigned to SFIO |   Total Investigation reports submitted by SFIO |   Total number of prosecutions filed by SFIO for various violations of the Act. |
|---------------------------|----------------------------------------------|-------------------------------------------------|---------------------------------------------------------------------------------|
| 2015-16                   |                                           23 |                                              09 |                                                                              53 |
| 2016-17                   |                                           25 |                                              14 |                                                                              23 |
| 2017-18                   |                                           21 |                                              05 |                                                                              15 |
| 2018-19 (Upto 30.06.2018) |                                           13 |                                              02 |                                                                              02 |

(e): Government has taken several steps to improve corporate governance which include nationwide drive to strike off inactive companies;  disqualification  of  defaulting  directors;  e-KYC  for  directors, monitoring compliance  of corporate social responsibility obligation; transfer  of  unclaimed  dividend  and  shares  to  Investors  Education  and Protection Fund etc.

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