Lok Sabha Question No. 970 (UNSTARRED), answered on 2025-02-10
Subject: Increase in Cases of Corporate Frauds
Ministry: CORPORATE AFFAIRS
Asked by: Shri Anup Sanjay Dhotre

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFIARS LOK SABHA

UN-STARRED QUESTION NO. 970 ANSWERED ON MONDAY, 10 th  FEBRUARY ,2025 MAGHA 21,1946 (SAKA).

Increase in Cases of Corporate Frauds

970. SHRI ANUP SANJAY DHOTRE:

Will the Minister of CORPORATE AFFAIRS

be pleased to state:

- (a)  whether  the  Government is aware that the cases of corporate
- fraud have increased in the country during the last five years;
- (b) if so, the details thereof;
- (c)  the  details  of  the  punishment  or  penalty  imposed  on  the defaulters during the said period; and
- (d)  the  action  taken/proposed  to  be  taken  by  the  Government  to
- prevent such frauds?

## ANSWER

Minister  of  State  in  the  Ministry  of  Corporate  Affairs;  Minister  of State in the Ministry of Road Transport and Highways

(SHRI HARSH MALHOTRA)

- (a) The Ministry of Corporate Affairs takes action against frauds as defined under the Companies Act, 2013. Investigation in matter of  frauds  are  assigned  to  the  Serious  Fraud  Investigation  Office (SFIO),  Reginal  Directors  (RDs)  of  Ministry  of  Corporate  Affairs under Section 212 and 210 of the Companies Act, 2013, respectively. No such verified information regarding an increase in the number of corporate fraud cases in the last five years have been noticed by this Ministry.

(b) Details of cases assigned for Investigation to SFIO, RDs during the last five years is at Annexure. (c) SFIO,  Registrar  of  Companies  (ROC)  have  filed  number  of complaints  before  competent  courts  for  fraud  and  cases  are  subjudice where punishment or penalty is to be awarded. (d) The Government set up SFIO through a Government Resolution dated  2 nd July,  2003  to  look  into  cases  of  serious  corporate  fraud. The Central Government has ordered and assigned to SFIO investigation  cases  involving  companies  where  alleged  fraudulent activities by corporates were reported.  In addition, the Government has  taken  a  number  of  other  measures  to  curb  and  prevent corporate frauds as under:(i)  'Fraud'  as  a  substantive  offence  has  been  introduced  in  the Companies Act, 2013; (ii)  It  has  been  made  mandatory  for  every  existing  or  prospective directors to obtain a 'Directors Identification Number' (DIN); (iii) In case of incorporation of new company or change of address of  an  existing  company,  the  Ministry  has  made  it  mandatory  for professionals to verify details of the company and to personally visit their premises and certify that the premises are at the disposal of the company; (iv) The Ministry has also undertaken pre-emptive measures aimed at  sensitizing  persons  through  investor  awareness  programme which are organized regularly in association with the three professional institutes namely Institute of Chartered Accountants of India  (ICAI),  Institute  of  Cost  Accountants  of  India  (ICoAI)  and Institute of  company secretaries of India (ICSI) in various cities. (v)  Ministry  of  Corporate  Affairs  has  also  initiated  KYC  Norms  for Directors and companies.

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## ANNEXURE  REFERRED  TO  PART  (b)  IN  REPLY  OF  LOK  SABHA UNSTARRED QUESTION NO. 970 FOR 10.02.2025

Number of Companies under Investigation:

| Financial Year   |   Companies under investigation by the Regional Directors |   Cases under Investigation by the SFIO |
|------------------|-----------------------------------------------------------|-----------------------------------------|
| 2019-20          |                                                       102 |                                      26 |
| 2020-21          |                                                        65 |                                      20 |
| 2021-22          |                                                        39 |                                      14 |
| 2022-23          |                                                       205 |                                      07 |
| 2023-24          |                                                        51 |                                      05 |
| Total            |                                                       462 |                                      72 |

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