Lok Sabha Question No. 3885 (UNSTARRED), answered on 2025-03-24
Subject: Allegations of Financial Misconduct and Bribery against Corporate Entities
Ministry: CORPORATE AFFAIRS
Asked by: Shri Aashtikar Patil Nagesh Bapurao

## Government of India

## Ministry of Corporate Affairs

## LOK SABHA UN-STARRED QUESTION NO. 3885

## ANSWERED ON MONDAY, MARCH 24, 2025

Allegations of Financial Misconduct and Bribery against Corporate Entities

Question

3885 Shri Aashtikar Patil Nagesh Bapurao.

Will the Minister of CORPORATE AFFAIRS Be please to state:

- (a) whether the Government is aware of the recent allegations of financial misconduct, irregularities, tax evasion and bribery involving major corporate entities:
- (b) if  so,  whether  the  Government  has  initiated  any  inquiry  or  directed concerned  regulatory  bodies  such  as  SEBI,  SFIO  and  NFRA  to  investigate these  allegations  and  the  steps  taken  by  the  Government  against  such companies;
- (c) whether  the  Government  plans  to  amend  existing  corporate  laws  to prevent such incidents and to ensure corporate transparency and financial accountability in the future;
- (d) whether the  Government  is  aware  of  the  impact  of  corporate  frauds and financial scams on local investors, employees and small businesses and if  so,  the  steps  taken  by  the  Government to safeguard investor confidence and  protect  stakeholders  including  small  investors  and  employees  from financial frauds and corporate misgovernance along with the details of relief provided to compensate them: and
- (e) the steps taken by the Government to increase financial literacy and awareness among small investors?

## Answer

MINISTER  OF  STATE  IN  THE  MINISTRY  OF  CORPORATE  AFFAIRS  AND MINISTER OF STATE IN  THE  MINISTRY  OF  ROAD  TRANSPORT  AND HIGHWAYS.

[SHRI HARSH MALHOTRA]

(a)&(b) The Ministry of Corporate Affairs (MCA) is responsible for implementation of  the Companies Act, 2013 and LLP Act 2008. These Acts have  provisions  that  mandate  certain  actions  pertaining  to  the  operations and  management  of  companies  and  LLPs  by  the  various  Stakeholders. Regulatory action is provided for in cases of non compliances amounting to offences under the respective provisions of the Acts. On  receipt of complaints or references regarding non compliances of Companies Act 2013, the Central Government may, depending on the gravity of the violations  and in  the  public  interest,  order  an  inquiry,  inspection  or  investigation  under section 206(4), 206(5), 210(1) as detailed in chapter V of the Companies Act 2013.    For  inspection  of  LLPs,  Section  206(5)  of  Companies  Act  2013 pertaining to  inspection of books of accounts has been made applicable to LLPs  as  per  notification  dated  11-02-2022.  Investigation  of  LLPs  may  be considered under section 43 (3)(c) of the LLP Act 2008. In cases of serious fraud  where  the  Central  Government  is  of  such  opinion,  cases  may  be assigned to the Serious Fraud Investigation Office (SFIO) for investigation u/s 212  of  the  Act.  Wherever  applicable,  findings  of  Inquiry,  Inspection  and investigation  are  also  shared  with  other  agencies  such  as  NFRA,  SEBI, Income Tax Department, GST authorities   and other agencies as the case may  be  so  that  they  may  take  up  necessary  regulatory  action  under  the relevant statutes.

- (c)  Presently there is no such proposal before the Government.

(d)&(e)  The  Companies  Act,  2013  contains  an  elaborate  framework  for dealing with minor and major violations of the Act. The major compliances include those related to accounting and auditing standards, statutory filings under  various  provisions  of  the  Act,  discharge  of  duties  assigned  to  the Board of Directors and Board Committees, role of auditors etc.

MCA has undertaken pro-active measures aimed at sensitizing stakeholders through  investors  awareness  programs  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. Further, as per Section 125(3) (b) of the Companies Act, 2013, the Investor Education Fund and Protection Authority(IEPFA)  is mandated to utilize the IEPF Fund for the promotion of investor education, awareness and protection,  acknowledging  the  importance  of  financial  literacy  among  the masses in general.  The Investor Awareness Programmes (IAP) conducted by IEPFA  are  generic  in  nature  which  aims  to  educate  and  protect  investors, especially regarding savings, budgeting, investments and a simple introduction to capital markets in general, ensuring that investor education reaches a broad audience across the country.  Under these IAPs, financial literacy and  awareness  are  imparted  by  organising camps. Further, 'Niveshek  Didi'  is an  innovative  initiative  through  Indian  Post  Payments Banks(IPPB)  wherein  the  trained  lady  dakiyas  are  employed  to  organise camps, targeting underserved women. The  Securities  and  Exchange  Board  of  India  (SEBI)  in  co-ordination  with Market  Infrastructure  Institutions  (MIIs)  i.e.  Exchanges  and  Depositories, also carries out various investor education and awareness program across different parts of country. A dedicated website https://investor.sebi.gov.in/ is maintained for educational and awareness material for investor awareness. SEBI has launched on March 18, 2024 a free, voluntary online exam 'SEBI Investor Certification Examination' designed to enhance investor awareness and knowledge. This online exam helps in enhancing investors' understanding  of  the  investment  process  and  the  associated  risks  in  the securities  market  and  thus  promote  an  efficient  approach  to  investment aligned with the risk appetite of the investor. Under the National Strategy for Financial  Inclusion, Reserve Bank of  India (RBI)  has  issued  guidelines  for  financial  literacy  through  setting  up  of Financial Literacy Centres (FLCs) by Lead Banks at District level and Centre for Financial Literacy (CFLs) at Block level across the country.  In terms of these  guidelines,  banks  have  been  regularly  conducting  special  camps through  FLCs.    Further,  National  Centre  for  Financial  Education  (NCFE), promoted by RBI along with Securities and Exchange Board of India (SEBI), Insurance  Regulatory  and  Development  Authority  of  India  (IRDAI)  and Pension  Fund  Regulatory  and  Development  Authority  (PFRDA),  is  regularly conducting Financial Education (FE) in collaboration with CFLs

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