Registrar of Companies and Regional Directors to get more powers

Ministry of corporate affairs (MCA) is set to give more powers to the Executive for conducting investigations by eliminating the need to seek multiple approvals before launching prosecution against defaulting companies.

MCA is delegating a large part of investigation-related work to Regional Directors, encouraging the use of emails and stepping up hiring at its field offices to speed up probes.

Excessive delays have often enabled companies to tamper with crucial evidence. MCA intends to now strengthen the functioning of the Registrar of Companies (ROC) so that they (the officers) are not subjected to prolonged delays while investigating a case. In a series of recent meetings with the RoC, the ministry said it planned to give greater liberty to its officers in initiating criminal action against defaulters once they were convinced of the companies’ connivance in an illegal action. However, the greater power for the field officers would come with increased accountability as they have been directed not to harass company directors or senior professionals without substantial evidence.

There are several challenges the government faces before a formal case is initiated in the courts. For instance, issuing summons to defaulters takes several years because prosecuting officers need the go-ahead from higher authorities who are often not quick to act. Then there are delays because of the involvement of multiple RoCs in a case. Multiple jurisdictions leads to multiplicity of approvals, a concern that is being handled through the increased use of electronic communication, the official said.

During the last four years, over 13,000 companies were prosecuted for non-compliance of various provisions of the Companies Act but a substantial number of these cases is still pending. To add to the problems, the prosecution arm of the RoC is severely understaffed. Although several measures like compounding of offences by payment of fines and easy exit scheme for defunct companies have had some impact, the delay in the process of prosecution is still a cause for concern.

Tags: regional directorROC

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