All newly incorporated firms and those in the process of getting registered under the Companies Act, 1956 will have now file an additional declaration, saying they will never raise money from public without meeting the norms of SEBI, RBI and other authorities.
The declaration, which is mandatory, has to be filed by the directors and initial shareholders of the companies. In the case of already registered firms, this declaration would be required whenever the company changes its objects of business, said officials in the corporate affairs ministry. As per a recent circular issued by MCA, the matter of protection of interest of investors, including depositors, “is very important to ensure healthy corporate capital market environment in the country”.
The move is aimed at introducing checks within the system to prevent chit fund scams such as the recent Saradha Group controversy in West Bengal. .
“The corporate affairs ministry has empowered the Registrar of Companies (RoC) to seek declaration from companies/directors that no funds would be raised from the public without compliance with laid down regulations,” a senior official said. New companies will have to give declarations that no funds would be collected without meeting the applicable norms of Sebi, RBI and other authorities, he said.
“In their declarations, the company/directors shall confirm that they (or the company) shall not accept deposits unless compliance with applicable provisions of Companies Act, 1956, RBI Act, 1934 and Sebi Act, 1992 and rules/directions/regulations made there under are duly complied and filed with concerned authorities,” official said.
In the case of Sahara, funds worth thousands of crores were raised from the public without the approval of market regulator Sebi, whereas Kolkata-based Saradha group is alleged to have duped investors by running fraudulent money-raising schemes.
MCA minister Sachin Pilot recently said the government would leave no stone unturned in cracking down on companies running ponzi schemes. “We will work closely with concerned ministries and industries to remove the ambiguity in the law as soon as possible.?
While chit funds laws are implemented by state governments, collective investments, except in certain classes, come under Sebi. Non-banking financial companies are governed by the RBI.
On May 31, RBI issued a public advisory urging them to carefully evaluate decisions before depositing money with any financial entities, including NBFCs. A parliamentary panel, besides an inter-ministerial group, are looking into ways to tackle fraudulent investment schemes.
