Strong enforcement rules and regulations have been included in the new Companies Bill, 2012, to crack down on companies carrying out unlawful activities, operating fraudulent chit-funds and ponzi schemes, said corporate affairs minister Sachin Pilot on Thursday at an Assocham event.
Pilot confirmed that the government may come out with an ordinance to provide more powers to Sebi to
tackle fraudulent investment schemes that defraud investors. Pilot said his ministry is working in close coordination with the market regulator Sebi to ensure that a regulatory environment where compliance is necessary and people are not duped of their hard earned money.
?The idea is to make sure any company raising money illegally is not allowed to do so and any company doing collective investment schemes under the garb of some other operation should be prohibited,? said Pilot while inaugurating a conference on ?Companies Bill-2012: Highlights and Insights?, organised by Assocham.
?The smallest of the investors need the most protection and I believe that the ponzi schemes, chit funds that operate illegally need to be put (under regulation). I think few of the amendments proposed are to be put as ordinance,? he said.
Emphasising the need for a better business environment, Pilot said the country needs a vibrant ecosystem that enables both foreign and domestic investments. The comments come against the backdrop of a sluggish economic growth and companies scrapping proposed multi-billion dollar projects. The comments from the corporate affairs minister comes after two global steel majors ? ArcelorMittal and Posco ? said that they have scrapped their multi-billion dollar projects.
Speaking about the new Companies Bill, 2012, Pilot said he was hopeful that it will be passed by the upper house of Parliament in the coming Monsoon session. ?It is a very comprehensive and dynamic Bill as we have incorporated the best practices followed globally that are important for the Indian economy,? said Pilot.
?I am hopeful that it will be taken up for discussion and the Bill is likely to be then passed.?
On his part, Praful Patel, minister for heavy industries and public enterprises, said, ?What we need along with a new Companies Bill is a new way of thinking and a new way of working for economic development and economic upliftment and progress to achieve 9-10% growth.?
Commenting on the steps to curb ponzi schemes, Pilot said Sebi has now been given more powers to curb ponzi schemes. ?Whatever regular requirements to take and enforce actions are required as a regulator have been given to Sebi to take effective and swift action against non-compliant companies,? he said.
Pilot said that the government is trying to plug the gaps between Sebi, RBI (Reserve Bank of India) and the MCA and the inter-ministerial group is looking into it. ?We?ll amend the laws if needed and we are willing to work together with state governments to fight this menace.?
