Role of Serious Fraud Investigation Office (SFIO) in Protection of Investor's Interest: An Overview
Year: 2014
Type: preprint
Abstract: The Companies Act 2013, guarantees several rights to investors and also regulates the affairs of a company with a view to ensure efficient functioning of a company so that investors may receive their due returns of the capital invested by them and their rights and interests are adequately protected. Investors are the real owners of a company but the power of management of the company is vested in the Board of Directors. There are chances to abuse of power like committing fraud, by few directors of the company. As we know that there is close nexus between corporate governance and ethics but conflicts between these two are also bound to occur. Corporate fraud, an inevitable incident occurring, in recent, is an aggravated form of corruption in corporate world. It is difficult to prevent and to catch such white collar crimes. Such incidents reduce the interest and trust in corporate investments and in turn reduce the confidence on the government. The Companies Act empowers the Central Government with the right to investigate the affairs of the company, especially in cases of an alleged fraud or even in the oppression of the minority shareholders. The Central Government is empowered to appoint inspectors to investigate either on its own if it is of the opinion that such investigation is required on the report of the Registrar or Inspector under section 208 or in public interest or on the request of the company on the basis of a special resolution or on the Direction of the court/tribunal or from such members of the company having requisite number of shares as specified in section 213 of the Companies Act, 2013. The Central Government has also set up the Serious Fraud Investigation Office (SFIO) in the ministry of corporate affairs, a specialized, multi-disciplinary organization to deal with serious cases of corporate fraud. This was also a major recommendation made by the Naresh Chandra Committee which was set up by the government on 21 August 2002 on corporate governance. Headquarters of this office is located in New Delhi, with field offices located in major cities throughout India. The SFIO is headed by a director not below the rank of a Joint Secretary to the Government of India having knowledge and experience in dealing with the matters relating to corporate affairs and also consist of experts from various disciplines. This will, certainly protect the investor’s interest and will also bring back the confidence of investors in Indian capital market.
Source: SSRN Electronic Journal
Authors: Radheshyam Prasad, Tabrez Ahmad
Language: English
Subfield: Marketing
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W66545635