India ramps up its enforcement of compliance in regard to accuracy and timeliness of company filings. The Ministry of Corporate Affairs says that incorrect information in company filings to attract strict action! This is a long overdue move to improve transparency.
To curb instances of companies submitting misleading information in their filings, the government has said that strict action will be initiated against professionals who certify such submission.
Registered chartered accountants, cost accountants and company secretaries have been allowed by the Ministry of Corporate Affairs (MCA) to authenticate the documents filed with it in the electronic mode. The new Companies Act, wherein most of the provisions have come into effect from April 1, has stringent clauses to ensure that correct information is provided by corporates while submitting the required documents to MCA.
Strengthening efforts to ensure integrity and correctness of filings, the ministry on May 7 asked all Regional Directors and Registrars of Companies to carry out “quick inquiry” against professionals who have certified documents that have false or misleading information.
Action will also be initiated in cases where the filings have omitted material facts or have provided incomplete information. According to a circular issued on May 7, violations could result in debarment of the concerned professional from filing any document on the MCA portal. In cases where misleading information has been submitted in the filings, an inquiry will be conducted before deciding on any action [BIIA Editorial Comment: This is not a sufficient deterrent. Filing misleading statements is tantamount to fraud and should be punished to the full extent of the law. Stiff fines should be appropriate].
The Ministry has asked the Regional Director or the Registrar to “conduct a quick inquiry against the professionals who certified the form and signatory thereof including an officer in default who appears prima facie responsible for submitting false or misleading or incorrect information”. The entity concerned will be given 15-day notice to respond.
“The Regional Director or the Registrar will submit his/her report in respect of the inquiry initiated, irrespective of the outcome, to the E-Governance cell of the Ministry within 15 days of the expiry of period given for submission of an explanation,” the circular said. After going through the matter, the ministry’s e-Governance cell would issue necessary instructions to the Regional Director/Registrar of Companies.
“The E-Governance cell will thereafter refer such cases to the concerned institute for conducting disciplinary proceedings against the errant member as well as debar the concerned professional from filing any document on the MCA portal in future,” the circular said. Registered members of Institute of Chartered Accountants of India (ICAI), Institute of Company Secretaries of India (ICSI) and Institute of Cost Accountants of India (ICOAI) can “authenticate correctness and integrity of documents being filed by them with the MCA in electronic mode.
Source: Economic Times of India