New Delhi, Oct. 23: The department of company affairs (DCA) has initiated criminal proceedings against 13 companies involved in the stock market scam of 2001.
DCA secretary Vinod Dhall said here today that of the 98 companies that were indicted in preliminary reports by the Joint Parliamentary Committee (JPC), reports on 87 are ready.
Based on this, 539 prosecutions have been initiated. Thirteen companies will be charged with committing serious offences under Section 63, 68 and 628 of the Companies Act, which can result in up to five years of imprisonment and a fine.
The 13 companies include Cyberspace, First Global, First Global Finance Limited, DSQ Software, Adani Exports, Vriddhi Kann Investments, Pentamedia, Nirmal Bang Securities, Goldfish Computers, Nakshatra Software, Daulat Capital, Sailesh Shah Securities and Rathi Global Finances. The DCA has also decided to apply before the Company Law Board (CLB) for appointment of government directors on the board of seven companies against whom which prosecutions have been initiated. These companies are Panther Industrial Products, Panther Fincap and Management Services, Padmini Technologies, DSQ Software, Kopran Limited, Classic Credit Limited and Pentamedia Graphics Limited. This will be under section 408 of the Companies Act, which empowers the government to prevent mismanagement of companies.
Dhall added that the DCA will soon approach the Cabinet with the recommendations of an internal committee on certain provisions of the Companies Bill 1997 which need to be amended. Earlier amendments to the 1997 Bill were carried out in 1999 and yet another set of amendments was done in the year 2000.
“We had appointed the Joshi Committee to look into the remaining provisions of the 1997 Bill and the committee has submitted its report. We are examining its suggestions and will approach the Cabinet for making the necessary amendments,” Dhall said. The recommendations of the Joshi committee include prohibiting promoters to withdraw once having subscribed to a public issue, restriction on the number of directors, retiring age of directors, serving notices by couriers and electronic means and restriction of loans to directors.
He also said a meeting would be held with merchant bankers tomorrow to discuss the issue of Indian Depository Receipts (IDR). Earlier, consultations have been held with the Securities and Exchange Board of India (Sebi), Institute of Chartered Accountants of India (ICAI), Institute of Company Secretaries of India (ICSI) and the Reserve Bank of India (RBI). ”We want to frame comprehensive guidelines for IDRs and these should be announced in the near future.”