New Delhi, March 11: A committee of secretaries has been formed to set the limits of the department of company affairs’ (DCA) policing powers over companies and the areas in which it will be involved.
The exercise, it is learnt, may prune several ambiguous areas from DCA’s domain and may cut down the sphere of its work even as it continues to hold regulatory powers assigned to it.
Sources in the finance ministry said the committee is being put in place to demarcate the areas of conflict between DCA and the market regulator, Securities and Exchange Board of India (Sebi).
Currently, there is an overlap of powers between DCA which regulates all companies in tune with the Companies Act and Sebi which is the market regulator for all listed companies.
In the past, these two regulatory bodies have had differences over the jurisdiction of their respective power. In certain cases, they have passed the buck to the other whenever things have got sticky.
The main area of conflict centres on policing of companies. DCA will continue to check accounts of registered companies and whether they have adhered to the corporate governance code and report to the newly set up serious frauds office if it finds any serious case of fraud. Otherwise, it will penalise companies as it normally does.
In fact, there have been several rounds of meeting between the two regulatory bodies to resolve the issue of overlapping areas. It may be pointed out here that the Joint Parliamentary Committee (JPC) as well as the Naresh Chandra Committee on auditing and corporate governance in their reports had pulled the department for not being up to the mark. The Naresh Chandra Committee had a taken a special note of DCA’s lack of powers for inspections. The DCA had, in the recent past, got substantial government grants to upgrade and computerise its office.