The Department of Company Affairs (DCA) has ordered prosecution against 13 companies for non-compoundable offences in the stock market scam case including Cyberspace, First Global Stock Broking, First Global Finance Ltd, DSQ Software and Adani Exports.Talking to the reporters, DCA Secretary V.K. Dhall said that ‘we have launched prosecution against these companies for non-compoundable offence’. The other companies in the list are Pruthicon Finvest, Pentamedia Graphics, Nirmal Bang Securities, Goldfish Computers, Nakshatra Software, Dolat Capital, Shailesh Shah Securities and Rathi Global Finance.Dhall said that DCA had ordered inspection of 98 companies last year and received 87 inspection reports. So far 539 prosecutions have been ordered for violation of various provision of the Companies Act, 1956.The Secretary said that DCA has also decided to make applications before Company Law Board (CLB) for appointment of Government directors on the board of seven companies. These include Panther Industrial Products, Panther Fincap & Management Services, Padmini Technologies, DSQ Software, Kopran Ltd, Classic Credit Ltd and Pentamedia Graphics.DCA is also going to approach the Cabinet with the recommendation of an internal committee on certain provision of the Companies Bill 1997 which need an amendment. One set of amendments to the 1997 Bill were carried out in 1999 and another set in 2000, Dhall said.‘We had appointed the Joshi committee to look into the remaining provisions of the 1997 Bill which need any changes 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 major 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, service of notice by courier and electronic means and restriction of loans to directors.On the issue of Indian Depository Receipts (IDRs), Dhall said DCA will hold a meeting with the merchant bankers on Thursday after having consulted Sebi, Institute of Chartered Accountants and Company Secretaries as well as the RBI on the issue.‘We want to frame comprehensive guidelines on IDRs and these should be announced in the near future,’ he said. ‘Section 605A of Companies Act permits companies incorporated or to be incorporated outside India to issue IDRs as per rules prescribed by the central government (DCA). Persuant to this section, DCA originally prepared draft IDR rules’, Dhall added. A final decision will be taken after completing the consultative process, he said .Also in the matter regarding applicability of section 43A (2A) to public companies which are subsidiaries of foreign companies, DCA has decided that such companies would be the subsidiary of another private company even if the holding company happens to be a foreign body corporate. DCA has already clarified and given instructions to the registrar of companies in Delhi to dispose off all pending applications seeking reversion back to private limited companies on the above lines.In case of valuation of shares and computation of swap ratio in case of mergers and amalgamations, DCA has constituted an expert group for evolving comprehensive guidelines.‘This will ensure uniformity in application of methods and procedures, but will also introduce greater objectivity in such exercise’, Dhall said.Referring to the Investor Education and Protection Fund, he said unclaimed and unpaid dividends should be transferred to the fund if they remain unclaimed for a period of seven years from the due date.So far Rs 48.54 crore has been deposited by various companies in the fund, he added.
