The government has finalised the broad framework of serious fraud office (SFO) which would be in place in the next couple of months. Slated to be multidisciplinary in nature, SFO would be headed by a joint secretary.In other major steps to amend rules Relating to company law, the DCA has decided to relax norms for appointing company secretaries by companies in small towns and rural areas. In yet another move, the DCA has amended the norms relating to appointment of relatives of directors/senior manager of any public limited company. Secretary, Department of Company V.K. Dhall said that at present SFO would operate within the existing laws and regulations. “We would see later if there is any need for a separate legislation”, Dhall said. SFO would also have outside experts to help it in dealing with cases of complex corporate frauds. According to Dhall, only complex cases would be referred to the SFO and if there are offenses which comes under other regulators apart from DCA like Sebi, RBI etc the cases would be referred to them. However, the administrative department would be the DCA, Dhall said.On the recent amendments in laws relating to appointments of company secretaries, Dhall said “any company having a registered office and working in a town of less than one lakh population and with a paid-up capital of less than Rs 5 crore need not appoint a company secretary”. At present, any company with a paid-up capital of over Rs 2 crore is required to appoint a company secretary. Referring to changes on appointments of relatives of directors/senior managers in public listed company, DCA secretary said “we have asked companies to follow the same procedure for selecting relatives as they have for appointing other employees. Also, there should be a separate selection committee for the purpose comprising a majority of independent directors. However, we have said any relative drawing a monthly salary of Rs 50,000 or above should be disclosed in every company’s annual report”. Earlier the cap for the monthly salary to be disclosed was Rs 20,000 per month. Dhall said the department is in the process of framing detailed guidelines for disqualification of directors of a company under section 274 1 (G) of the Companies Act. DCA has appointed a committee under the chairmanship of ICAI veteran Amarjeet Chopra to examine the comments an auditor is supposed to make while auditing accounts and balance sheets of companies. Regarding difficulties faced by companies in filing their annual documents, the secretary said that the department has instructed RoCs to open more counters, operate in two shifts between 8 am to 8 pm every day including holidays.
