MUMBAI, DEC 27: The Finance Ministry is looking at the pro and cons of merging the Department of Company Affairs (DCA) with the Securities and Exchange Board of India (Sebi) in order to protect investor interest and better utilisaion of scanty resources. Due to infighting between the two departments and overlapping of duties and responsibilities, it's the investors who are getting a raw deal which has already resulted in hundreds of companies vanishing and plantation scams, say ministry sources.``The finance ministry is looking at the option of merging both departments due to synergy of operations and passing the buck to each other in cases of scam,'' say officials. The first step, in this regard, is expected to be made by transferring the present DCA chief T A Krishnamurthy - responsible for many pro-active steps in the DCA - to Sebi as chairman. Present Sebi Chairman D R Mehta retires in February and, according to some reports, may be asked to head a new disinvestment commission.At present, both thegovernment departments do not even share information about corporate defaulters with each other and reject suggestions from either side for protecting small investor. Citing an example, a ministry official said a recent DCA suggestion to include promoters' picture during fund raising plan has been rejected by the Sebi and the latter has suggested RoC to include pictures at the time of company's registration.``With this kind of attitude, it's difficult to nab promoters who have run away with investors fund. it's necessary to have a joint strategy to save investors from the shady promoters,'' say official. ``If we include picture and fingerprints of the promoters at the time of any fund raising plan from public, more than 80 per cent of the corporate frauds would stop,'' sources say.In the cases of plantation companies, corporate regulators like Sebi, Reserve Bank and DCA were waiting for each other to take action against the companies who have raised over Rs 2,500 crore from investors. Lack ofcoordination and confusing guidelines resulted in many fly-by-night operators taking investors for a ride. Though Sebi is now regulating the collective investment schemes, chances of investors getting back their money are very slim.The prime minister has already announced his resolve to take action against all the vanishing companies. A list prepared by the DCA giving details of promoters, and their last known addresses would be soon made public. The Sebi has also forwarded names of about 80 companies to the DCA regarding all those companies who have vanished after raising funds from the public.Sebi identified these vanished companies based on a study and physical verification undertaken by the various exchanges on companies which came out with an initial opening offer (IPO) after 1992 and barred 70 directors from associating with the capital market for the next five years. As both DCA and Sebi complain of lack of manpower and resources, it would serve the purpose of both government and investors, if bothdepartments are merged, say sources.
