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Journalism of Courage
Concerned over rising instances of corporate fraud,the ministry of corporate affairs (MCA) has issued guidelines asking companies with a paid-up capital of over Rs 10 crore or having more than 100 members,to maintain functional websites.
These websites should give details on their finances,composition of shareholders,shares issued during last five years,pending litigations,if any,information about the audit committee,among other details.
The guidelines are voluntary at present,but are expected to be made mandatory after evaluating the response from companies,an official told The Indian Express.
The move is aimed at making investors more aware about the companies they are investing in.
The guidelines come in wake of the rising number of vanishing companies that have stopped filing their financial statements with the Registrar of Companies (ROC) as well as stock exchanges after raising funds from the public.
Apart from these untraceable firms,there are multi-level marketing (MLM) companies or ponzi schemes that lure investors to put in money by promising astronomically high returns. According to government data,87 companies across the country are reported to have vanished after raising funds totalling Rs 342 crore through public issues. Sebi has also detected as many as 669 companies which have allegedly duped the investors of Rs 7,435 crore through illegal collective investment schemes.
According to the guidelines,issued in December last year,apart from giving the general information about the company,including its brand,incorporation,and risk concerns,such companies will have to give out details of related parties transactions for the last three years and their important pending litigation.
The companies above the threshold are also advised to list out their expenditure toward the corporate social responsibilities and environment protection during the last three years, the official said.
FOR BETTER ACCOUNTABILITY
* The MCA guidelines ask company websites to give details on finances,shareholders,pending litigations,audit committees etc
* The guidelines are voluntary at present,but would be made mandatory after evaluating the response from the companies
* The guidelines come in the wake of the rising number of vanishing companies and ponzi schemes
* Several of them have stopped filing statements with ROC and stock exchanges after raising funds from the public
