(a) whether the Government is aware that the cases of corporate fraud have increased in the country during the last five years;
(b) if so, the details thereof;
(c) the details of the punishment or penalty imposed on the defaulters during the said period; and
(d) the action taken/proposed to be taken by the Government to check the said fraud?
THE MINISTER OF STATE FOR
FINANCE AND CORPORATE AFFAIRS (SHRI ANURAG SINGH THAKUR)
????? ??? ???????? ????? ???????? ??? ????? ?????? (?????????? ???? ?????)
(a) and (b): The Government is aware of the Corporate Frauds reported during the last five years . Details of Investigations ordered during last five years is as under:
Financial year No. of investigations ordered and assigned to SFIO No. of investigations ordered and assigned to RDs
No. of cases No. of companies No. of cases No of companies
2015-16 21 184 3 3
2016-17 25 111 2 2
2017-18 22 226 52 117
2018-19 33 414 27 126
2019-20 26 326 33 100
(c): Details of the punishment or penalty imposed on the defaulters during the last five years period is as under:
Years No. of Convictions Fine Imposed (in Rs.)
2015-16 927 64,01,902
2016-17 828 1,14,05,987
2017-18 572 7,02,10,532
2018-19 680 3,97,83,699
2019-20 424 5,24,30,392
…2/-
-2-
The Securities and Exchange Board of India (SEBI) has informed that it has initiated the following enforcement actions in the last five years:
Type of Regulatory Action Initiated No. of Entities
2019-20 2018-19 2017-18 2016-17 2015-16
Prosecution proceedings Initiated 10 0 133 91 0
Administrative Warning 69 40 322 206 454
Proceedings under Section 11 of SEBI Act, 1992 678 498 1195 604 1726
Proceedings under Intermediaries Regulations 0 7 1 2 0
Adjudication Proceedings 1294 15910 1256 897 1257
Enforcement under Summary Settlement 20 0 0 0 0
(d): The Government had set up Serious Fraud Investigation Office (SFIO) through a Government Resolution dated 2nd July, 2003 to look into cases of serious corporate fraud. The Central Government has ordered and assigned to SFIO, investigation cases involving many companies where alleged fraudulent activities by corporates were reported. These include cases of misappropriation of funds by the promoters/ top management and cheating the money lenders. Statutory status to the SFIO has been granted under the Companies Act, 2013. The Government has taken a number of measures to curb and prevent corporate frauds: (i) ‘Fraud’ as a substantive offence has been introduced in the Companies Act, 2013; (ii) stricter norms of Corporate Governance have been provided in the Companies Act, 2013; (iii) it has been made mandatory for every existing or prospective directors to obtain a “Directors Identification Number” (DIN); (iv) in case of incorporation of a new company or change of address of an existing company, the Ministry of Corporate Affairs (MCA) has made it mandatory for professionals to verify details of the company and to personally visit their premises and certify that the premises are at the disposal of the company; (v) MCA has also undertaken pre-emptive measures aimed at sensitizing people through investors awareness programs which are organized regularly in association with the three professional institutes namely Institute of Chartered Accountants of India (ICAI), Institute of Cost Accountants of India (ICoAI) and Institute of Company Secretaries of India (ICSI) in various cities.
Further, SEBI has informed that it has put in place systems and practices to promote a safe, transparent and efficient securities market and to protect market integrity. SEBI maintains constant vigil in the securities market and in case where any entity/ listed company is found to have engaged in any fraudulent activity in the securities market, it takes appropriate action, wherever warranted.
In order to prevent fraudulent and unfair trade practices, SEBI has put in place a regulatory framework viz. SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
SEBI conducts investigation to examine alleged or suspected violations of laws and Regulations relating to the securities market. Post investigation, whenever violations are established, appropriate enforcement actions are taken under the provisions of the SEBI Act, 1992 and Regulations framed thereunder which culminate in the issuance of Orders.
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