Millennium Post

Govt to consider ‘naming and shaming’ corporate fraudsters

The government will consider a 'name and shame' mechanism to publicise the details of corporate and investment fraudsters to make the general public aware about identity and modus operandi of such entities.

A final decision in this regard can be taken only after considering the legal aspects involved with such an exercise, such as privacy and defamation laws, Corporate Affairs Minister Sachin Pilot said.

While banks have begun publishing names and photographs in newspapers of wilful defaulters, including for corporate and individual loans, the capital markets regulator Sebi also puts out a list in public domain of all defaulters against whom it has taken action.
Asked whether the Ministry of Corporate Affairs (MCA) would consider adopting a similar practice for publicising the names and photographs of corporate defaulters and fraudsters, Pilot said: 'I would be happy to follow up on this and consider implementing it in some way, keeping in mind the legal consequences of it.'

'I think, unless there are some privacy issues, it is a good idea. We will have to look at the legal issues, as to whether somebody can challenge this in court by saying why he or she was being defamed, but in principle it is a good idea,' the minister said.

There are more than one million registered companies in India and MCA is mandated to take action against corporate entities, their top management personnel and promoters for any violation to companies law and for any corporate fraud.

Pilot said that Sebi to some extent makes public the names of defaulters in the capital markets space and other areas of its jurisdiction.
'If it (Sebi) bars a company from raising money, then it puts the names and other details of all the directors on its website for the public to know. A similar practice is in place in some parts of Europe and America...’

'I would be happy to adopt this practice in our ministry and I think, we should do it,' Pilot observed. Pilot said that there have been many instances where some people set up a company and do some fraud, and then they move to some other state and form another company under some other name and try to do the same thing.

‘We are now sharing the data with different states (about such frauds and people). There should be a centralised data of the people who have committed some fraud and have been found guilty, so that they must be barred from collecting money from any part of the country even under any other name.

‘Sebi has some sort of that practice in place (for making public their names and credentials) and I would be happy to adopt the same at MCA,’ the minister said.

Pilot said that some private websites are probably doing a similar job of listing out the names of all defaulters.
‘But, it may not be easy for an average investor to check about these matters with such websites and therefore it should be a proactive effort of the government to do so,’ he acknowledged.
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