Millennium Post

MCA to firms: Declare public funds abiding with norms

In the wake of huge public money being raised through various ponzi schemes, the government has made it mandatory for new companies to give declarations that no funds would be collected without meeting the applicable norms of Sebi, RBI and other authorities.
Such declarations would be required to be made by the new companies, as also their directors and initial shareholders, at the time of the incorporation. In the case of already registered companies, these declarations would be required whenever the company changes its objects of business.

The move follows thousands of crores worth money having been raised by numerous entities, including Sahara and Saradha group, from the public investors without approvals from Sebi and other regulators and the consequent actions against them. The Ministry of Corporate Affairs has said that it has taken note of seriously the 'recent instances of raising of monies by companies in a manner which is opaque/convoluted, non-accountable and which does not protect interests of depositors have been taken note of by the Ministry seriously'.
Registrar of Companies (RoC), the first point for any entity to get registered as a company, would have the powers to seek declaration that no funds would be raised from the public without being compliant with various regulations.

According to a circular issued by the Ministry on 29 May, in exercise of the powers under the Companies Act, RoC may obtain declaration/affidavits from subscribers/first directors first at the time of incorporation and from directors, subsequently whenever company changes its objects.
As per the recent circular, the matter of protection of interest of investors, including depositors, 'is very important to ensure healthy corporate capital market environment in
the country'.
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