Role, Powers& 

Functions of SFIO

ICSI Seminar28‐12‐13

Opening Remarks

SFIO then……

SFIO now!

Challenges Ahead

Concluding Remarks

We are neighbors now!

Secretarial Audit mandatory for certain class of companiesSecretarial Report forming part of Board Report

BOD need to explain Qualifications & Observations

Company Secretary in practice responsible for ensuring compliance to “Secretarial Standards”

Liable for punishment in case of default

Landing up in Eighth circle of Hell

Get a Pillion-ride on Geryon

May not have company of Virgil

Established through an Executive order

Having a Multi-disciplinary Team

Investigation only under reference u/s 235 & 237 of Companies Act

Market Research & Analysis Unit

A multi-disciplinary organization under Ministry of Corporate Affairs

Having experts in the field of accountancy, forensic auditing, law, information technology, investigation, company law, banking, capital market and taxation.

For detecting and prosecuting or recommending for prosecution white-collar crimes/frauds.

Takes up for investigation only such cases, which are characterized by complexity and having inter-departmental and multi-disciplinary ramifications

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Substantial involvement of public interest to be judged by size, either in terms of monetary misappropriation or in terms of persons affected

Possibility of investigation leading to or contributing towards a clear improvement in systems, laws or procedures.

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A statutory organization created u/s 211

Fraud defined for the first time in explanation to 447

Additional powers conferred under new Act under Chapter IVX

Provision for Special Court u/s 435

Enhanced punishment for Fraud u/s 447

Regulatory landscape: Multiple legislations

Overlapping Jurisdiction of Central Agencies due to camouflaging device adopted by Companies

Regulators suffer from “Pahle Aap Syndrome!

Prize Chits & Money Circulation Schemes (Banning) Act, 1978: Protection of Interest of Depositors Act

Provisions relating to Acceptance of Deposits u/s 58A of Companies Act 1956: MCA

Collective Investment Scheme 1999:SEBI

Listing of Securities: SEBIRBI Act

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Claims to be covered by exception in rule 2(b) clause (vi)"deposit" means any deposit of money with, and includes any amount borrowed by a company but does not include –(vi) any amount received by way of security or as an advance from any purchasing agent, selling agent, or other agents in the course of or for the purposes of the business of the company or any advance received against orders for the supply of goods or properties or for the rendering of any service

Substantial time gap between initial detection and taking up case for detailed investigation

Fraudsters always ahead of Regulators

Absence of coordination between various agencies when multiple agencies involved in investigation

Focus on detection than Prediction

White Collar crime vs. Street Crime

De-jure & De-facto protection

Time to break Silos

Bringing in Professionalism

Need for developing prediction capabilities

Corporate Governance: best disinfectant

Crime committed by person of respectability & high social status in the course of his occupationWhite-collar crimes are less violent & executed without a physical force Have a colossal injury: Loss of Trust

Street crime are sudden and accidental in nature without any defined occupational base

“It takes a crook to catch a crook”

Thank you