INVESTIGATION INTO AFFAIRS OF COMPANY [SECTION 210]:
Section 210 of the Companies Act, 2013 provides for Investigation into affairs of company. According to this section:
(i) Investigation in the opinion of Central Government [Sub-section (1)]: Where the Central Government is of the opinion, that it is necessary to investigate into the affairs of a company, it may order an investigation into the affairs of the company.
Central Government may order to investigate-
On Intimation of a Special Resolution passed by a company that the affairs of the company ought to be investigated; or
On the receipt of a report of the Registrar or inspector under Section 208; or
Suo moto in Public Interest.
(ii) Investigation on the order by a court or the Tribunal [Sub-section (2)]: Where an order is passed by a court or the Tribunal in any proceedings before it that the affairs of a company ought to be investigated, the Central Government shall order an investigation into the affairs of that company.
(iii) Appointment of inspectors [Sub-section (3)]: For the purposes of this section, the Central Government may appoint one or more persons as inspectors to investigate into the affairs of the company and to report thereon in such manner as the Central Government may direct.
According to the Companies (Inspection, investigation and inquiry) Rules, 2014:
(i) Applicant to pay security: The Central Government may before appointing an inspector under sub-section (3) of Section 210, require the applicant to give a security not exceeding 25,000 rupees for payment of the costs and expenses of investigation as per the criteria given in the said rule.
S.no
Turnover as per previous year balance sheet
Amount of Security
Turnover up to Rs. 50 Crores
Rs. 10,000
Turnover more than Rs. 50 crores and upto Rs. 200 crores
Rs. 15,000
Turnover more than Rs. 200 crores
Rs. 25,000
(ii) Refund of security to applicant: Further, the above referred security shall be refunded to the applicant if the investigation results in prosecution.
ESTABLISHMENT OF SERIOUS FRAUD INVESTIGATION OFFICE [SECTION 211]:
Section 211 of the Companies Act, 2013 provides for the establishment of Serious Fraud Investigation Office as under:
(i) Setting up of Serious Fraud Investigation Office (SFIO) [Section 211 (1)]: The Central Government shall, by notification, establish an office to be called the Serious Fraud Investigation Office to investigate frauds relating to a company.
(ii) Continuation of earlier SFIO: Until the SFIO as mentioned above is established, the Serious Fraud Investigation Office set-up by the Central Government in terms of the Government of India Resolution No. 45011/16/2003-Adm-I, dated 2nd July, 2003 shall be deemed to be the Serious Fraud Investigation Office for the purpose of this section.
(iii) Composition of SFIO [Section 211 (2)]: The SFIO shall be:
(a) Headed by a Director, and
(b) Consist of such number of experts from the following fields to be appointed by the Central Government from amongst persons of ability, integrity and experience in:
Banking
Corporate Affairs
Taxation
Forensic Audit
Capital Market
Information Technology
Law
Investigation
Cyber Forensic
Financial Accounting
Management Accounting
Cost Accounting
Such other fields as may be prescribed.
(iv) Appointment of Director [Section 211 (3)]: The Central Government shall, by notification, appoint a Director in the SFIO, who shall be an officer not below the rank of a Joint Secretary to the Government of India having knowledge and experience in dealing with matters relating to corporate affairs.
(v) Appointment of Experts Officers & Employees [Section 211 (4)]: The Central Government may appoint such experts and other officers and employees in the SFIO as it considers necessary for the efficient discharge of its functions under this Act.
According to Rule 3 of the Companies (Inspection, Investigation and Inquiry) Rules, 2014, the Central Government may appoint persons having expertise in the fields of investigations, cyber forensics, financial accounting, management accounting, cost accounting and any other fields as may be necessary for the efficient discharge of Serious Fraud Investigation Office (SFIO) functions under the Act.
(vi) Terms and conditions of service [Section 211 (5)]: The terms and conditions of service of Director, experts, and other officers and employees of the SFIO shall be such as may be prescribed
The terms and conditions of service of the above mentioned officers have been laid down in the Rule 4 of the Companies (Inspections, Investigations and Inquiry) Rules, 2014.
