Kastury & Talati
MCA Tightens Cos Disclosure Norms
Mandatory To Give Office Address Details, Info On Directors
Companies from now on will have to provide verifiable details of their directors and office premises in a tightening of rules which is being viewed as significant because of the controversy surrounding the Purti group linked to BJP chief Nitin Gadkari.
The new requirement has been prompted by the practice of companies using ghost names and addresses to secure and retain registration. Although rampant and fairly known, the practice stormed into national discourse following the disclosure that names and addresses submitted by Purti group of its directors were fake.
Sources acknowledged that the requirement to satisfy authorities about the genuineness of the directors and the addresses submitted by companies for registration was an addition to the mandatory yearly filing by companies. However, they maintained that it was part of their effort to make the conduct of companies more transparent.
The ministry of corporate affairs has been conducting an investigation into the affairs of Purti group which, as a series of reports in TOI showed, had mentioned phantom addresses of its directors who included Gadkaris driver and astrologer. Investigations had shown that money flowed into Purti Power and Sugar Ltd through a complex web of companies registered across the country.
The ministry of corporate affairs on Friday issued advertisements asking corporates and professionals to provide details of registered offices, whether it is owned or leased and proof of registered office address has been made mandatory. It has also asked for current occupation and educational qualifications of directors. This would serve as an affidavit by the applicant for a DIN number. The ministry has given 180 days to rectify mistakes and has cautioned corporates and professionals to be more vigilant and careful in certification and verification while providing the details in the forms to avoid penal action.
According to the MCA advertisement the move is aimed at minimizing registration of bogus or misleading addresses as registered offices of companies and fictitious generation of Director Identification Numbers (DIN). The ministry has issued a notification on the issue on December 24.It has made certain changes to electronic form 18,DIN1 and DIN4 to ensure that corporates and professionals provide correct information.
Corporate affairs minister Sachin Pilot told TOI the move has been made to ensure checks and balances and strengthen the system.
The suggestion was there to strengthen the system. This is to ensure that there are checks and balances and everything is online and transparent, Pilot said.
Several experts said that some of the changes would ensure that authentic information is made available. Earlier, there were instances where one room served as an address for several companies. This kind of practice will stop, said a lawyer specializing in company affairs.
Times of India, New Delhi, 29-12-2012