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CA FINAL LAW INVESTIGATION AND ENQUIRY 10 MINS QUICK REVISION
CA Final Law Inspection Inquiry 1 & Investigation Min Summary Notes
CA Final Law Inspection Inquiry and Investigation Notes for Quick Revision have been provided below. Section 206 of the Companies Act, 2013 provides for the power to call for information, inspect books and conduct inquiries.
Power to call for information
A Registrar has powers to to call for any information or produce documents from the company, by a written Notice
On the receipt of a notice from ROC, it shall be the duty of the company and of its officers to furnish such information with in the time limit specified in the Notice.
Past Employees: Where such information relates to any preceding period, the officers who had been in the employment of the company shall also answer the ROC.
Inquiry by the Registrar
Based on the information submitted by the Company, the Registrar may call for an inquiry. Before the inquiry, Registrar has to inform the company of the allegations made against it by a written order.
The Central Govt shall also order the ROC or appoint an inspector to carry out any inquiry.
Search and seizure(S.209)
Seize of books and papers can be conducted, If the Registrar or Inspector has reasonable ground to believe that the books and papers of the Company,
Directors, Auditors and Key Managerial Personnel are likely to be destroyed or altered.
Before such seizure, an order from the Special Court is required.
Period of Seizure: Books can be seized for a maximum period of 180 days. ROC can extend this to 180 days more by a written order.
Investigation into affairs of company
CG May order investigation into the company,
1. On the receipt of a report of the Registrar or inspector;
2. A Special Resolution is passed for investigation;
3. By order of a court or tribunal;
4. in public interest, CG may call the investigation Suo Moto (For eg., this has happened in the case of Kingfisher).
Serious Fraud Investigation Office (SFIO)
SFIO is Headed by a Director. The Director shall be appointed by the CG, an officer not below the rank of a Joint Secretary.
SFIO shall consist of members who are experts in fields like Banking, Corporate Affairs, Taxation, Forensic Audit, Information Technology, Law etc.
SFIO shall Investigation into affairs of Company on receipt of a report of the Registrar, on request from any Department of CG or SG, an SR is passed in GM and in public interest.
Any offence disclosed by SFIO shall be covered under section 447 and therefore are cognizable.
Powers of inspector to conduct investigation
An Inspector appointed by CG to investigate into affairs of a company can also investigate the affairs of:
a. Its Subsidiaries or Holding Companies
b. Companies which were manged by same persons as MD or Manager.
c. Any other body corporate whose Board of Directors comprises nominees of the company.
Restrictions on shares and debentures
Company Law Board can put in place restrictions on shares and debentures, for a max period of 3 years. ( This is covered under Section 250 of the Companies Act, 1956 )
Upon facing the restrictions:
a. any transfer of those shares shall be void
b. where those shares are to be issued, they shall not be issued; and any issue thereof or any transfer of the right to be issued in addition to that, shall be void;
c. no voting right shall be exercisable in respect of those shares;
d. Except in a liquidation, no payment shall be made of any sums due from the company on those shares, whether in respects of dividend, capital or otherwise