Press Information Bureau

Government of India

Ministry of Corporate Affairs

12-December-2011 18:57 IST

Some Complaints have been received against a few companies after getting just a registration number from the Registrar of Companies are active in the business of obtaining money under various schemes by alluring people, particularly in rural areas , on false promise of returns. However, regulation of collection of money by companies under various schemes does not fall within the ambit of the Companies Act, 1956. In order to detect possible violations of the Companies Act, 1956, inspection has been ordered under Section 209A of Companies Act, 1956 in respect of these companies.

The Minister of State for Ministry of Corporate Affairs Shri R.P.N. Singh gave this information in a written reply in Rajya Sabha today.

ST/bs

Regulation of company fund collection leads to inspections to detect possible Companies Act violations and protect investors. Inspections have been ordered under Section 209A of the Companies Act, 1956 to examine companies that, after obtaining only a registration number, solicit money under various schemes by false promises-particularly in rural areas-to detect possible violations of company law and determine whether company formalities are being used to facilitate deceptive fundraising.