Independent directors to be made more accountable: Government

NEW DELHI: To check corporate frauds, the government today said it is making independent directors and key managerial personnel more accountable besides strengthening the enforcement mechanism and empowering the Serious Fraud Investigation Office (SFIO).

"The role of key managerial personnel, board committees, independent director and auditors is being made more accountable in the management of the company," Corporate Affairs Minister M Veerappa Moily said in a written reply in Rajya Sabha while listing the steps being taken by the government to check corporate frauds.

Many of the changes, he added, have been incorporated in the Companies Bill, 2011, which is awaiting the Parliament approval.

"Strengthening of the enforcement mechanism to deal with corporate frauds is an evolving process as aspects of fraud touch upon many jurisdictions," he said, adding that the Companies Bill, 2011, provided for more effective action against companies which indulge in fraudulent actions.

Moily said the role of the key managerial personnel, board committees, independent directors and auditors is being made more accountable in the management of the company.

Also, the definition of 'officer in default' is also proposed to be revised to make it more relevant in the present corporate and economic environment, he said.

Moily said the SFIO was established in 2003 for investigating frauds of complex nature and or involving substantial public interest.