Government uses private spies to trace defaulter companies, directors: MCA

NEW DELHI: With an aim to resolve investors' complaints regarding non-traceability of defaulter companies and their directors, the government takes the help of private detective agencies to track such firms and persons, the Ministry of Corporate Affairs said today.

Usually, FIRs are filed in case a company or its directors are not traceable, and "if circumstances warrant, private detective agencies are also engaged to trace out the disappeared companies and their directors," Minister of State for Corporate Affairs R P N Singh informed Lok Sabha.

In addition, he said, the ministry has also devised an electronic form for the companies which come out with initial public offers for monitoring the utilisation of funds raised through public offers and also detect diversion of funds.

The Minister said government receives various types of complaints against companies, such as non-traceability of the firms and their directors.

Among other complaints are misuse of public funds by way of diversion of funds and non-fulfilment of terms and conditions for the completion of the projects as per the time schedule given in the prospectus, he added.

In 2011-12, the government had filed only one case for such violations by the companies, while during 2010-11 and 2009-10, five and 27 cases, respectively, were filed against firms, he said.

In case a company is found violating provision of the Companies Act, prosecutions are filed against the companies and their officers.