Govt vests powers in SFIO to make arrests under Companies Act
Published: Aug 30, 2017
By TIOLCORPLAWS News Service
NEW DELHI, AUG 30, 2017: The Ministry of Corporate Affairs has framed a new set of Rules, titled the Companies (Arrests in connection with Investigation by Serious Fraud Investigation Office) Rules, 2017. Under these new rules, where the Director, Additional Director or Assistant Director of the Serious Fraud Investigation Office (SFIO), which probes the affairs of a company, other than a Government company or foreign company, has reason to believe that any person has been guilty of any offence punishable under Section 212 of the Act, such person may be arrested. However, the reasons for believing that such person commited an offence punishable u/s 212, have to be recorded in writing. Moreover, where an Additional Director or Assistant Director propose to enforce an arrest, the prior approval of the Director must be obtained. Accordingly, the Director of the SFIO would now be responsible for all decisions pertaining to arrest of persons.
Now, where a person sought to be arrested for offences punishable u/s 212, is in connection with a Government run company or a foreign company, such arrest can only be made with prior approval of the Central Govt. However, intimation of such arrest is required to be given to the Managing Director of such firm, and if the person being arrested holds the office of Managing Director itself responsible, then the intimation of arrest has to be given to the Secretary of the administrative ministry concerned.