Inspection, Investigation and enquiry under Companies Act 2013 - Especially short notes for CA Final Students

1. INSPECTION,
INVESTIGATION AND
INQUIRY

2. POWER OF REGISTRAR TO CALL FOR INFORMATION,
INSPECT BOOKS AND CONDUCT INQUIRIES
SECTION 206
• The registrar in his option make a call for information from documents filed by
company to oversee or from some other sources (example IT return)
• ROC should send written notice
• Company has to provide information within reasonable time as specified in notice
• It is the duty of the company and its officers and post officers to provide
information to ROC
• if the given information is not adequate, the registrar may issue additional return
notice for calling for the information

3. Inquiry by register
• If register is satisfied that business carried on for fraudulent or unlawful purpose or not as per
act, he will issue return notice informing allegations
• Central government has power to appoint inspector or direct ROC to inquire by issuing a
General or special order under section 206 (5)
• If proved, guilty company and officers in default punishable under section 447
Contravention
• Failure to furnish information – company and every officer will be fined upto rupees 100000
• Rupees 500 per day for continuing failure
POWER OF REGISTRAR TO CALL FOR INFORMATION,
INSPECT BOOKS AND CONDUCT INQUIRIES
SECTION 206

4. CONDUCT OF INSPECTION AND ENQUIRY
SECTION 207
Duty of director, officer or employee
• To produce all documents to registrar or inspector
• Furnish information, statements and explanation in such form as may be required
• To render all assistance in inspection
Power of register or inspector
• Make copies of books of accounts and other papers
• To place marks for identification in such books taken for inspection
• Notwithstanding any law, register or inspector shall have all powers are vested in civil court under code of civil procedure 1908
Penalty
• Director officer will be imprisoned and upto one year and penalised from rupees 25000 to 100000
• Deemed to havevacated office from date of conviction and disqualified from holding any office in company

5. REPORT ON INSPECTION MADE
SECTION 208
• Register or inspector should submit report to CG in writing after inspection for
enquiry including their findings and recommendations

6. SEARCH AND SEIZURE
SECTION 209
Circumstances
• if a register for inspector believes that the documents will be destroyed by the
company, then after getting order from special court, they can seize the
document or papers of auditor etc
Period of seizure:
• Seize books should be returned within 180 days
• Register on inspector can take copies and place identification marks
• All the provision related to sizer of code of criminal procedure will apply

7. INVESTIGATION INTO THE AFFAIRS OF THE
COMPANY - SECTION 210
• investigation in the opinion of Central Government on the result of report from
register in public interest or on intimation by special resolution passed by
company that affairs of the company ought to be audited
• investigation on the order by a court or tribunal – on intimation by court or
tribunal, CG order for investigation
• CG may appoint one or more inspectors for investigation.
• The company has to give a security not exceeding rupees 25000 for meeting the
expenses for investigation and it will be refunded if investigation ends in
prosecution

8. ESTABLISHMENT OF SERIOUS FRAUD
INVESTIGATION OFFICE (SFIO) – SECTION 211
• CG may establish SFIO for a company
• Headed by director appointed by CG not below the rank of joint secretary of
government having knowledge in corporate affairs
• Consists of such number of experts from various field appointed by CG
• the terms and conditions of SFIO shall be as such as may be prescribed

9. INVESTIGATION INTO THE EFFECTS OF THE
COMPANY BY SFIO – SECTION 212
• Where CG is of the opinion to investigate as per section 210 CG may by order assign
investigation to SFIO
• If SFIO is assigned with investigation, no other agency of CG or SG shall proceed investigation
• Shall conduct investigation in murder and procedure prescribing chapter XIV of companies act
and submit report to CG
• Notwithstanding code of criminal procedure, offence covered under section 447 is cognizable
• Submit report to CG on completion
• SFIO shall share informations of company with other investigating agency of CG, SG, police
security, IT department and also collect information from them relating to the offence being
investigated

10. SECTION 215
• Former body corporate organisation should not be appointed as inspector