Companies Act 2013
Replacedthe Companies Act 1956,
making corporate fraud a criminal
offense. Introduced auditor rotation and
required a Director's Responsibility
Statement in Board reports.
SEBI
Enacted the SEBI Regulations 2015 to
mandate reporting and disclosure of
fraud.
ICAI
Emphasized detailed
reporting by auditors on
false assets and liabilities
Serious Fraud Investigation
Office
Gained statutory authority under
the Companies Act 2013 to
LEGAL AND REGULATORY ACTION
2.
Investigate All Inaccuracies:
Smalldiscrepancies can grow
into massive fraud; even minor
inaccuracies should be
investigated.
LESSON
LEARNT
Ruined Reputations: Corporate
fraud damages not only the
company but also the industry
and country's reputation.
Stronger Corporate Governance:
The scandal highlights the need
for more robust governance,
especially in selecting top-level
executives.
Stronger Corporate Governance:
The scandal highlights the need
for more robust governance,
especially in selecting top-level
executives.
3.
RECOM M ENDATION
S TO PREVENT
CORPORATE FRAUDS
Balance power between the Board and
shareholders.
Ensure transparency by timely disclosure of
decisions.
Shareholders should actively oppose harmful
decisions.
Conduct due diligence before investing;
actively
participate in meetings.
Blockholders should monitor the upper
management.
Independent directors should have
autonomy
and no company shares.
Financial information must be reported
accurately.
Follow corporate governance rules
