The government on Monday said steps were being taken to ensure 'adequate accountability' of auditors, solicitors and managers to a public issue of a vanishing company.
Vanishing companies are believed to have eloped with a whopping Rs 10,000 crore (Rs 100 billion) of investor money, forcing the government to put the entire investigating mechanism on a high alert in order to track down such entities.
"The issue of vanishing companies needs to be tackled and we are taking several measures to keep them under the scanner," the Company Affairs Minister Prem Chand Gupta said at a seminar on corporate governance.
Among other steps, the government is also taking measures to establish the veracity of promoters and directors of a company at the time it is established. "This helps in ensuring that people with dubious and questionable track records do not enter the market and fool investors," Gupta said.
The ministry is also contemplating issuing advertisements in leading national and regional newspapers, giving details of such promoters to sensitise the public. Gupta said the government also wanted to tackle the presence of celebrities on the board of some companies.
"By charging a fee for being a non-executive member of the board, they can lure many to invest in a company. However, in case of a default by the company concerned, there should be no compromise on compliance," he said, adding that the government was 'considering changes' keeping this aspect in mind.
"However, on the issue of whether they should be regulated by the government or flexibility should be given to companies on the matter, our government is committed to de-regulation and minimum control," he said, though pointing out that some kind of government monitoring was also required in the backdrop of cases like Enron and Worldcom.
Gupta said the government was 'opposed to any kind of policing of the corporate sector' and was taking steps to ensure transparency and simplicity.
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