Government plans 'warning system' to curb corporate frauds

Government plans 'warning system' to curb corporate frauds

Monday, 24 August 2009, 01:38 Hrs
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Hyderabad: Corporate Affairs Minister Salman Khursheed Friday said the government would set up an "early warning system" to pre-empt corporate fraud like that committed by the promoters of Satyam Computers, now Mahindra Satyam.

"Experts are working on a mechanism to detect if something has gone wrong and take remedial measures," Khursheed told reporters on the sidelines of a national conference on corporate governance, but declined to elaborate.

Addressing the conference, Khursheed called for a system to restrict the number of directors of a company and to ensure that nobody becomes director without knowing his duties and responsibilities.

"It is necessary that we move to a system where nobody becomes a director without certain amount of familiarisation and training and the declaration that they are familiar with their duties," he said.

"We also need to restrict number of directors. We do not have super humans who can attend 20 to 25 companies, read everything and be responsible. However, there may be special cases and special situations."

Khursheed also called for consensus between his ministry and the corporate sector on the number of companies that is humanly possible for a person to be director of.

The minister said the new Companies Bill was prepared by people who had worked in the light of experiences of last six months.

"The essence of what we want to do is there in the draft. There will be deliberations by the standing committee. People like you can give evidence and your suggestions will be incorporated," he said.
Source: IANS
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