Fraud Sword-learning from mistakes
The Companies Act, 2013 incorporates strong safeguards for investors and stakeholders to protect them from frauds committed by companies, their management,
auditors, advisors and consultants. With the enactment of the Act, the companies will not only have to adopt safeguards that they are legally obliged to
protect the interest of the stakeholders, but all professionals associated with the company would have to be more cautious and diligent while undertaking
or advising the companies on any decisions.
UNDER THE COMPANIES ACT, 1956 (“The Old Act”)
Over past few years, several corporate and financial frauds have shattered the confidence of shareholders and foreign investors. It was therefore widely
expected that the government will introduce stringent penal regime involving strict penal liability for those committing fraud. Corporate governance codes
mostly involve self regulation and have not done much to curb frauds and other misdeeds.