Corporate frauds: Reporting, investigation and action

The Companies Act 2013 deals the issue of fraud much extensively and defines it as an act of concealment, deceit or abuse of position by any member of a company that can either injure the interests of the company or can allow that member to take undue advantage of the same. The reporting of corporate frauds at any level needs to be handled well by the company to ensure proper investigation and action that can prevent such cases in the future.

The various possibilities of corporate fraud that need to be reported can include furnishing false or incorrect information or even suppressing any significant information for personal gains. Tricking people into investing money for fraudulent gains, illegal transfer of shares, failure to pay pending deposits or deliberately providing incorrect particulars in case of filling up forms and other related acts all account for corporate fraud. Reporting for the same can call for serious legal penalties.

In order to handle the reporting and investigation of corporate frauds, the SFIO or Serious Fraud Investigation Office has been set up by the Central Government under the Companies Act 2013. Once the report of any possible fraud reached the inspector or the registrar, the SFIO will proceed with the investigation and all fraud related offences will be subject to stringent penalties that have been prescribed in advance.