Government on Thursday said it has prosecuted over 13,000 companies during the three years ending 2008-09 for not following the provisions of the Companies Act. “As many as 13,437 companies were prosecuted for non-compliance of provisions of the Companies Act, 1956, during the last three years–2006-07 to 2008-09,” Corporate Affairs Minister Salman Khurshid told the Lok Sabha.
All locally incorporated companies are required to follow the provisions of the Companies Act and regularly file reports with the Registrar of Companies. Violation of these norms invites penalty of different degrees, depending on the gravity of offence. As many as 4,531 cases were pending for prosecution, Khurshid said, adding, “the process of filing prosecution in these cases has been initiated”.
There are more than eight lakh companies registered in the country today. Khurshid said the Companies Bill 2009, which is pending in the Lower House, proposes to increase the penalty for non-compliance.
“Stringent provisions have been proposed under different clauses in the Bill for non-compliance,” he said, adding the new law significantly raises the penalty for wrongly using suffix “Limited” or “Private Limited”.