In order to check the misuse of funds raised by companies via public offerings, the government has directed the Registrar of Companies (RoCs) to look for diversion of IPO funds while inspecting their annual accounts. In a directive to RoCs and Regional Directors, the Corporate Affairs Ministry has asked them last week to check for fund diversions by companies from the objectives stated in the prospectus and related party transactions, and carry out inspections soon after the filing of annual accounts.
“It was often noticed that inspections carried out by RoCs on end use of IPO money needed a relook by the MCA. Now, we have given them a comprehensive check list of the areas they need to look into while carrying out inspections,” an official source told PTI.
ROC is neither competent nor does it have the necessary infrastructure in the form inter alia of qualified and trained officers. This job ought to be given to the IRS officers/income tax department as part of their regular, ordinary job.