The Minister of Corporate Affairs has said that whenever any case of a company found violating the provisions of Section 383A of the Companies Act, 1956 comes to the notice, Show Cause Notices are issued to the company and defaulting directors. Giving this information in written reply to a question in the Lok Sabha today, Shri Salman Khurshid, Minister of Corporate Affairs, informed the House that after consideration of the reply to the Show Cause Notices, prosecutions are filed in the jurisdictional Courts. Though certain companies do not appoint whole time Company Secretary due to their poor financial position, stoppage of business operations, non-availability of qualified company secretaries at remote places, prosecutions are filed regularly on year-to-year basis. During 2008-09, prosecution against 52 companies for non-compliance of Section 383A of the Act were filed. In the year 2009-10, prosecutions against 39 companies have been filed. Besides, show cause notices in respect of 210 companies have also been issued during the year 2009-10.
Companies are taking the advantage of the exemptions given in sec 383A like poor financial position, stoppage of business operations, non-availability of qualified company secretaries at remote places etc. So ministry should examine the genuinity and take strong action in the nation interest.
Regards