The Company Affairs minister has said that while the government’s crusade against vanishing companies and defaulters will continue, it will soon introduce a scheme to withdraw / settle cases involving technical violations of company law. It is noteworthy that as of March 2004, there were 45,562 cases pending in various courts of India.

Further, the government will now pay particular attention to the major defaulters and is in the process of constituting an expert group to render advice on steps to strengthen the Serious Frauds Investigation Office (SFIO).

The SFIO is a relatively new organization. It commenced functioning in October 2003. It was set up in the backdrop of the stock market scams, failure of non banking financial companies and phenomena of vanishing companies. The SFIO is a multi-disciplinary organization having experts from the financial sector and capital markets as well as from the fields of accountancy, forensic audit, taxation, law, information technology, company law, customs and investigation. The criteria for referring cases to the SFIO by the Central Government are:

1. complexity and having inter-departmental and multi-disciplinary ramifications;
2. substantial involvement of public interest, either in terms of monetary misappropriation or in terms of persons affected; and
3. the possibility of investigation leading to or contributing towards a clear improvement in systems, laws or procedures.