Provisions of 

Companies 
Act 2013
Clause Gist of Provision Remarks Action Points

206 CG can order inquiry by  No  provision  for  Preliminary  Can  this  be 

an inspector inquiry by SFIO incorporated  so  that 
preliminary 
investigation  is  done 
within  a  fixed  time 
frame  before  full 
fledged  investigation 
starts?
207 Lays  down  Procedure  to  Mainly  pertains  to  RoC  unless  an 
be  adopted  for  Officer  of  SFIO  is  appointed  as 
inspection or inquiry and  Inspector u/s 206
powers
208 Submission of report  ‐do‐
including 
recommendations for 
investigation
Clause Gist of Provision Remarks Action Points
209 Power  of  search  & 
seizure  by  inspector 
with  order  from 
special court
Can  enter  premises  Power  more  Can the anomaly
where  books  of  comprehensive  as  between 209 & 220
accounts  and  papers  compared to provision of  be removed?
of  a  company  or  clause 220
relating  to  KMP, 
Director,  Auditor,  CS 
kept
Provisions  of  Cr  PC 
relating to S&S apply
Clause Gist of Provision Remarks/ Action Points
210 CG  may  order  This is general provision 
investigation  into  the  relating to investigation and 
affairs of a company: not specific to SFIO
• On receipt of report of 
Registrar or Inspector
• Passing  of  a  special  *A  mechanism  would  be 
resolution  by  the  required  to  facilitate  this 
company provision
• In public Interest *Public Interest has to be 
defined
Shall order investigation 
when court passes an 
order
CG may appoint one or  Here CG appoints Inspectors 
more inspectors not necessarily from SFIO
Clause Gist of Provision Remarks Action Points
211 CG  has  to  notify  establishment  of  Reference to Corporate Affairs , Laws as one of the  •Corporate  Affairs  in  211(2)(ii) 
SFIO fields of expertise  needs  to  be  replaced  with 
Corporate Laws
•Whether  Laws  needs  to  be 
changed to General Laws?
•A  new  notification  to  be 
prepared  with  a  fresh  mandate 
for SFIO

Other  fields  to  be  prescribed  in  Police,  Cyber  Forensic  Experts, 
Rules Data  Analysts,  Statistician, 
Economists,  Financial  Analysts 
etc  may  be  specified  with  room 
for flexibility

• Terms  and  conditions  of  service  While  specifying  Term  &  conditions  for  experts,  •Rules to be framed
of  Director, Experts, other officers  provision  to  be  made  for  hiring  consultants  on  •Structure  of  SFIO,  Creation  of 
and employees to be prescribed contract basis for skill sets not available within the  Permanent  Cadre,  New 
government,  Empanelment  of  CA/FA  firm,  Recruitment  Rules,  policy  of 
Appointment  of  Company/Public    Prosecutors,  encadrement  to be specified
Legal Counsels •Delegation  of  power  to 
Director, SFIO to hire consultants 
to be considered
Claus Gist of Provision Remarks Action Points
e
212(1) CG  considers  that  A new notification to be prepared 
investigation  to  be  done  with a fresh mandate for SFIO
by  SFIO  on  the  basis  of 
following:
• On receipt of report of 
Registrar or Inspector u/s 
208
• Passing  of  a  special  *A  mechanism  would  be  required 
resolution by the company to facilitate this provision
• In public Interest *Public Interest has to be defined

• Any request from any  *A coordination mechanism 
Department of CG, State  would be required to facilitate this 
Government provision
CG assigns case to SFIO by an 
order and Director, SFIO 
designate Inspectors
Clause Gist of Provision Remarks/ Action Points
212(2) Once a case assigned to SFIO,  Since  Fraud  now  is  comprehensively 
no  other  agency  of  the  defined  only  under  the  Companies  Act, 
Central  or  State  Govt.  shall  no  other  agency  will  conduct 
investigation  relating  to  fraud  defined 
proceed  in  respect  of  any  under the Companies Act
offence under this Act
Concerned agency shall transfer  *A  mechanism  would  be  required  to 
relevant documents and records  facilitate  this  provision.  Coordination 
to SFIO unit within SFIO to be set up

SFIO  will  submit  a  report  to  CG  • MCA’s  order  assigning  cases  to  SFIO 
within  such  period  specified  in  must  mention  the  possibility  of 
the order extension. 
• Will  require  a  check  list  for  MCA  in 
respect  of  procedural  changes  provided 
for in the Act
Director, SFIO shall cause the  • Concept of I O introduced 
affairs to be investigated by an  • IO will have the power of Inspector 
Investigating Officer (IO) specified u/s 217
Clause Gist of Provision Remarks/Action Points
212 (6) Offences  covered  under  sub‐sections  (5)  • Interplay  between  447  and  212(6)    is 
and (6) of section 7, section 34, section 36, 
subsection  (1)  of  section  38,  sub‐sections 
significant
(5)  of  section  46,  sub‐section(7)  of 
section56  sub‐section  (10)  of  section  66,  •Explanatory Note would be required
sub‐section (5) of section 140,, sub‐section 
(4)  of  section  206,  section  213,  section 
229,  sub‐section  (1)  of  section  251,  sub‐
•Other  Agencies/different  authorities 
section (3) of section 339 and section 448  within  MCA  involved  in  implementing 
which  attract  the  punishment  for  fraud  some of these sections
provided in section 447 of this Act shall be 
cognizable
Offences  covered  u/s  447  are  the  Offences  covered  are  during  the  entire 
following:
7(5) • furnishing  any  false  or  incorrect 
life‐cycle  of  a  corporation  from 
particulars of any information in any of the  incorporation to winding up
documents  filed  with  the  Registrar  in 
relation to the registration of a company 
7(6) • Furnishing  any  false  or  incorrect 
information  or  representation  or  by 
suppressing  any  material  fact  or 
information  in  any  of  the  documents  or 
declaration filed or made for incorporating 
34 such company, or by any fraudulent action
• Misstatement in Prospectus
Clause Gist of Provision Remarks/Action Points
212 (6) Other  offences  covered  u/s  447  are 
the following:
•Knowingly,  recklessly  making  any 
36 statement,  promise  or  forecast  which 
is  false,  deceptive  or  misleading, 
deliberately  concealing  material  facts 
to induce another person to enter into 
(a) agreement for acquiring, disposing, 
subscribing,  underwriting  of  securities 
(b)  agreement  to  secure  profit  from 
yield  of  securities  © agreement  for 
obtaining  credit  facilities  from  banks, 
financial institutions
38(1) • Making application in fictitious name 
for  acquiring  or  subscribing  to 
securities,  making  multiple 
applications,  inducing  companies  to 
allot, register or transfer securities
• Issuance  of  duplicate  shares  with  an 
46(5) intent to defraud
56(7) • depository  or  depository  participant, 
transferring shares with an intention to 
defraud 
Clause Gist of Provision Remarks/Action Points
212 (6) Other  offences  covered  u/s  447  are 
the following:
66(10) •Officer  of  a  company  (a)  knowingly 
concealing  the  name  of  any  creditor 
entitled  to  object  to  reduction  of 
capital; 
(b)  knowingly  misrepresenting  the 
nature or amount of the debt or claim 
of any  creditor; or 
(c)  abets  or  is  privy  to  any  such 
concealment or misrepresentation
140(5) • Auditor  of  a  company  against  whom 
final  order  has  been  passed  by  the 
Tribunal  for  acting  in  a  fraudulent 
manner or abetted or  colluded in any 
fraud  by,  or  in  relation  to,  the 
company  or  its  directors  or  officers, 
directly or indirectly
206(4) • where  business  of  a  company  has 
been  or  is  being  carried  on  for  a 
fraudulent or unlawful purpose
• Post  investigation  when  ordered  by 
213 the  Tribunal,  if  found  that  company 
was  formed  with  a  fraudulent  or 
unlawful  purpose,  business  conducted 
to defraud creditors,  any other person
Clause Gist of Provision Remarks/Action Points

212 (6) Other  offences  covered  u/s  447  are  the  •Once a case is assigned for investigation, the IO 

following: has  to  immediately  serve  an  order  on  the 
• When required to make a statement, give an 
229 company  and  other  employees  or    auditors  or 
explanation  during  the  course  of  inspection, 
inquiry or investigation, — other persons having custody of documents not 
(a) destroys, mutilates or falsifies, or conceals  to  tamper  with  the  documents,  remove 
or tampers or unauthorizedly removes, or is a  documents  unauthorized  ly  etc.  Manual  must 
party  to  the  destruction,  mutilation  or  contain this instruction as part of the check list 
falsification  or  concealment  or  tampering  or  of  things  to  be  done    immediately  after 
unauthorized  removal  of,  documents  relating 
assignment of a case
to  the  property,  assets  or  affairs  of  the 
company or the body corporate; 
(b)  makes,  or  is  a  party  to  the  making  of,  a 
false  entry  in  any  document  concerning  the 
company or body corporate; or 
(c)  provides  an  explanation  which  is  false  or 
which he knows to be false
Clause Gist of Provision Remarks/Action Points
212 (6) Other  offences  covered  u/s  447  are 
the following:
• Fraudulent application for removal of 
251 name  of  a  company  from  the  register 
of companies
• Fraudulent conduct of business in the 
339(3) course of winding up of a company
• Making a false statement or omitting 
448 any  material  fact  in  any  Return, 
Report,  Certificate,  Financial 
Statement,  Prospectus,  Statement  or 
other document required by or for the 
purpose  of  the  Act  and  Rules  made 
there under 
No person accused of any offence  MCA  to  issue  a  separate  order 
which  is  cognizable  shall  be  authorizing   other officers of SFIO to file 
released on bail unless: complaint  in  special  court  through  a 
• Public  prosecutor  given  an  general  or special order
opportunity to oppose release
• Special  court  shall  not  take 
cognizance  except  upon  a 
complaint  in  writing  by  Director, 
SFIO;  any  officer  of  CG 
authorized  by  a  general  or 
special order
Clause Gist of Provision Remarks/Action Points
212 (8) Director,  Addl  Director,  Asst  MCA  has  to  pass  such  an  order  of 
Director,  SFIO  can  arrest  any  authorization,  restricting  authorization 
person  guilty  of  any  offence  to only Director, SFIO to start with. 
punishable  under  sections 
referred  in  212(6),  when  SFIO  has  to  prepare  a  detailed  manual 
authorized  by  CG  by  general  or  on Arrest
special  order,  after  recording 
reason on the basis of material in 
his possession
212(9) Director,  Addl  Director,  Asst  Rules  have  to  be  framed  regarding 
Director,  SFIO    shall  immediately  manner of forwarding the materials and 
after arrest forward a copy of the  period  for  which  the  materials  have  to 
order  along  with  materials  in  his  be kept
possession  to  SFIO  in  a  sealed 
cover  in  such  a  manner  as  may 
be prescribed and  SFIO will  keep 
such  order  and  material  for  a 
period as may be prescribed
Clause Gist of Provision Remarks/Action Points
212  In  case  SFIO  has  been  Mechanism  for  inter‐agency 
(17)(a) investigating  any  offence  under  coordination has to be worked out. 
this  Act,  any  other  investing  
agency  ,  State  Govt.,  Police  Some of the cognizable offences defined 
Authority, income tax authorities  in  section  212(6)  may  be    in  the 
having  any  information  or  knowledge of SEBI and other agencies
documents  in  respect  of  such 
offence  shall  provide  all  such 
information  or  documents 
available to SFIO
SFIO  will  share  information  or  SFIO manual needs to spell out the 
212(17) document  with  it  with  any  sharing mechanism
investigating agency, State Govt., 
(b) Police  Authority,  income  tax 
authority  in  respect  of  any 
offence being investigated by any 
other law
Clause Provision
If the Director, Additional Director or Assistant
212 (8) Director of Serious Frauds Investigation Office
authorised in this behalf by the Central
Government by general or special order, has on the
basis of material in his possession reason to
believe (the reason for such belief to be recorded in
writing) that any person has been guilty of any
offence punishable under sections referred to in
sub-section (6), he may arrest such person and
shall, as soon as may be, inform him of the
grounds for such arrest.
Implementation
1. The  Director,  Addl.  Director  and  Asstt.  Director  has 
power  to  arrest.  Hence  the  Investigating  Officer  has  to 
be nominated only out of above officers of SFIO because 
the  arresting  officer  will  have  to  keep  material  in  his 
possession for which he has reason to believe and which 
shall be reduced in writing that the person to be arrested 
is guilty of offence.
2. The above provision may result into practical difficulties 
considering  the  shortage  of  officers  at  this  level  and 
therefore  it  requires    suitable  amendments  which  may 
be as under:
i.  All  the  officers  of  the  rank  Deputy  Director,  Joint 
Director, Sr. Asstt. Director may be included.
ii. While authorising Director, SFIO under this  section by 
the  Central  Government  through  a  General  or  Special 
Order,  the  Director,  SFIO  may  also  be  authorised  to 
nominate  officers  of  any  rank  to  exercise  powers  of 
arrest  so  that  officers  so  nominated  by  Director  could 
also  be  appointed  as  Investigating  Officers.  Legal 
possibility of delegation of this power by Director may be 
looked into.  
3.      The principles regarding arrest as laid down by Hon’ble 
Supreme  Court    in  the  case  of  D.  K.  Basu  are  to  be 
followed in respect of arrest to be made by SFIO.
Clause Provision
On receipt of the investigation report, the Central
212 (14) Government may, after examination of the report
and after taking such legal advice, employment of
the company or any other person directly or
indirectly connected with the affairs of the
company.
Notwithstanding anything contained in this Act or
212(15) in any other law for the time being in force, the
investigation report filed withthe Special Court for
framing of charges shall be deemed to be a report
filed by a police officer under section 173 of the
Code of Criminal Procedure, 1973.
Implementation
This  clause  relates  to  sanction  of  prosecution  to  be 
given  by  Central  Government  after  obtaining  legal 
advice  on  the  recommendations  made  in  the 
Investigation    Report  submitted  by  SFIO.  In  this 
regard  the  time  taken  by  the  Central  Government  is 
to  be  excluded  for  the  purposes  of  computing  the 
period  of  limitation  u/s  470(3)  of  Cr.Pc.  Therefore, 
Rules  and  Standard  Proforma  for  the 
sanction/consent  of  the  Central  Government  are  to 
be devised. 
While  preparing  the  investigation  report  provisions 
of section 173 Cr.Pc. are to be complied . 
Clause Provision Implementation
Notwithstanding anything contained in this Act or
217 (11) in the Code of Criminal Procedure, 1973 if, in the
•SFIO may be designated as Nodal Agency by MCA in 
course of an investigation into the affairs of the relations to Corporate Frauds. 
company, an application is made to the competent •Standard Proforma to be devised.
court in India by the inspector stating that evidence
is, or may be, available in a country or place
•MCA to enter into Agreements with the Government 
outside India, such court may issue a letter of of Foreign States for reciprocal arrangements
request to a court or an authority in such country •Inter‐agency coordination with other nodal agencies 
or place, competent to deal with such request, to
examine orally, or otherwise, any person, supposed like, CBI, ED to be worked out
to be acquainted with the facts and circumstances
of the case, to record his statement made in the
course of such examination and also to require
such person or any other person to produce any
document or thing, which may be in his possession
pertaining to the case, and to forward all the
evidence so taken or collected or the authenticated
copies thereof or the things so collected to the
court in India which had issued such letter of
request:
Provided that the letter of request shall be
transmitted in such manner as the Central
Government may specify in this behalf:
Provided further that every statement recorded or
document or thing received under this sub-section
shall be deemed to be the evidence collected
during the course of investigation
Clause Provision
220. (1) Where in the course of an investigation under
220 this Chapter, the inspector has reasonable grounds to
believe that the books and papers of, or relating to, any
company or other body corporate (b) seize
books and papers as he considers necessary after
allowing the company to take copies of, or extracts from,
such books and papers at its cost for the purposes of his
investigation.
Implementation
The  word  ‘search’ is  missing,  which  may  cause 
operational difficulties and may lead to litigation. 
This  section  can’t  be  invoked  in  case  of  Company 
Secretary,  Auditors,  Key  Managerial  Personnel, 
though it can be invoked under section 209. 
The authority to issue Search and Seizure warrant has 
not been specified. 
Clause Gist of Provision
447 any person who is found to be guilty of fraud,
shall be punishable with imprisonment
for a term which shall not be less than
six months but which may extend to
ten years and shall also be liable to fine
which shall not be less than the amount
involved in the fraud, but which may
extend to three times the amount
involved in the fraud:
Remarks
Any person found to be guilty of fraud as 
defined  in  this  section  is  liable  for 
punishment
SFIO has to quantify amount involved in 
Fraud so that fine can be determined

Provided that where the fraud in question Public interest has to be defined as term 

involves public interest, the term of
imprisonment shall not be less than of  imprisonment  is  linked  to  fraud 
three years. involving public interest. 
“fraud” in  relation  to  affairs  of  a  company  or  Fraud has now an inclusive definition
any  body  corporate,  includes  any  act, 
omission, concealment of any fact or abuse of 
position committed by any person or any other  Punishment for fraud includes other 
person  with  the  connivance  in  any  manner, 
with  intent  to  deceive,  to  gain  undue 
offences specified in 212(6) which are 
advantage  from,  or  to  injure  the  interests  of,  cognizable offences
the  company  or  its  shareholders  or  its 
creditors or any other person, whether or not 
there is any wrongful gain or wrongful loss;  Interplay between this definition and 
(ii) “wrongful gain” means the gain by unlawful  other cognizable offences to be 
means of property to which the person gaining 
is not legally entitled; 
understood
(iii) “wrongful loss” means the loss by unlawful 
means  of property  to  which the  person  losing  Coordination mechanism with other 
is legally entitled
agencies to be worked out
Clause Gist of Provision Remarks/Action Points

143(12) Reporting of Fraud by Mechanism for reporting to be

Auditors worked out
CLAUSE CLAUSE WHAT HAS TO BE PRESCRIBED
NO.
211 Establishment of Serious (a)Other fields, in which the
Fraud Investigation Office. experts appointed under
Serious Fraud Investigation
Office, shall have experience,
may be prescribed.
(b)Terms and conditions of
service of persons appointed
under Serious Fraud
Investigation Office shall be
such, as may be prescribed
212 Investigation into affairs of (a) Manner in which copy of
Company by Serious Fraud Central Government order
Investigation Office. shall be forwarded, along
with the material in his
possession, to Serious Fraud
Investigation Office, may be
prescribed
(b)Period for which Serious
Fraud Investigation Office
shall keep such order, may
be prescribed.
CLAUSE CLAUSE WHAT HAS TO BE
NO. PRESCRIBED

214 Security for payment of Amount of security for

costs and expenses of payment of costs and
investigation. expenses of investigation,
which the applicant may be
required to give, before
Central Government
appoints inspector for
investigation, may be
prescribed

218 Protection of employees Manner and fees, for

during investigation. making an appeal to
Appellate Tribunal, to be
prescribed