MCA for early warning system to prevent scams

In a move to prevent recurrence of Satyam (SATYAM.BO : 90.55 -2.2)-like frauds, the ministry of corporate affairs (MCA) is considering a proposal for creating an early warning system. With open digital disclosures on track, MCA is seriously thinking on an early warning system which might flag incidences immediately and remedial measures can be sought.

Inaugurating a two-day conference on corporate governance organised by the Institue of Directors (IOD) in Hyderabad, minister for corporate affairs Salman Khurshid said the ministry is open to new ideas to demystify corporate governance as it is a democrative commitment and protection of minority shareholders is an important factor to it.

He said that while it is important to keep competition live, the future of industrial democracy must have an important role for corporate governance. The MCA is also open to suggestions for a shorter and simpler Companies Bill.

Working on a principle of trust but verify, Khurshid said while it is essential for trust in the corporate sector, it need not be a blind trust as it is a fact that there are vanishing companies. Besides, the number of directorships in a company have to be restricted except during special circumstances as it is not a joy ride but holding to a position of responsibility.