Section 227 of the Companies Act, 2013
Section 227 of the Companies Act, 2013 relates to the powers of inspectors during the course of an investigation into company affairs.
🔹 Section 227 – Powers of Inspector to Conduct Investigation into Affairs of Related Companies, etc.
✅ Key Provisions:
Wider Investigation Scope:
If an inspector appointed under the Act (e.g., under Section 210 or 212) believes it is necessary for a full and complete investigation, he may investigate the affairs of:
Holding company
Subsidiary company
Associate company
Other companies related through business transactions or common management
Approval Required:
The inspector must obtain prior approval from the Central Government before starting investigation into such related companies.
Purpose:
This provision is to ensure that fraud or irregularities are not hidden through complex structures or inter-company dealings.
It allows the inspector to follow the trail wherever it leads in the corporate network.
🔸 Why Section 227 is Important:
It prevents corporate fraud from being hidden behind layers of companies.
Empowers inspectors to look beyond the company under investigation, ensuring full disclosure and accountability.
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