Section 263 of the Companies Act, 2013
Section 263 of the Companies Act, 2013 deals with the Power of the Central Government to Direct Inspection, Inquiry or Investigation into a company.
✅ Section 263 – Power of Central Government to Direct Inspection, Inquiry or Investigation
Key Points:
Authority:
The Central Government has the power to direct the Registrar of Companies (ROC) or any other authority to conduct an inspection, inquiry, or investigation into the affairs of a company.
Grounds for Action:
The Government may initiate such action if there are reasons to believe that:
The company is involved in activities prejudicial to the public interest,
The company has defaulted in filing returns,
There are complaints or reports regarding mismanagement, fraud, or misconduct,
The company has failed to comply with the provisions of the Companies Act or other laws.
Scope:
The inspection or investigation can cover books of accounts, papers, and documents of the company.
It can be extended to its officers, employees, auditors, and any other related parties.
Procedure:
The Central Government can appoint an investigating authority,
The investigation must be conducted according to prescribed rules and guidelines.
Objective:
To ensure transparency, accountability, and protection of stakeholders’ interests,
To detect and prevent frauds and irregularities.
⚖️ Example:
If a company fails to file annual returns for several years or is suspected of financial fraud, the Central Government can order an investigation under Section 263.
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