The Companies (Inspection, Investigation and Inquiry) Rules, 2014 is applicable from 1st April 2014.
Chapter XIV (Sections 206 to 229 ) of the Companies Act, 2013 deals with the provisions related to inspection, investigation and inquiry. The Companies (Inspection, Investigation and Inquiry) Rules, 2014 published vide G.S.R. 247(E), dated 31-03-2014.
Read with section 210 “Investigation into affairs of company”, section 211 “Establishment of Serious Fraud Investigation Office”, section 214 “Security for payment of costs and expenses of investigation” and section 217 “Procedure, powers, etc., of inspectors”.
The Companies (Inspection, Investigation and Inquiry) Rules, 2014
[Published vide G.S.R. 247(E), dated 31-03-2014]
In exercise of the powers conferred under sub-section (2) of Section 211, sub-section (5) of Section 211, Section 214, sub-section (3) of Section 210, and sub-section (11) of Section 217, read with sub-sections (1) and (2) of Section 469 of the Companies Act, 2013 (18 of 2013) and in supersession of the Companies (Central Government’s) General Rules and Forms, 1956 or any other relevant rules prescribed under the Companies Act, 1956 (1 of 1956) on matters covered under these rules, except as respects things done or omitted to be done before such supersession, the Central Government hereby makes the following rules, namely: —
Rule-1: Short title and commencement
Rule-1(1): These rules may be called the Companies (Inspection, Investigation and Inquiry) Rules, 2014.
Rule-1(2): They shall come into force on the 1st day of April, 2014.
Rule-2: Definitions
Rule-2(1): In these rules, unless the context otherwise requires, —
- (a) ‘‘Act’’ means the Companies Act, 2013 (18 of 2013);
- (b) ‘‘Annexure’’ means the Annexure to these rules;
- (c) ‘‘Fees’’ means the fees as specified in the Companies (Registration Offices and Fees) Rules, 2014;
- (d) “Form’’ or “e form” means a form set forth in Annexure to these rules which shall be used for the matter to which it relates;
- (e) ‘‘Regional Director’’ means the person appointed by the Central Government in the Ministry of Corporate Affairs as a Regional Director;
- (f) ‘‘Section’’ means the section of the Act;
Rule-2(2): Words and expressions used in these rules but not defined and defined in the Act or in Companies (Specification of definitions details) Rules, 2014 shall have the meanings respectively assigned to them in the Act and said rules.
Rule-3: Appointment of persons having expertise in various fields
The Central Government may appoint persons having expertise in the fields of investigations, cyber forensics, financial accounting, management accounting, cost accounting and any other fields as may be necessary for the efficient discharge of Serious Fraud Investigation Office (SFIO) functions under the Act.
Rule-4: Terms and Condition of service
The terms and conditions of service of Director, experts and other officers and employees of the Serious Fraud Investigation Office under sub-section (5) of Section 211 shall be as under—
- (a) the terms and conditions of appointment of Director shall be governed by the deputation rules under the Central Staffing Scheme of Government of India;
- (b) the terms and conditions of service of experts from the Central Government or the State Government or Union territory Government, Public Sector Undertaking, Autonomous Bodies and such other organizations shall be as per the recruitment rules which may be duly notified by the Central Government under article 309 of the Constitution of India;
- (c) the terms and conditions of service of other officers and employees from the Central Government or the State Government or Union Territory Government, Public Sector Undertaking, Autonomous Bodies and such other organizations shall be as per the recruitment rules which may be duly notified by the Central Government under article 309 of the Constitution of India;
- (d) the Central Government may appoint experts or consultants or other professionals or professional firms on contractual basis as per the Scheme of engagement of experts or consultants which may be duly approved by the Central Government.
Rule-5: Security
Rule-5(1): The Central Government may before appointing an inspector under sub-section (3) of Section 210, require the applicant to give a security not exceeding twenty-five thousand rupees for payment of the costs and expenses of investigation as per the criteria given below—
| S. No | Turnover as per previous year balance sheet (₹) | Amount of security (₹) |
|---|---|---|
| 1 | Turnover up to ₹50 crore | ₹10,000 |
| 2 | Turnover more than ₹50 crore and up to 200 crore | ₹15,000 |
| 3 | Turnover more than ₹200 crore | ₹25,000 |
Rule-5(2): The security shall be refunded to the applicant if the investigation results in prosecution.
Rule-6: Letter of Request, as per Section 217
The letter of request shall be transmitted in such manner as specified by the Ministry of Corporate Affairs.