Laws & Regulations

MUMBAI – While India's foundational criminal laws have been revamped through the Bharatiya Nyaya Sanhita, 2023 (BNS), the specific and stringent regime governing corporate fraud under the Companies Act, 2013, remains firmly in place, operating alongside the new code. High-profile scandals continue to test this framework.Section 447 of the Companies Act, 2013, stands independent of the BNS and retains its broad definition of fraud: encompassing acts, omissions, concealments, or abuses of position intended to deceive or injure the interests of the company, its shareholders, creditors, or others, irrespective of wrongful gain or loss. The severe penalties under this section, including potential imprisonment up to ten years and significant fines, are unaltered.The principle of piercing the corporate veil, holding Directors and Key Managerial Personnel (KMP) accountable, continues under the Companies Act. Liability can extend beyond personal acts to failures in oversight, reinforcing the need for stringent internal controls and ethical governance. The concept of the "officer who is in default" maintains its wide reach.The Serious Fraud Investigation Office (SFIO), empowered under the Companies Act, remains the key agency for probing complex corporate frauds. While the general provisions for cheating or forgery previously referenced under the old IPC now find their equivalents in the BNS (e.g., Section 318 for cheating), the dedicated corporate fraud mechanism under Section 447 of the Companies Act provides the primary tool for regulators and prosecutors in this specific domain. The coexistence of the robust Companies Act provisions with the new BNS underscores a multi-layered approach to corporate accountability.