Govt plans to keep track of companies with common addresses

PrintPDF Concerned over growing corporate fraud, the government is considering to tighten its Early Warning System (EWS) to scrutinise activities of companies with same addresses and common directors. The Ministry of Corporate Affairs (MCA) plans to add two more parameters to its software-based fraud detecting system, called Early Warning System (EWS), which scans unusual developments in companies and alerts the Ministry of any possible wrongdoing.

With the EWS, the government scrutinises quarterly results of companies, their public announcements, filings with exchanges, tax returns, media reports, etc, and detect wrong doings.

If a company has more than 5 per cent of domestic sales through related party transaction, or if more than half of its directors have put in their papers in a year, or if there is a discrepancy in earning-per-share ratio, besides other parameters, a company comes in the MCA’s radar.