The corporate environment of India is fast changing. Even the Parliament of India realised this fact and it passed the Indian Companies Act, 2013 (PDF). The Act has streamlined the corporate environment of India and has also widened the powers of serious Frauds Investigation Office (SFIO) that can now investigate many more serious frauds happening in the Indian corporate sector.
Companies operating in India have also been accused of violating the transfer pricing laws of India. Transfer pricing orders have already been issued against Vodafone and Shell India and Nokia has been accused of violating the income tax and transfer pricing laws of India.
There are provisions under the Income Tax Act for avoidance of tax by certain transactions in securities and avoidance of income-tax by transactions resulting in transfer of income to non residents. Now Income Tax Overseas Units (ITOUs) of India in foreign countries are in pipeline.
There is no escape from the reality that white collar crimes and financial frauds are increasing in India. Further, IT and cyber frauds in Indian companies are increasing. By their very nature these high profile crimes affect corporate sector. Indian companies are also facing increased corporate frauds, financial frauds, white color crimes and technological frauds.
According to Perry4Law, the leading techno legal law firm of Asia, corporate frauds, financial frauds and cyber crimes are still on rise in India. Companies in India are not at all following cyber law due diligence requirements and this has resulted in increased cyber crimes and online frauds in India. These irregularities and crimes can be easily detected if an e-discovery exercise is undertaken by law enforcement agencies of India.
Money laundering is another area that requires immediate attention of Indian government and regulatory authorities. The Finance Ministry and RBI investigated money laundering accusations against ICICI, HDFC and Axis Bank in the past. The legality of Bitcoins in India is also in doubt but Indian regulatory authorities have still not deemed it fit to regulate dealings of Bitcoins in India. Banking frauds have also significantly increased in India.
With these changes taking place in India the Indian government needs to formulate techno legal policies and laws so that corporate environment can be made more transparent, fair and effective.