Corporate frauds and legal mechanism in india-an overview

A corporation, being a congregation of various stakeholders atthe micro and macro levels, must be fair and transparent to itsstakeholders in all its transactions. Corporate frauds and misconduct remains a constant feature posing a threat both from the macro and micro prospective of the economy. Corporate frauds have become a global phenomenon with the advancement of commerce and technology. In recent decades, fast-growing economies observed an enormous increase in corporate frauds, posing serious questions before the academicians, researchers and professionals on the effectiveness of corporate governance mechanisms, government regulation mechanism and the role of corporate and individual ethics. Moreover, the recognition of issues relating to good corporate governance is due to various frauds in market i.e Harshad Mehta fraud, Satyam fraud, Sahara estate Corporation fraudand Sharda Chit Fraud Fund etc. Every year there is new fraudin corporate world. More importantly India is in top list offraud. These frauds expose the loopholes in regulatory systemand need to impose stringent penalty on defaulters. India’s new Companies Act, 2013 has introduced several new provisions which change the face of Indian corporate business. One of such new provisions is Corporate Social Responsibility. SEBI’s primary goal is to cater to the needs of the market, which include investors, issuers of securities and any third parties involved. To an extent, SEBI has successfully made tangible. It is clear that in corporate world financial scams can be committed silently in connivance with concern corporate employees. In most of the cases their own employees play tricks and secure illegal gains. Sometimes big investors also take advantages of loop holes in concerned corporations and commit frauds.