The Government of India had set up a Committee on Corporate Governance under the Chairmanship of Shri Naresh Chandra, former Cabinet Secretary. The Naresh Chandra Committee inter-alia recommended setting up of Corporate Serious Fraud Office. The recommendations of the Naresh Chandra Committee were as under:-
Consequent to the recommendation of the Naresh Chandra Committee and in the backdrop of stock market scams as also the failure of non-banking companies resulting in huge financial loss to the public, the Cabinet in its meeting held on 9th January 2003, decided to set up a Serious Fraud Investigation Office (SFIO).
As per the decisions of the Cabinet, the Central Government issued a resolution on 2nd July 2003 constituting this organisation. In continuation of the aforesaid Resolution, the charter of the Serious Fraud Investigation Office was issued by the Government on the 21st of August, 2003 which inter alia stated that the responsibilities and functions of the SFIO will include, but not be limited to the following:-
With a view to reviewing the functioning of the SFIO and making it more effective, the Central Government constituted an Expert Committee under the Chairmanship of Shri VepaKamesam formerly Deputy Governor, Reserve Bank of India. The committee deliberated upon various issues relating to the investigation of corporate fraud, based on the experience of SFIO and the recent developments in India and the global arena. In its report dated 29th April 2009, the committee gave various recommendations to suggest statutory, administrative and organizational changes for improving the effectiveness and ensuring efficient discharge of duties by SFIO. The committee carefully considered the views and opinions of different regulatory and investigative agencies and gave its recommendations to the Ministry in developing its proposals for legislative changes and institutional development towards dealing with corporate fraud effectively and also making SFIO and effective investigative and law enforcement agency.
As per the Companies Act, 2013, Serious Fraud Investigation Office (SFIO) has been established through the Government of India vide Notification NO. S.O.2005(E) dated 21.07.2015. It is a multi-disciplinary organisation under the Ministry of Corporate Affairs, consisting of experts in the field of accountancy, forensic auditing, banking, law, information technology, investigation, company law, capital market and taxation etc. for detecting and prosecuting or recommending for prosecution white-collar crimes/frauds.
Investigation into the affairs of a company is assigned to SFIO, where Government is of the opinion that it is necessary to investigate the affairs of a company –
SFIO is headed by a Director as Head of Department in the rank of Joint Secretary to the Government of India. The Director is assisted by Additional Directors, Joint Directors, Deputy Directors, Senior Assistant Directors, Assistant Directors Prosecutors and other secretarial staff. The Headquarter of SFIO is in New Delhi, with five Regional Offices in Mumbai, New Delhi, Chennai, Hyderabad & Kolkata