New Delhi: To rein in multi-level marketing companies that are swindling investors, the Corporate Affairs as well as Consumer Affairs ministries, along with various stakeholders, are working on ways for cracking down on such entities.
     
"We are working with the Ministry of Consumer Affairs, and I think they have issued some draft guidelines also. But the final view is yet to be taken," Corporate Affairs Minister Sachin Pilot said on Monday.
     
He was responding to a query on multi-level marketing companies. "We had a joint meeting with the Ministry of Consumer Affairs and the concerned stakeholders. The idea is to have a mechanism where companies, which are doing something illegal, can be curbed," he told reporters here.
     
Pilot said his Ministry has asked all state governments to take strict action against companies that are found indulging in fraudulent schemes.
     
"We have written to all Chief Ministers in the country that state governments which are empowered to act on Chit Funds Act... that Act should be pursued and enforced," he added.
     
The minister also emphasised that state governments, RBI, Sebi, Corporate Affairs Ministry and others have to work together to make sure that investors, especially small and marginal which are the most vulnerable ones, are protected.     

According to Pilot, the idea is to sift between good and bad multi-level marketing companies.
     
"If some companies are following the law and doing things according to the rules prescribed, then we have no issues. Companies and entities which are pretending to be law abiding and yet are non-compliant, it is against those entities that we want to take action," he said.
     
In response to a query on multi-level marketing companies based overseas and doing business in India, Pilot said that the new Companies Bill has provisions to take action against entities committing fraud.
     
He added: "No company or entity can commit fraud in this land or commit fraud from outside this country on Indian people and get away with it.
     
"If a company is doing business in the political boundaries of India and perhaps registered oversea etc, it will not come in the way for us to take action."
     
As per the new Companies Bill, any company that has operations and and makes revenues in this country would be deemed as an Indian company. Another clause is that firms operating in India should have at least one director living in the country.
     
The Minister also expressed hope that the new the Companies Bill would be introduced in the Rajya Sabha in the current Budget session of Parliament. The Bill has already been cleared by the Lok Sabha.

(Agencies)

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