Sandeep (firm) 14 August 2012

Responsibility of board in case of fraud

A fraud results due to bad decision(s) taken in board of directors meeting of a Public Limited Company (A wholly owned Corporation of a state Government). In this case

A. what is the responsibility of Chairman of the board.

B. what is the responsibility of Directors of the of the company

C. what is the responsibility of other board members.

D. What is the responsibility of Company Secretary

E. What is the responsibility of the person who prepared such board agenda and put up the agenda to board through Company Secretary

Sandeep

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2 Replies

Adv Rohit Dalmia 9324538481 (Lawyer) 14 August 2012

Dear Sandeep,

Do you mean loss due to bad decision? or you mean that the chairman and other board members had intentionally taken bad decision so that fraud could takes place??? please clarify.

Incase it was just a wrong decision of the board without any intention of cheating or committing any fraud then in that case they shall not be prosecuted by the Law. But, if they are involved in the fraud or conspiracy to commit the fraud, then they are surely liable for prosecution.

Regards,

Advocate Rohit Dalmia

9324538481

Sandeep (firm) 15 August 2012

Thanks Mr. Rohit.

Board decision was taken with intention to fraud or conspiracy to commit the fraud.

In one such case only Chairman of the board has been prosecuted and all directors, board members and company secretary have been left untocuhed by investigating agencies.

As far as I know board decisions are joint decision of the board. Hence all members present should be jointly held responsible.

Sandeep