INDIA Law and Practice Contributed by: Priyank Ladoia, Asif Ahmed, Pranav Tomar and Puneet Dhanoa, AZB & Partners
guidelines (as may be statutorily introduced) to prevent corruption, this shall be treated as a valid defence available to such a commercial organisation. It should be noted that the government has not formally issued any guidelines under Section 9 that a commercial organisation may adopt, thereby ensuring compliance of such guidelines by its employees. However, this amendment has made it incumbent upon companies to introduce internal policies, guidelines or codes of conduct to ensure their employees are routinely sensi - tised towards India’s anti-bribery law, and as regards their duty to act in a manner to prevent bribery. Such internal policies, guidelines or codes of conduct are modelled on international best prac - tices, since the government has not yet released guidelines under Section 9. In situations where a company has failed to implement any internal anti-bribery policies, guidelines or codes of con - duct, the defence under Section 9 is not avail - able, therefore rendering it liable to prosecution under the PCA. 8.2 Compliance Guidelines and Best Practices While the PCA itself does not explicitly lay out detailed guidelines for compliance programmes, it does provide a framework that encourages organisations to establish robust anti-corrup - tion measures, including expectations for ethi - cal conduct and best practices to prevent brib - ery and corruption. Please see 8.1 Compliance Obligations for the mandatory practices pro - vided under the Act. 8.3 Compliance Monitorships There is no direct corporate monitoring mecha - nism within the PCA. However, the enforcement
authorities can obtain information pertaining to bribery and corruption through company audi - tors. As per Section 139 of the Companies Act, 2013, every company is mandated to appoint an auditor in their first annual general meeting, who is responsible for conducting audits in accord - ance with the auditing and accounting standards prescribed under Section 133 of the Companies Act, 2013. The recognised authorities on whose recommendations the Central Government pre - scribes these auditing standards are the Institute of Chartered Accountants of India (ICAI) and the National Financing Reporting Authority (NFRA). In light of the specific auditors’ duty under Sec - tion 143(12) of the Companies Act, 2013, the ICAI states in its auditing handbook of report - ing fraud that an auditor is mandated to report bribery, money laundering, corruption or non- compliance with any applicable law. The ICAI states that the direct effect of any act of bribery or corruption in either the form of illegal ben - efit or penal consequences is on the company and should thus be reported by the appointed auditor. Section 147 of the Companies Act, 2013 lays down a detailed code for penalisation of the auditor for contravention of their duties.
9. Assessment 9.1 Assessment of the Applicable Enforced Legislation
The enforcement of the PCA was assessed by the United Nations Office on Drugs and Crime in their report titled INDIA: Incentives for corporate integrity in accordance with the United Nations Convention against Corruption , published in 2013. Subsequently, the PCA underwent substan - tial amendment in 2018 to expand the scope
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