The department of company affairs is planning to recover dues of investors from the personal assets of promoters who have vanished with funds.

"We are examining the feasibility, including legal issues, and will take a decision soon," an official with the department said.

A legal amendment may be required to implement the plan because promoters have limited liability. The department is also checking out if existing provisions in the Companies Act can be used for the purpose.

The Companies (Amendment) Bill, 2003, introduced in Parliament earlier in May, has also proposed stricter norms for companies raising capital, and penalties have been enhanced to ensure that the vanishing-firms phenomenon of the mid-nineties does not recur. "Penalties have been linked to amounts raised, and we hope this will act as a deterrent," the official said.

For fraudulently inducing investments, the Bill has proposed substituting Section 68 of the Companies Act, which provides for a penalty twice the amount raised, with tighter norms.

In addition, those making false claims will have unlimited liability for payment of the penalty.

The official pointed out that action had been initiated and prosecution launched against 149 companies under Sections 63, 68 and 628 of the Companies Act, 1956, which included penalties for non-compoundable offences.

Measures have also been proposed in the Companies (Amendment) Bill.

The department is also planning to invoke provisions under Sections 397 and 398 of the Companies Act and to file petitions before the Company Law Board. The relevant provisions deal with relief in cases of oppression and mismanagement.

Moreover, a model first-information report has been provided to registrars of companies and regional directors instructed to file them with the police in their respective areas of jurisdiction.

The model report is a follow-up to the recommendations of the joint parliamentary committee that investigated the 2001 stocks scam.

The official said the model report provided instructions in filing a foolproof case against errant promoters. "We do not want to leave any ambiguity or loophole that can be exploited by the promoters," he explained.