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Legal opinion says no Companies Act breach: Reliance Capital

Reliance Capital Ltd's Board of Directors in their special review meeting here on Thursday noted that legal opinion from a reputed law firm confirmed that there was no violation attracting Section 143 (12) of the Companies Act as alleged by audit firm, Price Waterhouse & Co to the Ministry of Corporate Affairs (MCA), a company statement said.
Legal opinion says no Companies Act breach: Reliance Capital

Reliance Capital, in the statement, said the Board took note of the views of legal experts who independently carried out an in-depth examination of the matter and the issues raised by PwC.

"The Board noted the independent legal opinion from reputed law firm confirming that there was no violation attracting Section 143(12) of the Companies Act, and which concluded that the PwC letter is devoid of any rationale or basis and is invalid," the statement said.

Section 143 of the Companies Act deals with "Powers and duties of auditors and auditing standards" and subsection (12) says that if the "auditor of a company, in the course of the performance of his duties as auditor, has reason to believe that an offence involving fraud is being or has been committed against the company by officers or employees of the company, he shall immediately report the matter to the Central Government within such time and in such manner as may be prescribed".

Reliance Capital said the Board also noted the views of other joint auditors, who have been its auditors for the last three financial years and continue as the sole statutory auditors of the company, confirming that there are no violations as alleged by PwC.

The company said that the Board also noted that PwC had duly audited the accounts for the financial year 2017-2018, as also limited review of financial results of three consecutive quarters ended December 2018, without any qualifications or raising any concerns.

Reliance Capital said the Board, at the special review meeting, also noted that the alleged basis relied upon by PwC for reporting under Section 143(12) is itself grossly inadequate, and does not even point to a single specific instance of alleged fraud.

According to the statement, the Board considered all facts including: "PwC had chosen not to attend the Audit Committee meeting on June 12, 2019; PwC abruptly resigned at the unearthly hour of 4.32 am on June 11, 2019; After resigning and ceasing to be the auditor of the company, PwC filed its letter with MCA later the same day; PwC did not even share a copy of its letter with the company or even with the Board's independent Audit Committee, despite repeated requests from the company."

It also reaffirmed to take all appropriate steps to safeguard the interests of all stakeholders, the statement said.

Resigning as one of the statutory auditors of Reliance Capital in June, PwC had alleged diversion of funds and wrote to the MCA.

The company had refuted the charge.

( With inputs from IANS )

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