Rules 1 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The Companies (Arrests in connection with Investigation by Serious Fraud Investigation Office) Rules, 2017 set the safeguards around an arrest by an officer of the Serious Fraud Investigation Office (SFIO) under section 212 of the Act: who may arrest, whose approval is needed, how the arrest order is signed and served, and how records are kept. They are stated as amended up to the rules as notified on 24 August 2017, with no amendment listed by MCA, per the MCA e-book; later amendments should be checked.
The Director, Additional Director or Assistant Director of SFIO may arrest a person if, on the material in his possession, he has reason to believe, recorded in writing, that the person is guilty of an offence punishable under section 212. An Additional Director or Assistant Director needs the prior written approval of the Director SFIO. For a Government company or foreign company, prior written approval of the Central Government is needed. The arrest order and personal search memo are signed and served on the arrestee, with written acknowledgement, and the papers reach the Director's office within twenty-four hours.
Context
Section 212 of the Act provides for investigation into the affairs of a company by the SFIO; see Sections 206–212: inspection, investigation and SFIO and SFIO investigation: when and how the Central Government orders it. These Rules, made under section 469(1) read with section 212, deal only with arrests. The rules on experts and the terms of SFIO staff are in Rules 1–6 of the Inspection, Investigation and Inquiry Rules.
A person facing investigation should speak to counsel early. Our team can help you understand the process and your position through legal dispute resolution.
Rule 1: short title and commencement
The rules may be called the Companies (Arrests in connection with Investigation by Serious Fraud Investigation Office) Rules, 2017. They came into force on the date of their publication in the Official Gazette (notification dated 24 August 2017).
Rule 2: who may arrest, and who decides
2(1). Where the Director, Additional Director or Assistant Director of SFIO is investigating the affairs of a company other than a Government company or foreign company, and on the basis of material in his possession has reason to believe that any person has been guilty of an offence punishable under section 212, he may arrest that person. The reason for the belief must be recorded in writing. A proviso adds that if the arrest is made by an Additional Director or Assistant Director, the prior written approval of the Director SFIO must be obtained.
2(2). The Director SFIO is the competent authority for all decisions about arrest.
Rule 3: Government companies and foreign companies
An arrest in connection with a Government company or a foreign company under investigation is made only with the prior written approval of the Central Government. A proviso requires the arresting officer to give intimation of the arrest to the Managing Director or the person in charge of the affairs of the Government company, and, where the person arrested is the Managing Director or person in charge, to the Secretary of the administrative ministry concerned.
Rule 4: the arrest order and personal search memo
When exercising powers under section 212(8), the Director, Additional Director or Assistant Director signs the arrest order together with a personal search memo, in the Form appended to the rules, serves it on the arrestee and obtains written acknowledgement of service. The Form is a separate document called the Arrest Order; the rule text prints no field-by-field format, and none is reproduced here.
Rule 5: forwarding to the Director's office
The arresting officer forwards a copy of the arrest order, with the material in his possession and all other documents including the personal search memo, to the office of the Director SFIO in a sealed envelope with a forwarding letter, signing each page, so that it reaches the Director's office within twenty-four hours by the quickest possible means.
Rules 6 and 7: the arrest register
- Rule 6. An arrest register is maintained in the Director's office. The Director or an officer he nominates ensures that entries on the particulars of the arrestee, the date and time of arrest and other relevant information are made for all arrests by arresting officers.
- Rule 7. The entry about the arrest of the person and the information given to him is made in the register immediately on receipt of the documents specified in rule 5.
Rule 8: preserving records
The Director's office preserves the copy of the arrest order with the supporting materials for five years, counted:
- (a) from the date of the judgment or final order of the Trial Court, if it has not been challenged in an appellate court; or
- (b) from the date of disposal of the matter before the final appellate court, if the judgment or order has been challenged,
whichever is later.
Rule 9: arrest procedure of the Code of Criminal Procedure
The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to arrest apply mutatis mutandis to every arrest made under this Act. This rule is quoted as printed. It relies on a statute that the reader should check for its current form and any replacement before relying on it. This article names no replacement and does not take the rule beyond its printed words.
Example. An Assistant Director of SFIO, investigating Crestline Holdings Ltd (a company that is neither a Government company nor a foreign company), records in writing his reasons for believing a promoter has committed an offence punishable under section 212. Because he is an Assistant Director, he obtains the Director SFIO's prior written approval, signs the arrest order and personal search memo, serves them on the person and takes a written acknowledgement. He forwards signed copies in a sealed envelope so they reach the Director's office within twenty-four hours, and the register entry is made immediately on receipt.
Steps and safeguards as printed
| Step | Rule | Who | Period as printed | Document |
|---|---|---|---|---|
| Reasons recorded in writing | 2(1) | Arresting officer | None | Written record |
| Approval for arrest by Additional Director or Assistant Director | 2(1) proviso | Director SFIO | Prior | Written approval |
| Approval for Government or foreign company | 3 | Central Government | Prior | Written approval |
| Arrest order and search memo served | 4 | Arresting officer | None | Arrest Order Form; written acknowledgement |
| Papers to Director's office | 5 | Arresting officer | Within twenty-four hours | Sealed envelope, signed pages |
| Register entry | 6, 7 | Director or nominee | Immediately on receipt | Arrest register |
| Preservation | 8 | Director's office | Five years from judgment or final order, whichever is later | Arrest order and materials |
Need help if SFIO has contacted you or your company?
An investigation by the SFIO, and the possibility of arrest, calls for prompt and careful advice. Our team can explain these safeguards in your situation and help you work with your counsel. Start with legal dispute resolution.
Key takeaways
- Only the Director, Additional Director or Assistant Director of SFIO may arrest, with reasons recorded in writing.
- An Additional Director or Assistant Director needs the Director SFIO's prior written approval; the Director is the competent authority on arrest.
- For a Government company or foreign company, prior written approval of the Central Government is required.
- The arrest order and personal search memo are served with written acknowledgement and forwarded within twenty-four hours.
- The arrest register is updated immediately and records are kept for five years from the later of the stated dates.
Read next
- Rules 1–6 of the Inspection, Investigation and Inquiry Rules
- Rules 1, 2, 3 and 3A of the Adjudication of Penalties Rules
- Sections 206–212: inspection, investigation and SFIO
- SFIO investigation: when and how the Central Government orders it
Disclaimer: Based on the Companies Act, 2013 rules named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.