The Ministry of Corporate Affairs today said it has tightened its Early Warning System (EWS) to scrutinise activities of companies, including those that raised money through initial public offerings.

Balance sheets of companies with a paid-up capital of Rs 50 crore and more and those having 1,000 and more shareholders are scanned through the MCA''s online fraud detecting system EWS, Minister of State for Corporate Affairs RPN Singh said in a written reply in the Lok Sabha.

Developed in the aftermath of the Rs 14,000-crore Satyam accounting fraud that came to light in January, 2009, the EWS sends signals if a company is found to be faltering any of the parameters set by MCA.

"The criteria devised in 2009 was revisited and revised for identifying companies for their early scrutiny," Singh said.

As the first filter, he said, if a company has more than 5 per cent of domestic sales through related party transactions, or if more than half of its directors have put in their papers in a year, or if there is a discrepancy in earning-per-share ratio, besides other parameters, a company comes in the MCA''s radar.

Besides, the companies where the combined quantum of investment made is more than 50 per cent of the paid-up capital and reserves during the last 3 years; among others, also come under the first filter.

Then, firms are judged through five parameters. These include adverse remarks of auditors, change of auditors in the last 3 years or if half or more directors ceased to hold office during the last one year.

"For the purpose of examination public interest has been shifted to mean... the companies having accepted deposits but have not repaid matured amount and interest; companies having collected money through IPO and companies having taken secured loans but have not filed their due annual returns with the RoCs (Registrar of Companies)," Singh said.

With the EWS, the government scrutinises quarterly results of companies, their public announcements, filings with exchanges, tax returns, media reports, etc, and detect wrong doings.