Over 2.25 lakh more shell companies to be removed from register

Speed Post News Network

New Delhi : The Task Force on Shell Companies has met 8 times since its constitution and has taken proactive and coordinated steps to check the menace of shell companies. The ‘Task Force’ was set up in February, 2017, by the Prime Minister’s Office under the joint Chairmanship of the Revenue Secretary and Secretary, MCA, with a mandate to check in a systematic way, through a coordinated multi-agency approach, the menace of companies indulging in illegal activities including facilitation of tax evasion.

Department of Financial Services, CBDT, CBEC, CBI, ED, SFIO, FIU-IND, RBI, SEBI, DG GSTI and DG-CEIB are its Members.

The major achievements of the Task Force include the compilation of a database of shell companies by Serious Fraud Investigation Office (SFIO). This database, as on date, comprises of 3 lists, viz the Confirmed List, Derived List and Suspect List.

The Confirmed List has a total of 16,537 confirmed shell companies on the basis of the information received from the various Law Enforcement Agencies about the companies found involved in illegal activities. The Derived List has 16,739 companies identified on the basis of 100% common directorships with the confirmed shell companies. The Suspect List has 80,670 suspected shell companies and has been drawn up by SFIO using certain Red Flag Indicators. The Task Force has identified certain Red Flag Indicators, which will be used to identify more shell companies, according to a PIB release.

In a drive carried out under the supervision of the Ministry of Corporate Affairs (MCA) in the Financial Year 2017-18, the Registrars of Companies (ROCs) identified and removed from the register of companies under Section 248 of the Companies Act, 2013, the names of 2,26,166 companies, which had not filed their Financial Statements or Annual Returns for a continuous period of two or more financial years.

As many as 3,09,619 directors were also disqualified u/s.164(2)(a) read with Section 167(1) of the Companies Act, 2013, for non-filing of Financial Statements or Annual Returns for a continuous period of immediately preceding 3 financial years (2013-14, 2014-15 & 2015-16).

With the concerted efforts of the Ministry of Corporate Affairs, Department of Financial Services and Indian Banks Association, the ex- directors / authorized signatories of the struck-off companies have been restricted from operating the bank accounts of these companies and they cannot withdraw any amount from these bank accounts, other than for specified purposes, till the company is restored u/s 252 of the Companies Act.

To help the genuine corporates in regularizing their pending returns, the Condonation of Delay Scheme, 2018, was brought in. It was effective from January 1, 2018 to May 1, 2018. A total of 13,993 companies benefitted from the scheme.

For the 2nd drive to be launched during the current Financial Year 2018-19, a total of 2,25,910 companies have been further identified for being struck-off under section 248 of the Companies Act, 2013. An opportunity of being heard will be given to these identified companiess by way of notices regarding their default and the proposed action.

The mechanism for sharing of documents and information amongst all the Law Enforcement Agencies has been put in place. Standard Operating Procedure regarding ‘Sharing of Documents’ has been finalised and circulated amongst all the Law Enforcement Agencies for compliance. The Task Force is the appellate authority for this purpose.

The Task Force has directed all member Law Enforcement Agencies to send to Institute of Chartered Accountants of India, the details of action taken against Chartered Accountants by them. Establishment of an independent regulator for the auditing profession, i.e., the National Financial Reporting Authority, one of the key changes brought in by the Companies Act, 2013, was approved by the Union Cabinet on March 1, 2018, and notified on March 21, 2018.