The Ministry of Finance on Tuesday said it has deregistered over 2.09 companies and has initiated action to restrict their bank account operations, for failing to comply with regulatory requirements. The government has struck off the names of these 2.09 lakh companies from the register of companies, and has barred the directors of these companies from operating the bank accounts till the time the entities are legally restored.
The government has recently taken up a crackdown on shell companies, which are allegedly used as conduits for illicit fund flows and tax evasion. Earlier last month, SEBI had suspended trading in the stocks of 331 suspected shell companies identified by the government. Following demonetisation, the government claims to have identified as many as 37,000 shell companies.
The government action this week comes under the ambit of Section 248 of the Companies Act, which provides the government powers to strike off names of companies from the register on various grounds, including for being inactive for long. “Since such ‘struck off’ companies have ceased to exist, action has been initiated to restrict the operation of bank accounts of such companies,” the Ministry of Finance said in a release.
The existing directors and authorised signatories of such struck off companies will now become ex-directors or ex-authorized signatories, the release said, adding, “These individuals will therefore not be able to operate bank accounts of such companies till such companies are legally restored under Section 252 of the Companies Act by an order of the National Company Law Tribunal.” The restoration, as and when it happens, shall be reflected by change in the status of the company from ‘Struck off’ to ‘Active’, it said.
The Department of Financial Services has asked the Indian Banks Association to advised all banks that they should take immediate steps to put restrictions on bank accounts of such struck off companies. The ministry has published the list of such companies (Registrar of Companies wise) on the official website of Ministry of Corporate Affairs.
Further, the ministry has also advised banks exercise enhanced diligence while dealing with companies other than the struck-off companies. “A company even having an active status on the website of the Ministry of Corporate Affairs but defaulting in filing of its due Financial Statement(s) or Annual Return(s) of Particular of Charges on its assets on the secured loan should be seen with suspicion,” the release said.