Asks banks to restrict ops of their accounts; says even an active firm should be viewed with suspicion if it is not filing annual returns.
The ministry of corporate affairs has struck off 2,09,032 companies, most of which are believed to be shell firms, from the Register of Companies and barred the operation of bank accounts of such firms, as part of the government’s drive against channels of black money following demonetisation.
The department of financial services has, through the Indian Banks Association, advised all banks to take immediate steps to put curbs on bank accounts of such struck-off companies, according to an official statement on Tuesday.
Banks have also been advised to go in for enhanced diligence while dealing with companies in general. Even a company having an active status on the website of the ministry of corporate affairs but defaulting in filing of its due financial statements or annual returns of particulars of charges on its assets on the secured loan should be seen with suspicion as, prima facie, the company is not complying with its mandatory statutory obligations to file this vital information for its stakeholders, the corporate affairs ministry said.
These companies that have been struck off fall within the ambit of Section 248 of the Companies Act and their existing directors and signatories will be considered ex-directors and ex-authorised signatories. “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’,” the government said in the statement.
Section 248 of the Companies Act empowers the Registrar to strike off the name of a company if it has failed to start business within a year of its incorporation or if it isn’t carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company, among other reasons.
In his Independence Day speech last month, Prime Minister Narendra Modi said the government had deregistered more than 1.75 lakh shell companies with doctored accounts, based on data mined from the note ban exercise. “The drive against black money has led to the discovery of many shell companies. Following demonetisation, over 3 lakh companies have been found, which are nothing but shell companies. Of these, the registrations of 175,000 companies have been cancelled,” he said. Around 400 such firms were discovered to be operating from a single address.
Last week, the Reserve Bank of India (RBI) said 99% of the banned `500 and `1,000 notes were deposited with the banking system following demonetisation. However, the government has been maintaining that just because money has been deposited with banks doesn’t mean they are also legally accounted-for cash.