Crackdown on shell firms: Over 1 lakh more to be off registered soon

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New Delhi | Published: September 5, 2018 3:59:30 AM

Last year, the government had struck off over 2.26 lakh shell companies for non-filing of financial statements or annual returns for a continuous period of 2 years or more.

Crackdown on shell firms: Over 1 lakh more to be off registered soon

Continuing the crackdown on shell companies, the government has identified an additional 2.25 lakh such firms in the current financial year and is likely to strike off around one lakh of them by mid-September. Last year, the government had struck off over 2.26 lakh shell companies for non-filing of financial statements or annual returns for a continuous period of 2 years or more.

According to a senior government official, as part of the second drive launched during the current financial year as many as 60,000 companies have already been weeded out of the system. These and another 40,000 chosen for removal from the register of companies under Section 248 of the Companies Act by the end of the first half had failed to file their financial statements or annual returns for FY16 and FY17.

The government is keen to weed out entities that do no economic activity and are a burden on the system. The corporate affairs ministry also combs through the database of companies to see if any of them used for economic offences like money laundering.

Last year, over 3.09 lakh directors were disqualified for non-filing of financial statements or annual returns for preceding three financial years (2013-14, 2014-15 and 2015-16). “Of the 2.26 lakh companies struck off last year, only about 1,500 companies have come back to the system,” the official said.

Also, out of the 7,775 LLPs identified for action under section 75 of the LLP Act, 2008, the government has already struck off 6,000 LLPs due to non-filing of financial statements for 2015-16 and 2016-17, the official said.

To check tax evasion and prevent money laundering especially in the wake of demonetisation, the government had constituted a task force last year under the chairmanship of revenue and finance secretary Hasmukh Adhia and corporate affairs secretary Injeti Srinivas.

The task force has compiled a database of shell companies by the Serious Fraud Investigation Office. The authorities have frozen the accounts of those shell companies which have been removed from the list and their directors have been restricted from accessing the bank accounts of these companies, the government had said.

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