Action follows cancellation of registration of 2.1 lakh defaulting companies

The Ministry of Corporate Affairs (MoCA) has said as on Tuesday, it has identified 1.06 lakh directors of 'shell companies' for disqualification under the relevant provisions of the Companies Act, 2013. This is part of actions to break the network of 'shell companies' and the fight against black money/money laundering activities, it said.

Professionals including Chartered Accountants, Company Secretaries and Cost Accountants associated with such defaulting companies and involved in illegal activities have been identified in certain cases and the action by professional institutes such as ICAI, ICSI and ICoAI is also being monitored, it said.

Minister of State for Corporate Affairs P.P. Chaudhary said in a statement that, “The present Government has vowed to fight black money, and fighting the menace of shell companies is an imperative element of such fight. The fight against black money shall be incomplete without breaking the network of shell companies." He said there is the possibility of using the shell companies for laundering black money.

He further said, “... by the end of this month, we would be ready with the relevant details of all defaulting Directors of these shell companies. This whole exercise shall go a long way in creating an atmosphere of confidence and faith in the system paving the way for ease of doing business in India.”

The move is pursuant to the MoCA’s action of cancellation of registration of around 2.10 lakh defaulting companies and subsequent direction of the finance ministry to banks to restrict operations of bank accounts of such companies by the directors of such companies or their authorized representatives, the MoCA said.

The MoCA said it is analysing the data of these companies available with the Registrar of Companies (RoC) to identify the Directors and the significant beneficial interests behind these companies. Profiles of Directors such as their background, antecedents and their role in the operations/functioning of these companies are also being compiled in collaboration with the enforcement agencies. “The money laundering activities performed under the aegis of these companies are also under the scanner,” it said.

Mr Chaudhary is holding regular meetings with the MoCA officials and its subordinate organizations such as Serious Fraud Investigation Office (SFIO), ROCs, Department of Financial Services, Indian Banks Association and other Departments involved in the crackdown against such companies, it added. Prior to action against defaulting companies, there were about 13 lakh companies in the Registry, the official statement said. However, after closing of around 2.1 lakh companies, there are about 11 lakh companies having ‘active’ status in the Registry, it added.