News- Bogus Shell Companies
Over 3.8 lakh Shell Companies struck off under Companies Act in 3 years by Modi Government
M.Y.Team Dt.21st Sept.2020
More than 3.8 lakh shell companies having no active business or no assets have been struck off from official records under the Companies Act during the past three years, according to the written reply submitted by the government in Rajya Sabha.
In a written reply to the Rajya Sabha, Minister of State for Corporate Affairs Anurag Singh Thakur also said the term “shell company” is not defined under the Companies Act. According to the minister, the government has undertaken a special drive for identification and then to strike off shell companies.
“It normally refers to a company without any active business operation or significant assets, which in some cases are used for illegal purpose such as tax evasion, money laundering, obscuring ownership, benami properties etc,” he noted. It is very important to note in earlier years some these companies were formed or used for coverup operations in defaulted bank loans.
The Special Task Force set up by the government to look into the issue of shell companies has recommended the use of certain red flag indicators as alerts for identification of shell companies.
According to the minister, the government has undertaken a special drive for identification and then to strike off shell companies. Based on non-filing of financial statements consecutively for two years or more, companies were identified and after following due process of law, “3,82,581 number of companies were struck off during the last three years”, Thakur said.
This was done as provided under Section 248 of the Companies Act, 2013, read with the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.
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