News Details- (Get Professional Updates on Whatsapp, Msg on
8285393786) More
News
MCA cracking down on those who are directors at more than 20 companies
PrintThe ministry of corporate affairs (MCA) is cracking down on those who are directors at more than 20 companies and has asked Registrar of Companies officials to start legal action against those exceeding the limit. Interestingly, four persons hold directorships in more than 100 firms each.
Action has already been taken against 250 persons in the past few months, a corporate affairs ministry official told ET. "While we ensure compliance and have been taking action for some time, a public notice has been issued for the first time," the person said.
The Companies Act, 2013, does not permit an individual to hold directorships in more than 20 companies (10 if they're public).
Corporate affairs ministry data show that at the end of April, 642 individuals were in violation of the limit, holding directorships in a total 17,418 companies, which translates into an average 27 board memberships each, exceeding the limit prescribed under the Companies Act. Half of these persons are based in and around Kolkata, followed by Mumbai, Delhi and elsewhere.
Action has already been taken against 250 persons in the past few months, a corporate affairs ministry official told ET. "While we ensure compliance and have been taking action for some time, a public notice has been issued for the first time," the person said.
The Companies Act, 2013, does not permit an individual to hold directorships in more than 20 companies (10 if they're public).
Corporate affairs ministry data show that at the end of April, 642 individuals were in violation of the limit, holding directorships in a total 17,418 companies, which translates into an average 27 board memberships each, exceeding the limit prescribed under the Companies Act. Half of these persons are based in and around Kolkata, followed by Mumbai, Delhi and elsewhere.
Show-cause notices sent by the registrars seem to have made an impact though. The latest information from Bengaluru-based Zauba Technologies, which provides data based on publicly available corporate records, shows the total number of directors exceeding the limit at 500 in 15,390 companies.
The ministry had issued a public notice last month, observing that several persons had been found to be functioning as directors in more than 20 companies in violation of Section 165(1) of the Companies Act. All such individuals were given 30 days to comply with the rules.
"These are largely cases involving paper (shell) companies created for the purpose of jama kharchi," said a practising company secretary, who didn't want to be named. That refers to the use of accounting entries among a plethora of companies allegedly used to launder money or win government contracts, which are subsequently given as sub-contracts to other units in the network.
The existence of multiple director identification numbers (DINs) and multiple directorships shows that provisions of the Companies Act have been violated in the absence of exemplary penal action, he said.
Some experts feel that those who certified the e-forms should also face action. "At a time when the government is promoting self-regulation, professionals like chartered accountants and company secretaries who certify their documents should also be stopped from adopting unscrupulous practices, lest they lose their privilege," said the head of compliance at a leading bank.#casansaar (Economic Times Beauru)
"These are largely cases involving paper (shell) companies created for the purpose of jama kharchi," said a practising company secretary, who didn't want to be named. That refers to the use of accounting entries among a plethora of companies allegedly used to launder money or win government contracts, which are subsequently given as sub-contracts to other units in the network.
The existence of multiple director identification numbers (DINs) and multiple directorships shows that provisions of the Companies Act have been violated in the absence of exemplary penal action, he said.
Some experts feel that those who certified the e-forms should also face action. "At a time when the government is promoting self-regulation, professionals like chartered accountants and company secretaries who certify their documents should also be stopped from adopting unscrupulous practices, lest they lose their privilege," said the head of compliance at a leading bank.#casansaar (Economic Times Beauru)
Category : MCA | Comments : 1 | Hits : 810
Get Free Daily Updates Via e-Mail on Income Tax, Service tax, Excise and Corporate law
Search News
News By Categories More Categories
- Income Tax Dept serves notices to salaried individuals for documentary proof to claim exemptions
- Bank Branch Audit 2021 - Update on allotment of Branches
- Bank Branch Audit 2020 Updates
- Bank Branch Audit 2021 Updates
- Bank Branch Audit 2020 - Update on Allotment of Branches
- Police Atrocities towards CA in Faridabad - Its Time to be Unite
- Bank Branch Statutory Audit Updates 2019
- Bank Branch Statutory Audit Updates
- Bank Branch Audit 2022 Updates
- Bank Branch Statutory Audit Updates
- NFRA Imposes Monetary penalty of Rs 1 Crore on M/s Dhiraj & Dheeraj
- ICAI notifies earlier announced CA exam dates despite pending legal challenge before SC
- NFRA debars Auditors, imposes Rs 50 lakh penalties for lapses in Brightcom, CMIL cases
- GST Important Update - Enhancement in the GST Portal
- NFRA Slaps Rs 5 lakh Penalty on Audit Firm for lapses in Vikas WSP Audit Case
- CBDT extends due date for filing Form 10A/10AB upto 30th June, 2024
- RBI comes out with FEMA regulations for direct listing on international exchange
- RBI directs payment firms to track high-value, fishy transactions during elections
- NCLT orders insolvency proceedings against Subhash Chandra
- Income Tax dept starts drive to dispose of appeals, 0.54 million at last count
- Payment of MCA fees –electronic mode-regarding
- Budget '11-12' Parliament Completes Approval Exercise
- Satyam restrained from operating its accounts
- ICICI a foreign firm, subject to FDI norms: Govt
- Maha expects Rs 15 crore entertainment tax revenue from IPL
- CAG blames PMO for not acting against Kalmadi
- No service tax on visa facilitators: CBEC
- Provision of 15-minutes reading and planning time allowance to the candidates of Chartered Accountants Examinations
- Companies Bill to be taken up in Monsoon Session
- File Service Tax Return in time as Maximum Penalty increased 10 times to Rs. 20000
Comments
MAHESH JALAN
17-May-2016 , 10:28:13 amIN THE FORM ALSO THERE SHOULD BE A COLUMN THAT IN HOW MANY COMPANY TH EPERSON IS ALREADY A DIRECTOR, THEN ONLY THIS ISSUE CAN BE COME UNDER CONTROL.