2.25 lakh shell companies under scrutiny of corporate affairs ministry

A total of 2.25 lakh companies are under the scanner of the Ministry of Corporate Affairs for not making requisite filings for 2015-16 and 2016-17, and the ministry may crack down upon them to identify “shell companies”, The Times of India reported.

Sources told TOI that the registrar of companies is in the middle of issuing notices to these entities, and if they fail to file returns over the next few months, they may get deregistered.

The government has been targeting companies who have not filed required returns under the Companies Act for over a year now. Directors of said companies are affected due to deregistration, who can be disqualified from holding board positions.

Previously, nearly 3 lakh companies and their directors had received notices from the ministry on the failure of filing the correct returns since 2013-14 and names of 2.26 lakh companies were struck off.

Close to 98,000 director identification numbers have been revived, according to sources, and 14,000 directors working with over 35,000 companies have availed the Condonation of Delay Scheme (CoDS).

Sources also said the government will pursue action against shell companies since evidence has been found in the multiple layers of data suggesting routing of funds, mostly involving cash payments. Many companies under scrutiny have made significant transactions during demonetization.

The tax department has asked for data from these 2.25 lakh companies which were deregistered after suggestions that the government should define ‘shell companies’ in the Companies Act. No decision has been reached on having a separate definition of shell companies at the moment. #casansaar (Source - Times of India, MoneyControl)