35,494 shell firms to be struck off records

The ongoing move is part of a drive to remove shell companies or entities that do not contribute to an economic activity and are rather a burden on the system.
For representational purposes
For representational purposes

NEW DELHI: As many as 35,494 shell companies have been identified and are in the process of being struck-off from the register of companies as on April 30, 2019 amid a government crackdown on money laundering and tax evasion, official data showed.

Of the 18.83 lakh companies registered with the Registrar of Companies (RoC), data released by the Ministry of Corporate Affairs (MCA) revealed that 6,83,050 companies were closed and some 6,452 companies were under liquidation. In addition, nearly 93 companies were in the process of being re-activated and 1,778 companies have obtained the “dormant” status.

Under Section 248 of the Companies Act, 2013, the RoC is entitled to remove a company’s name if it fails
to commence business within one year of its incorporation or is not carrying out operations for three years.

The ongoing move is part of a drive to remove shell companies or entities that do not contribute to economic activity and are rather a burden on the system.

Officials said that the corporate affairs ministry is also looking at companies’ data to see if these companies are deliberately trying to escape the law by converting into a limited liability partnership (LLP). Over 6,000 companies have got converted to LLPs since November 2016. The ministry is also considering tweaking the law in order to allow only small firms to change into an LLP.

The data showed that out of the total registered companies, 11.56 lakh were active in April 2019 as compared to 11.76 in a year ago period. Active companies are those that do not engage in fraudulent or illegal business and carry out daily operations while meeting the basic requirements such as filing financial statements.

During April, a total of 10,383 companies, including 626 companies run by entrepreneurs who on their own are capable of starting a venture by allowing them to create a single person economic entity, were registered with an authorised capital of Rs 19.54 crore.

Among the registered companies, Maharashtra has 1,943 companies followed by Delhi and Uttar Pradesh,
with 1,276 and 1,064 companies, respectively.

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