NEW DELHI: In a major crackdown on domestic shell companies, the government on Friday decided to take ‘harsh punitive’ action, including freezing of their bank accounts used to launder money or evade taxes.
Following a review by the Prime Minister’s Office, a task force with members from regulatory ministries and enforcement agencies has been constituted to monitor action against “deviant” shell companies.
Shell firms are characterised by nominal paid-up capital, high reserves and surplus on account of receipt of high share premium, investment in unlisted companies, no dividend income and high cash.
While the Serious Fraud Investigation Office has filed cases against 49 shell companies, as much as Rs 3,900 crore has been laundered by 559 persons with the help of 54 professionals. Also, Rs 1,238 crore cash has been deposited in shell or dormant companies, post demonetisation.
“There are about 15 lakh registered companies in India, of which only six lakh file their annual return, which means a large number of these companies may be indulging in financial irregularities,” said a PMO statement.
“Harsh punitive actions will be taken against the deviant shell companies, which will include freezing of bank accounts, striking off the names of dormant companies, invocation of Benami Transactions (Prohibition) Amendment Act, 2016,” it said. The database will also capture the Aadhaar number of individual directors in the companies.
The regulatory ministry concerned will ensure disciplinary actions are initiated against the professionals indulging in malpractices and abetting the entry operators of these companies.