Almost three lakh companies, who have not been carrying out business activities since some time, have been notified with show cause notices by the Corporate Affairs Ministry. Stern action is also likely to be taken against them. In a bid to root out shell companies engaged in nefarious activities, the ministry is taking steps to nullify the registration of such businesses. The ministry is preparing a database of shell firms so as to keep a check on non legal activities, PTI quoted sources as saying.
They added that 2.96 such firms, who have not submitted details of their finances for two or more consecutive years, are on the radar of the government. The ministry, putting into action the Companies Act, has asked for reasons from the firms as to why they should be allowed to remain registered. Strict action would be taken against those whose reasons are found unsatisfactory. Final measures would be initiated in batches starting June after all formalities are through, sources added.
The Registrars of Companies (RoCs) in states and union territories have sent notices to more than two lakh companies under the Companies Act, 2013, Section 248, as per the ministry. This section deals with cancelling registration based on certain check lists.
The country has almost 16 lakh registered firms out of which, active companies are only about 11 lakh. The RoC has the power to ask any company for explanations in case a given firm has not actively engaged in business since a year of being registered.