After canceling registration of 2.09 lakh companies and restricting operations in their bank accounts, the Ministry of Corporate Affairs has identified 1,06,578 directors for “disqualification” as on September 12, 2017, the government said in a statement on Tuesday. Money laundering activities performed under the aegis of these companies are also being scanned by the government, it said. The move comes after the Ministry of Finance directed banks to restrict operations of these companies’ bank accounts by their directors or their authorised representatives.
The government has “identified 1,06,578 directors for disqualification under Section 164(2)(a) of the Companies Act, 2013 as on September 12, 2017,” as per the statement. “Ministry of Corporate Affairs is further analysing the data of these firms available with the Registrar of Companies to identify the Directors and the significant beneficial interests behind these firms. Profiles of Directors such as their background, antecedents and their role in the operations/functioning of these firms are also being compiled in collaboration with the enforcement agencies,” it added.
Under Section 164 of the Companies Act, 2013, a director in a firm that has not filed financial statements or annual returns for three financial years continuously would not be eligible for re-appointment in that company or any other firm for five years.
“The Professionals, Chartered Accountants/Company Secretaries/Cost Accountants associated with such defaulting firms and involved in illegal activities have been identified in certain cases and the action by Professional Institutes such as the Institute of Chartered Accountants of India, the Institute of Company Secretaries of India and the Institute of Cost Accountants of India is also being monitored,” the ministry said.
“The fight against black money shall be incomplete without breaking the network of shell companies. Possibility of using the Shell companies for laundering the black money cannot be undermined,” Minister of State for Corporate Affairs P P Chaudhary said, according to the government statement. There are now about 11 lakh companies with active status after deregistration of over 2.09 lakh firms, it said.
Earlier speaking at the ICAI event on July 1, Prime Minister Narendra Modi had said that transactions of more than 3 lakh companies were under the radar of suspicion post demonetisation. Modi added that names of one lakh companies were struck off Register of Companies. These companies were removed as they have not been carrying any business or operation for a period of two immediately preceding financial years and have not made any application within such period for obtaining the status of dormant company under section 455.
Chaudhary is also monitoring the situation emerging out of cancellation of registration of the companies and is holding regular meetings with officials of the ministry and various related organisations. These include Serious Fraud Investigation Office (SFIO), ROCs, Department of Financial Services, Indian Banks Association and other departments involved in the crackdown against defaulting companies.