Delhi and Hyderabad accounted for more than a third of the 1.42 lakh companies that were sent notices by the Registrar of Companies for removing and dissolution from register of companies. While Prime Minister Narendra Modi on July 1 said that over 1 lakh companies have been removed from the register of companies, data accessed from the 24 register of companies across the country show that the RoCs under the Ministry of Corporate Affairs sent notices to over 1,42,000 companies in the period between March and June 2017 proposing to strike off their names from register of companies and then dissolve them since they did not carry out any business or operation in the previous two financial years.
As per information available till July 7, nine out of the 24 ROCs had struck off 58,008 companies from the register of companies after sending them the notices. While 22,864 companies were struck off from register of companies in Delhi, 12,134 companies in Chennai, 9,625 in Ahmedabad, 8,078 in Kolkata, 3237 in Kanpur, 737 in Uttarakhand and 679 in Jammu, among others. The data on companies which were dissolved in other large centres including Mumbai, Bengaluru and Jaipur were not available till July 7.
While sending notices to companies prior to actual dissolution, the RoC said that it had reasonable cause to believe that the companies did not commence business within one year of incorporation. In its notice to the companies, the ROC said that it, “proposes to remove/strike off the names of the above-mentioned companies from the register of companies and dissolve them unless a cause is shown to the contrary, within 30 days from the date of this notice.”
While Delhi RoC alone accounted for 26,000 such companies which were given 30-day period to respond to the notice for strike off or dissolution, Hyderabad had 24,338 companies that did not carry any business or operation for two immediately preceding financial years. Other centres that saw high number of such companies were Bengaluru (14,827), Kolkata (11,955) and Pune (11,285).
Stating the reason for the dissolving them it said that the companies 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.The said action by the RoC was taken under provisions of section 248(1) of Companies Act, 2013 which relates to Power of Registrar to remove name of company from register of companies.
On July 1, at the ICAI event, the PM said that while transactions of more than 3 lakh companies were under the radar of suspicion post demonetisation, he said that “one lakh companies were struck off the list by the stroke of a pen. The names of those companies have been removed from the register of companies.”
Government sources said not all of these companies would have been involved in illegal activities such as money laundering or conversion of black money into white. Companies whose transactions are under the radar of regulators and enforcement agencies will face further scrutiny, a senior government official said. The government has also barred directors in companies whose transactions have been found to be suspicious to take board position in other companies for the next five years.
Section 164 of the Companies Act 2013 provides for disqualification for the appointment of directors in certain cases of non-compliance such as non-filing of financial statements or annual returns, or failing to repay deposits accepted by the company, among others.
The government has been analysing transaction data of companies before and after November 8, the day when old notes of Rs 500 and Rs 1,000 were withdrawn from circulation, to detect any untoward transactions. “Whatever data mining has been done till now has revealed that the transactions of more than 3 lakh companies – registered companies are under the radar of suspicion,” Modi said on July 1. He had said that the government has identified 37,000 shell companies who are engaged in hiding black money and hawala transactions.