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Govt releases names of 55K directors linked to delisted ‘shell companies’

In most cases, the directors whose names have been made public will not be eligible for any directorship till October 2021 as the action has been initiated with effect from November 2016.

By: ENS Economic Bureau | New Delhi | Published: September 20, 2017 3:20 am
shell companies, black money, shell company directors, india business, business news, indian express news The ministry has also identified professionals, chartered accountants, company secretaries and cost accountants associated with the defaulting companies. (Representational image)

Following delisting of around 2,09,032 companies and restriction of their bank accounts, the government has now released the list of over 55,000 directors associated with struck off companies. The names have been released by different Registrar of Companies (ROCs), with more than 24,000 such shell companies from the Chennai region and over 12,000 each from Ahmedabad and Ernakulam.

Similar lists of directors have been made public by the ROCs in Cuttack, Goa and Shillong, among others. However, ROCs in Delhi, Mumbai and Chandigarh are yet to publish such lists.

More such names will be published soon as the government has already identified over 1.06 lakh directors for their association with shell companies which were deregistered for not carrying business activities for a long period. Several of these names could also be linked to various political and corporate groups, but it could not be ascertained immediately as most of the lists only contain the names of directors and their DINs (Director Identification Numbers) and not any specific personal details.

Earlier this month, the government had said more than 1.06 lakh directors will be disqualified for their association with shell companies. The names of these firms have been struck off under Section 248 of the Companies Act, which provides that the ROC may take action against them if a company has failed to commence its business within one year of its incorporation; or it has not carried out any business for two financial years or has failed to file its financial statements for three years.

The action against directors of such firms can be taken under Section 164(2), which provides that such persons will not be eligible to be re-appointed as a director of that company or appointed in any other company for five years from the date of default by the company concerned.

In most cases, the directors whose names have been made public will not be eligible for any directorship till October 2021 as the action has been initiated with effect from November 2016. Signalling that more regulatory action is expected, the ministry is already analysing further data of 2.09 lakh defaulter companies to also identify persons with significant beneficial interests. There are nearly 11 lakh companies with active status after deregistration of over 2.09 lakh firms.

“Profiles of directors such as their background, antecedents and their role in the operations/functioning of these companies are also being compiled in collaboration with the enforcement agencies,” the ministry had said on September 12. Money laundering activities under the aegis of these companies are also under the scanner, it had said.

The ministry has also identified professionals, chartered accountants, company secretaries and cost accountants associated with the defaulting companies. “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 had said earlier this month. The minister 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.

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