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Saturday, September 25, 2021

Government restricts bank accounts of over 2 lakh ‘struck off’ companies

The banks have been advised to go in for “enhanced diligence” while dealing with companies in general, the release said.

By: ENS Economic Bureau | New Delhi |
Updated: September 5, 2017 6:04:43 pm
Shell firms, shell companies, Government shell companies, Modi govt shell companies, demonetisation Finance Minister Arun Jaitley coming out of his ministry in New Delhi. PTI Photo by Shahbaz Khan

The government has advised banks to “put restrictions” on the operation of bank accounts of the 2,09,032 companies delisted by the Registrar of Companies. “Since such ‘struck off’ companies have ceased to exist, action has been initiated to restrict the operation of Bank accounts of such companies. The Department of Financial Services has, through the Indian Banks Association, advised all Banks that they should take immediate steps to put restrictions on bank accounts of such struck off companies,” a finance ministry release said.

Also, the banks have been advised to go in for “enhanced diligence” while dealing with companies in general, the release said. “A company even having an active status on the website of the Ministry of Corporate Affairs but defaulting in filing of its due Financial Statement(s) or Annual Return(s) of Particular of Charges on its assets on the secured loan should be seen with suspicion as, prima facie, the company is not complying with its mandatory statutory obligations to file this vital information for availability to its stakeholders,” it said.

The existing directors and authorized signatories of such struck off companies will now not be able to operate bank accounts of such companies till they are legally restored under Section 252 of the Companies Act by an order of the National Company Law Tribunal, it added.

In his Independence Day speech, Prime Minister Narendra Modi had said that data mining after demonetisation has revealed 3 lakh shell companies, out of which registration of 1.75 lakh companies have been cancelled. “Post-demonetization, the reports from data mining astonishingly revealed that there are 3 lakh shell companies dealing in Hawala transactions. Can anyone imagine? Out of these 3 lakh shell companies, registration of 1.75 lakh companies were cancelled,” Modi had said.

The companies were delisted for carrying any business or operation for a period of two immediately preceding financial years and not making any application within such period for obtaining the status of dormant company under Section 455. The said action by the Registrar of Companies (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.

The Securities and Exchange Board of India (SEBI) had also directed the stock exchanges to initiate action against 331 listed companies, suspected to be shell firms. The regulator’s directive had come after the corporate affairs ministry had shared a list of the 331 listed companies. Subsequently, some companies had appealed to the Securities Appellate Tribunal (SAT) against the market regulator’s directive. Since then, SAT has stayed the trading restrictions on 12 such companies including J Kumar Infraprojects and Parsvnath Developers.

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