In an effort to intensify the campaign against black money, the government has identified over 2.25 lakh more companies to be struck off the register of companies. With this, a total of over 5 lakh companies will have been legally de-recognised.

“The government expects that its efforts to clean up the registry will create a transparent and compliant corporate ecosystem in India, promote the cause of ‘ease of doing business’ and enhance the trust of the public,” a Ministry of Corporate Affairs statement said on Friday.

During Financial Year 2017-18, the Registrar of Companies had removed a total of 2,26,166 companies from the register; over 3.09 lakh directors were disqualified.

Talking about the second round of the drive to be launched this financial year, the Ministry said that a total of 2,25,910 companies have been marked for being struck off under Section 248 of the Companies Act, 2013, along with 7,191 LLPs for action under Section 75 of the LLP Act, 2008 for their failure to file financial statements for 2015-16 and 2016-17. “An opportunity of being heard will be given to these identified companies and LLPs by way of notices regarding their default and the proposed action. Appropriate action will be taken after considering their response.” it said.

A task force was set up during February 2017 under the joint Chairmanship of the Revenue Secretary and Corporate Affairs Secretary. Members of the committee have been drawn from the Department of Financial Services, the RBI, and various law enforcement and regulatory bodies. It has been given a mandate to check the menace of ‘shell companies’ indulging in illegal activities, including facilitation of tax evasion. The task force has met eight times so far.

Three lists of companies

The Ministry has listed the compilation of a database of shell companies by the SFIO (Serious Fraud Investigation Office) as one of the task force’s major achievements. The database has three lists: the Confirmed List, the Derived List and the Suspect List.

The Confirmed List has 16,537 confirmed shell companies on the basis of the information received from various law enforcement agencies. The Derived List has 16,739 companies identified on the basis of 100 per cent common directorships with the confirmed shell companies. The Suspect List has 80,670 suspected shell companies drawn up by the SFIO using ‘Red Flag Indicators’ identified by the task force.

The task force has directed members drawn from law enforcement agencies to send to the Institute of Chartered Accountants of India the details of action taken against Chartered Accountants by them. The Ministry will soon launch a campaign to raise awareness about the need to get the registrations of defunct companies cancelled.