After striking off 2.26 lakh shell companies last year, the Centre is all set to de-register an equal number of firms this year for non-filing of financial statements for the years 2015-16 and 2016-17.
The government has identified over 2.25 lakh companies for de-registration due to non-filing of financial statement. However, they will be given an opportunity of being heard by way of notices regarding their default and the proposed action, the Ministry of Corporate Affairs said on Friday.
“Appropriate action will be taken after considering their response,” the ministry said in a statement.
A task force headed by Finance Secretary Hasmukh Adhia and MCA Secretary Injeti Srinivas was set up in February 2017 to check the menace of shell companies through a coordinated, multi-agency approach, it said.
The task force has met around eight times since its constitution to check the menace of these companies indulging in “illegal activities”.
These illegal activities could include showing transactions on paper as legitimate business transactions, which helps turn black money into white. This lets the business person avoid paying tax on the laundered money, the ministry said.
“Over 3.09 lakh directors were disqualified for not filing financial statements or annual returns for preceding three years (2013-14, 2014-15 and 2015-16). For the second drive to be launched during 2018-19), 2,25,910 companies have been further identified for being struck off under section 248 of the Companies Act, 2013 for non-filing of financial statements for 2015-16 and 2016-17,” the statement said.
As many as 7,191 Limited Liability Partnerships (LLPs) have been identified for action under section 75 of the LLP Act, 2008 due to non-filing of financial statements for the stated years, it said.
The task force has classified shell companies into three categories - Confirmed, Derived and Suspect.
The Confirmed list has 16,537 shell companies on the basis of the information received from the various law enforcement agencies of the companies found to be involved in illegal activities. The Derived list has 16,739 companies identified on the basis of 100% common directorships with the confirmed shell companies. The Suspect list has 80,670 shell firms drawn up by SFIO using certain red flag indicators by the task force, the ministry said.
It said the government will be launching an awareness campaign soon on the issue.