According to the latest Ministry of Corporate Affairs (MCA) data, 14,848 Indian companies registered in India were either found to be defunct or were struck off from official records in January (2019), reports Mint.
Out of the total 1.85 million companies registered with the Ministry at the end of January, as many as 670,318 companies have been ‘closed’ as part of the government's efforts to crack down on shell companies suspected of money laundering and tax evasion.
Shell companies are those entities that are often set up for subversive economic activities and do not contribute to any economic activity.
Under Section 248 of the Companies Act, the Registrar of Companies (RoC) can delist a company from its records if it does not commence business within a year of its incorporation, or has not carried out any transactions for three straight years.
The government has also planned to geo-tag all shell companies in the country. “This (geo-tagging) will help us identify instances of one building being used by hundreds of shell companies as their registered office or of companies citing vacant plots as their registered office address. It will serve as an early warning system for detecting mushrooming of shell companies. We are seriously thinking of introducing this requirement,” Minister of State in Corporate Affairs Ministry, P P Chaudhary, stated.
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