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100,000 Deregistered Indian Companies To Face More Heat

NEW DELHI – The government is launching a multi-pronged offensive against one lakh companies that have been de-registered, including action against those for violating taxation and money-laundering laws as well as choking their access to banking.

A day after Prime Minister Narendra Modi’s announcement that the ministry of corporate affairs (MCA) had struck off names of these companies, sources told TOI that all directors on the boards of these companies would be barred from similar positions on other corporate boards for five years, which is in line with the provisions of the Companies Act.

While the MCA has acted against them for not filing returns, it is now going to approach banks with the list of companies where action has been taken to ensure that they are unable to operate their bank accounts or access loans.

“In the past, we noticed that some of the de-registered companies continued to enjoy access to banking services due to lack of information flow. We want to prevent that, otherwise the whole purpose will be defeated,” said a source, who did not wish to be identified.

Similarly, the ministry is writing to the Financial Intelligence Unit (FIU) to scan for any violation of provisions of the Prevention of Money Laundering Act. Along with the Enforcement Directorate, the FIU has powers to implement the provisions of the PMLA.

Income tax authorities too are scanning the information, with sources indicating that some companies could face action under the law against benami property. The MCA and the revenue department are jointly working to crack down against shell companies, with the PM’s office keeping close watch over the developments.

Sources said it was found that a large number of these companies had not filed the required returns related to Companies Act and were suspected to exist only on paper. But some of the dormant entities suddenly got active during demonetisation and the money laundering and benami property-related investigations and actions would be confined to them.

Addressing chartered accountants on Saturday, Modi had said more than 3 lakh companies were under suspicion. The MCA had sent notices to at least another two lakh companies that had not filed returns. “The ministry will take similar action wherever there is a violation. Even in case of the one lakh companies which have been de-registered, time was given to respond and it has been done in line with the law,” a source said.

While acting against dodgy companies, the MCA had initiated several steps to make life simpler for genuine companies, sources insisted, while listing out a series of steps from registration to name selection and new guidelines for mergers.

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