News: 2 lakh directors banned from taking new board posts


2 lakh directors banned from taking new board posts

RoC strikes off names of 2.1 lakh non-compliant companies. The move is aimed at intensifying crackdown on shell companies.
2 lakh directors banned from taking new board posts

Nearly 2 lakh directors who serve on the board of companies are now effectively barred from holding any board position in new businesses, as their names have been struck off by the Registrar of Companies (RoC), says a news report.

2.1 lakh companies have been struck off by the RoC for “not filing returns and not completing other formalities related to compliance after noticed served to 2.97 lakh companies that have failed to respond to show-cause notices” says the report. The numbers are significant in the context that there are over 10 lakh companies registered in India. In effect this means that there are over 20 lakh directors in the country presently. Although the directors will not have to step down from the board of other companies on which they currently serve as directors, a strong crackdown is anticipated in the next few weeks. 

The step is aimed to expose shell companies used to divert funds and launder money. The government is well within its rights to bar directors of non-compliant companies from taking up any board position for a period of five years, however, their directorship on other boards will not be impacted and they will be allowed to fulfill their duties related to the companies that have been struck off. Delhi has the maximum number of companies whose names have been struck off at about 48,000 followed by Mumbai (approx. 38,000), Chennai (approx. 12,000), Bengaluru (approx. 11,000) and Pune (10,000). 

The move is the latest from the government to turn up the heat on the shady business of running shell companies and evading scrutiny. The report says that a task force comprising of officials from Ministry of Corporate Affairs (MCA) and the revenue department has already been set up to identify such companies and clamp down on them.

An unnamed source in the report has been quoted saying, “There is no intention to create problems in other companies. So we are for the moment staying away from acting against the boards of other companies."

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Topics: C-Suite

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