News: MoCA 'disqualifies' over 1 lakh Directors at Shell companies


MoCA 'disqualifies' over 1 lakh Directors at Shell companies

The move is aimed at intensifying the much-publicised crackdown on shell companies that indulge in money-laundering
MoCA 'disqualifies' over 1 lakh Directors at Shell companies

Delivering on the promise of cracking down on shell firms, the central government announced on Tuesday that it has identified 1.06 lakh directors for ‘disqualification’, says a news report. This development from the Ministry of Corporate Affairs comes days after some 2.09 lakh firms were deregistered for irregularities by Registrar of Companies last week. 

The government has “identified 1,06,578 Directors for disqualification under Section 164(2)(a) of the Companies Act, 2013 as on September 12, 2017. Ministry of Corporate Affairs is further analysing the data of these firms available with the Registrar of Companies to identify the Directors and the significant beneficial interests behind these firms. Profiles of Directors such as their background, antecedents and their role in the operations/functioning of these firms are also being compiled in collaboration with the enforcement agencies,” the statement issued of MoCA read.

According to the Section 164 of the Companies Act, 2013, a director of a company that has not filed financial statements or annual returns for three financial years consecutively can be disqualified and made ineligible for re-appointment in that company or any other firm for a period of five years. 

This is a part of the government’s much-publicised war on black money, and comes on the heels of Ministry of Finance directing banks to restrict financial operations of these companies’ bank accounts. Furthermore, by the looks of it, the government is not planning to go soft anytime soon. The statement released yesterday by MoCA added, “The Professionals, Chartered Accountants/Company Secretaries/Cost Accountants associated with such defaulting firms and involved in illegal activities have been identified in certain cases and the action by Professional Institutes such as the Institute of Chartered Accountants of India, the Institute of Company Secretaries of India and the Institute of Cost Accountants of India is also being monitored.”

PP Chaudhary, Minister of State of Corporate Affairs has been quoted saying in a statement, “The present Government has vowed to fight black money, and fighting the menace of shell companies is an imperative element of such fight. The fight against black money shall be incomplete without breaking the network of shell companies... by the end of this month, we would be ready with the relevant details of all defaulting Directors of these shell companies. This whole exercise shall go a long way in creating an atmosphere of confidence and faith in the system paving the way for ease of doing business in India.” He is also said to be assessing the situation regarding cancellation of registration of companies and is in regular touch with all relevant ministries and organisations, namely, Serious Fraud Investigation Office (SFIO), ROCs, Department of Financial Services, Indian Banks Association and other departments involved in the crackdown against defaulting companies.

The list of disqualified directors can be found here.

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Topics: C-Suite, Leadership, #National, #Current

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