Government task force identifies 16,537 'confirmed' shell companies; 97,000 more under scanner

The Task Force on shell companies constituted in February 2017, three months after demonetisation, has so far identified 16,537 confirmed 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, informed the Ministry of Corporate Affairs (MCA) today.

It has identified another 16,739 companies, which have same sets of directors as those of the confirmed shell companies. The task force has also identified 80,670 suspected shell companies drawn up by SFIO using certain Red Flag Indicators. "The Task Force has identified certain Red Flag Indicators, which will be used to identify more shell companies," informed the MCA statement.

The task force has met 8 times since its constitution. It was formed under the joint chairmanship of the revenue secretary and secretary of MCA with a mandate to check in a systematic way, through a coordinated multi-agency approach, the menace of companies indulging in illegal activities including facilitation of tax evasion. The officials from Department of Financial Services, direct and indirect tax departments, Central Bureau of Investigation, Enforcement Directorate, SFIO, FIU-IND, RBI, SEBI, DG-GSTI and DG-CEIB are its members.

This is part of the government's drive to weed out black money from the corporate sector by cracking down on non-serious 'companies' registered with the Registrar of Companies (RoC). The Section 248 of the Companies Act, 2013, gives the RoC power to deregister or strike off the name of the companies.

In a drive carried out by MCA in 2017-18, the ROC removed from the register of companies the names of 2,26,166 companies, which had not filed their financial statements or annual returns for a continuous period of two or more financial years. As many as 3,09,619 directors were also disqualified under for non-filing of financial statements or annual returns for a continuous period of immediately preceding 3 financial years.

MCA has identified 2,25,910 companies for being struck-off in 2018-19.