Ministry of corporate affairs deregisters 50,000 shell companies in a week

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NEW DELHI: The ministry of corporate affairs (MCA) has deregistered about 50,000 companies in the last week as part of its ongoing drive against shell companies. The Delhi Registrar of Companies (RoC) has stuck off the names of more than 30,000 companies over the last three days, while more than 11,000 companies have been deregistered by the Mumbai RoC. Other RoCs have also struck off companies.

“These companies have been stuck off for not carrying any business or operations for the last two consecutive years. More such companies are likely to be stuck off in the next few days,” a senior government official said. “Notices of deregistration have been sent to all these companies,” he added. Last fiscal, the government had deregistered about 250,000 companies which had no operations or zero turnover for two consecutive years.

According to an MCA estimate, around the same number of companies could be de-registered in the current fiscal as well. A task force within the ministry is separately scanning the registers of all RoCs and undertaking the same exercise, the official said. There are more than 1.1 million active companies in India.

Under Section 248 of the Companies Act of 2013, the government can proceed with action against dormant companies which have been passive for two consecutive years. The government, through the Registrar of Companies, has to serve a notice on the dormant companies and its directors to respond within 30 days before the company’s name is struck off.

“Sections in the Companies Act allow the government to remove name of a company from the register if it fails to commence business within a year of incorporation or if the capital subscription has not been made within 180 days. Companies can also be stuck off in a situation where a company has not carried on business for two years,” the official said.

The ministry is also planning to weed out the limited liability partnerships (LLPs) that haven’t done any business in at least last two consecutive years. About 4,000 such LLPs have already been derecognised.

Source: Economic Times