Black Money War: Two lakh shell companies under RoC scanner for money laundering

More than 2 lakh inactive companies are under the scanner of the Registrar of Companies (RoC) as the government looks to crackdown on shell companies used for evading taxes.The companies identified by the RoC have not been complying with the rules of the Companies Act. These companies will be shifted into dormant category for the next two years, a source told Moneycontrol. A dormant company is one that has had no significant accounting transactions during the accounting period.If these companies still fail to comply with the regulations, the RoC will derecognize them. The RoC is in the final phase of identifying inactive companies who have not filed annual balance sheet or company regular updates for more than three years. The RoC will force the inactive companies to comply with the rules of the Companies Act and file past annual reports even while in the dormant status, said the source. If the companies are de-recognized by the RoC, they will have to surrender their names and they will no longer able to run their business on that name.There are around 15 lakh companies registered with ROC and more than 9 lakh companies have not been filing the details regularly.The RoC is creating a filter of companies based on the number of years that they have not been filing details for.“The problem arises when some fraud happens and we don’t have company details or promoters details,” the source said.Following the government’s decision to ban the old Rs 500 and Rs 1000 currency notes, may shell companies were used by black money hoarders to launder their illegitimate cash. The Prime Minister’s Office and Ministry of Corporate Affairs are jointly monitoring the exercise to identify shell companies.“Around 30-40 percent companies of the registered companies exist only for laundering money and evading tax; this exercise will help weed out such companies,” the source said.