Moneycontrol
Last Updated : Oct 17, 2018 04:21 PM IST | Source: Moneycontrol.com

One third of registered companies found defunct, struck off official records

The corporate affairs ministry is also examining companies’ data to see if they are involved in tax evasion or money laundering

Shreya Nandi @shreyanandi15

Nearly one in every three registered company in India is defunct, the government has found out, as it struck off 5.95 lakh companies from the official records as part of the plan to crack down on shell or paper companies.

As on August 31, 6.11 lakh companies that were shuttered down, of which 10,562 were dissolved, 5.65 lakh were defunct or struck off, 9,436 were converted into Limited Liability Partnership (LLP), government data reviewed by Moneycontrol showed.

These represent  31.2 percent of the 17.95 lakh companies registered in India.

Under the section 248 of the Companies Act, 2013, a company’s name can be removed from the Registrar of Companies (RoC) if it fails to commence business within one year of its incorporation or is not carrying out operations for three years.

The ongoing move is part of a drive to remove entities that do not contribute to an economic activity and are rather a burden on the system. The corporate affairs ministry is also examining companies’ data to see if they are involved in tax evasion or money laundering.

The data also showed that nearly two-thirds or 11.27 lakh companies are active. Active companies carry out normal business and trading activities, generating income and meeting the basic requirements such as filing financial statements.

Out of the 11.27 lakh active companies, 11.20 were limited by shares, 6,706 were limited by guarantee and 351 were unlimited companies.

Among registered companies, data reveals that Maharashtra has 3.56 lakh or maximum entities, followed by Delhi and West Bengal, with 3.24 lakh and 1.98 lakh companies respectively.

As a part of government’s clampdown on black money, the government has taken several steps including constitution of the Special Investigation Team on Black Money, enactment of the The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, Income Declaration Scheme, 2016, Benami Transactions (Prohibition) Amendment Act, 2016 and the demonetization scheme.

A task force was also set up in February, 2017 by the Prime Minister’s Office under the joint chairmanship of the finance secretary Hasmukh Adhia and corporate affairs secretary Injeti Srinivas with a mandate to check the menace of companies indulging in illegal activities including facilitation of tax evasion.

In 2017-18, MCA had identified and removed the names of 2.26 lakh organisations from the registrar of companies (RoC) directory for remaining inactive for two years or more.

 
First Published on Oct 17, 2018 04:21 pm
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