MCA plans to further intensify crackdown on shell companies: Report

The Ministry of Corporate Affairs has already struck off hundreds of thousands of shell companies that are often used to funnel black money, the report said quoting sources in the know

The Ministry of Corporate Affairs (MCA) is planning to further intensify its crackdown against non-functional (shell) companies, the Economic Times (ET) reported.

The MCA has already struck off hundreds of thousands of shell companies that are often used to funnel black money, the report said, quoting sources aware of the matter.  

According to the report the MCA is planning to rake up the physical verification of non-functional or non-compliant firms by the Registrar of Companies (ROC). This is likely to compel such firms to take compliance more seriously and become more disciplined.

A company is required to have a registered office within thirty days, which should be capable of receiving and acknowledging all communications and notices for the firm.

In the past three years, nearly 127,952 firms were struck from records according to Minister of State for corporate affairs Rao Inderjit Singh's statement in Lok Sabha in February.

The MCA has been proactively working to crackdown on shell companies since 2016, the report said.  

Quoting another source the ET report said that this decision will complement the ongoing drives by Enforcement Directorate and Tax officials against such shell companies.

MAC21 portal's database which is meant for various filings under the Companies Act and the LLP Act will further aid drive against such companies, the report said.