Govt names and shames directors of shell firms
CRACKING DOWN At least 17 Registrars of Companies of states have released these names
MUMBAI: The ministry of corporate affairs (MCA) has made public the names of directors whom it disqualified last week for associating with companies that have not filed their financial statements or annual returns for three financial years.
This is possibly the first of its kind naming and shaming exercise aimed at directors who have been barred from assuming directorships at other firms for five years as the government continues its crusade to eradicate the black economy.
The names include some that are similar to prominent politicians, from Arunachal Pradesh to Tamil Nadu, and businessmen, including non-resident Indians.
Mint couldn’t ascertain whether these directors were indeed popular public figures.
On September 12, the MCA issued a statement saying that it has identified 106,000 directors of companies that did not file their financial statements or annual returns for three straight years, violating provisions of the Companies Act, 2013.
Prior to that, it struck off 200,000 companies that were suspected to be shell firms and directed banks to restrict operation of bank accounts of such companies by the directors of such companies or their authorised representatives.
Shell companies, though not defined under the Companies Act, are those that adhere to basic company laws and are used to avoid taxes and convert black money into white.
At least 17 Registrars of Companies (RoCs) belonging to various states have released these names.
In some cases, they have released the names of directors in companies that been struck off the RoC list as well. At least six RoCs, including those in Patna, Jaipur and Kolkata, are yet to release a list of such directors. RoC Mumbai, which has at least 39,000 names, has released only the director identification number (DIN), while most others have released their names as well.
“The government in the past had introduced a mechanism to encourage companies to close down voluntarily if their financials did not check out. But the current exercise seems to be of a different magnitude and scale. Apparently a lot of data analytics and data mining has gone into putting together such voluminous data. It seems like a fallout of demonetisation – an integrative, consultative and inter-regulatory action to track black money and instill a culture of compliance,” said SN Ananthasubramanian, practising company secretary and past president, Institute of Company Secretaries of India.