The Ministry of Corporate Affairs has commenced working on the plan of action for second phase of striking out shell companies. Government sent show-cause notice to 2,25,000 companies, out of which 70,000 are crossed off and 1 lakh are now in the row, said an official to Business Standard.
The first draft of the suspected list constituted approximately 3 lakh organizations. The ministry has seized the bank accounts of weeded out firms and their transactions are now under investigation. The Corporate Affairs ministry has initiated a KYC drive for company directors as a part of their long term-strategy. The company official have to share PAN, Passport and other important personal details like phone numbers and address. The Govt is seeking towards bringing down companies which are operating outside the legal boundaries.
An anonymous source of Business Standard quoted, “We are trying to trace the directors of vanishing companies. At present, we are targeting are about 70 of them. Over the years, we have been able to identify many companies that listed on the bourses, but are not traceable. For the remaining, while we are trying to locate their offices, an attempt is being made to look for their directors.”
History records suggests that from 1996 to 2004, only 123 out of 200 companies were tracked down by the government, the rest disappeared. A lot of the companies did not list themselves after their first public offering. Apparently, a notice was issued by the ministry to all these companies to which around 100 companies responded. Many companies did not maintained registers at address as recommended by Stock Exchange and hence were categorized as missing.
PP Chaudhary, The Minister of State for Corporate Affairs, informed parliament that Gujarat has the highest number of missing companies which is 17. Further, The Government has registered a FIR against 70 companies.
The Registrar of Companies is instructed to scrutinize the financial records of the companies which cater money through public issue. As per Statistics, more then 4000 companies were guilty of money laundry and hence found missing in between 1992 and 1994.