New Delhi: The central government informed in a Lok Sabha session that one lakh shell companies had been de-registered so far in the current financial year.
The Corporate Affairs Ministry said the action was taken under the government’s drive to arrest misappropriation and money laundering.
The government has undertaken the drive to curb black money and money laundering in the country. As part of the initiative, an action was taken against the shell companies. ‘In the last year, 2,26,000 companies were prosecuted while the 1,15,000 shell companies were de-registered in this year’, the Minister of State for Corporate Affairs, P.P Chaudhary said in reply to a question at the Lok Sabha.
Shell companies are the companies which exist only on paper. Although all the shell companies are not involved in malpractices, such companies are often used for money laundering, as well as for illicit fund flows. Therefore, such companies are being identified to initiate further action over them. As per the government provision, registrations of companies which are non-functional for two consecutive years and also have not applied for securing a certificate for a dormant status of the company were to be cancelled. ‘Under the Companies Act, 2013, in the financial year 2018-19, a total of 2,25,910 shell companies were identified so far. Also, according to Section 248, the registration of 1,15,000 companies was cancelled’, Chaudhary said.