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Govt plans to revoke registrations of over 2 lakhs ‘inactive’ business forms

April 21, 2017

companiesNew Delhi: The government plans to cancel the registration of more than two lakh companies that have not been carrying out business for a considerable period of time, amid stepped up efforts to tackle the black money menace.

More than 200,000 companies, spread across various states, have been served with show cause notices as they have not been carrying out any operation or business activity for a prolonged time.

The corporate affairs ministry’s move also comes against the backdrop of overall efforts by the authorities to crack the whip on shell companies, suspected to be used for money laundering activities.

The Registrars of Companies (RoCs) in various states and union territories have issued notices to more than 200,000 firms under the Companies Act, 2013, according to information available with the ministry.

These notices have been issued under Section 248 of the Act, which is implemented by the Ministry. This section pertains to striking off names of companies on certain grounds.

With the issuance of notices, the companies concerned have to explain their position and if the responses are not satisfactory, then their names would be struck off by the Ministry.

Data showed that RoC Mumbai has issued notices to more than 71,000 companies while RoC Delhi has served notices to over 53,000 firms, among others.

As per the regulations, an RoC can seek explanation from a company if the latter has not commenced business within one year of getting incorporated under the Act.

Notice is also issued if a particular company has not been carrying out business for at least two continuous financial years and has not applied for dormant status. Such entities are given a time of 30 days to submit objections if any.

The Ministry has power to remove or strike off the names of such entities from the “register of companies” if the response is not satisfactory. Earlier this month, the Ministry had amended the Companies (Removal of Names of Companies from the Register of Companies) Rules. There are more than 15 lakh registered companies in the country.


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