Govt likely to strike off over 1000 shell companies

The move is a continuation of the ministry of corporate affairs’ (MCA) efforts to weed out shell companies.

The Government of India might strike off as many as 1,313 companies from the registrar of companies’ (RoC) database, which have failed to file annual reports for two years. 
 
The move is a continuation of the ministry of corporate affairs’ (MCA) efforts to weed out shell companies.
 
A senior ministry official told the Financial Express that the status of these companies will be altered from “listed” to “unlisted” before they are struck off.
 
“They might have sought permission from the MCA to file draft prospectuses for initial public offerings (IPOs) but did not complete the process. That is why they are categorised as ‘listed’,” the official was quoted as saying.
 
As asked by the government in May, the Securities and Exchange Board of India (Sebi) had provided a “status” report on these companies. The capital market regulator found that 402 were not listed on any of the bourses. 
 
Of the 911 firms, Sebi found that 335 have been delisted while 73 are vanishing companies. Around 80 were on the dissemination board of the BSE and NSE, while 405 continued to be listed. Another 18 firms are limited by guarantee or private limited companies, the Financial Express report said.
 
The corporate affairs ministry has powers to strike off the delisted firms (330 on BSE and 5 on NSE) as well as 18 private limited or companies limited by guarantee. 
 
However, as regards 558 firms, the ministry should wait till Sebi takes action against them. Of the 80 companies on the dissemination board, 33 are on the NSE and 47 on the BSE.
 
A last month report said the government has identified over 2.25 lakh companies for de-registration this year due to non-filing of financial statement. 
 
The government had de-registered an equal number of firms last year.
 
Source: Media reports

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