There is no definition of the term “Shell Company” in the Companies Act. It normally refers to a company without active business operation or significant assets, which in some cases are used for illegal purpose such as tax evasion, money laundering, obscuring ownership, benami properties etc. This was stated by Union Minister of State for Corporate Affairs Shri Rao Inderjit Singh in a written reply to a question in Rajya Sabha today.
On the identification shell companies, the Minister stated that the Special Task Force set up by the Government to look into the issue of “Shell Companies” has inter-alia recommended the use of certain red flag indicators as alerts for identification of Shell Companies.
Giving more details, the Minister stated that the Government has undertaken a Special Drive for identification and strike off of Companies by invoking the provisions of section 248 (1) of the Act by which the Registrar of Companies (RoC) struck off those companies after following the due process of law from the Register of companies when RoC has reasonable cause to believe that those companies are not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455.
The Minister listed the total number of companies struck off u/s 248 State/Union Territory-wise as under:
Sate/ UT-wise
2018-19
2019-20
2020-21
Gujarat
6398
2494
257
Andaman
24
15
2
Karnataka
4171
5568
1038
UT of Chandigarh
3514
893
501
Tamil Nadu and Coimbatore
9107
3214
1322
Orissa
2907
719
78
NCT of Delhi and Haryana
30544
12653
2396
Kerala
2801
5339
977
Goa
250
311
36
Madhya Pradesh
3386
1168
111
Himachal Pradesh
481
176
201
Telangana
16364
2686
730
Rajasthan
4038
4466
507
Jammu and Kashmir
255
138
0
Jharkhand
1306
403
139
Uttar Pradesh
7589
5821
1936
West Bengal
8390
6627
5
Maharashtra (Mumbai and Pune)
47575
7824
2298
Bihar
2540
1956
185
UT of Puducherry
37
117
35
Assam, Tripura, Arunachal Pradesh, Nagaland, Mizoram, Meghalaya, Manipur, and Sikkim
372
796
88
Uttarakhand
476
79
0
Andhra Pradesh
3864
958
0
Chhattisgarh
539
347
47
Grand Total
156928
64768
12889
Ministry of Corporate Affairs Press Release dated 03 August 2021
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