Lok Sabha Question No. 1194 (UNSTARRED), answered on 2018-02-09
Subject: Campaign against Shell Companies
Ministry: CORPORATE AFFAIRS
Asked by: POONAMBEN HEMATBHAI MAADAM

## 1194.

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 1194 ANSWERED ON FRIDAY, THE 09 TH  FEBRUARY, 2018 [MAGHA 20, 1939 (SAKA)]

## COMPAIGN AGAINST SHELL COMPANIES

## QUESTION

## SHRIMATI POONAMBEN MAADAM:

Will the Minister of CORPORATE AFFAIRS

## be pleased to state:

- (a) whether the Government has initiated campaign against black money, wilful defaulters and erring directors and if so, the details thereof;
- (b) whether a number of registered companies are facing action from authorities after the demonetisation;
- to after
- (c) if so, the number of companies registered prior demonetisation and the number of companies closed demonetisation;
- (d) whether  a  number  of  companies  are  not  carrying  out  their business activities since long;
- (e) if  so, the number of such companies identified so far and the action taken by the Government against such companies; and
- (f) the details of guidelines and the action taken by the Government against the directors of shell companies?

## ANSWER

MINISTER OF STATE FOR LAW AND JUSTICE  (SHRI P. P. CHAUDHARY) AND CORPORATE AFFAIRS

- (a) to (f): The mandate under the Companies Act, 2013 is to regulate companies  incorporated  under  it. However,  the  provisions for

disqualification of directors are prescribed under Section 164 of the Companies Act, 2013.  Section 164(2)(a) prescribes that no person who  is  or  has  been  a  director  of  a  company  which  has  not  filed Financial

Contd….. 2/-

- 2 -

Statements  or  Annual  Returns  for  any  continuous  period  of  three financial years shall be eligible to be re-appointed as director of that company or appointed as director in other company for a period of five years from the date on which the said company fails to do so. Section  167(1)  (a)  of  the  Act  also  prescribes  that  the  office  of  a director shall become  vacant  in case he incurs any of the disqualifications specified in Section 164 of the Act.  Further, Rule 14(2) of the Companies (Appointment and Qualification of Directors), Rules,  2014  requires  the  companies  to  intimate  the  particulars  of their  directors  on  such  failure  by  filing  a  prescribed  form  DIR-9  to Registrar of Companies [ ROCs].  3,09,619 Directors were  identified as disqualified under Section 164(2)(a) read with Section 167 of the Companies Act, 2013 for non-filing of Financial Statements or Annual Returns for a continuous period of immediately preceding 3 (three) financial  years  (2013-14,  2014-15  &  2015-16).    Further,  Section 248(1)(c) provides for removal of name of company from the register of companies if it is not carrying on any business or operation for a period of 2(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 of the Act. Based on the above mentioned provision, 2.97 lakh companies were identified under this category  as  on  31.03.2017  and  after  following  due  process,  the names of 2,26,166 companies were struck off from the register of companies as on 31.12.2017.  Out of the above mentioned 3,09,619 disqualified directors, 2,10,116 number of disqualified directors were directors on the Board of struck off companies.

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