Lok Sabha Question No. 469 (UNSTARRED), answered on 2023-02-06
Subject: Business with Shell Companies
Ministry: CORPORATE AFFAIRS
Asked by: Maddila  Gurumoorthy

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA UN-STARRED QUESTION NO. 469

ANSWERED ON MONDAY, 06 FEBRUARY, 2023

## BUSINESS WITH SHELL COMPANIES

QUESTION

469. SHRI MADDILA GURUMOORTHY:

Will the Minister of CORPORATE AFFAIRS कारपोरेट कार्य मंत्री

be pleased to state:

- (a) whether  the  Government  has  implemented  any  safeguard measures for firms that unknowingly conduct business with the shell companies;
- (b) if so, the details thereof and if not, the reasons therefor;
- (c) whether the Government has taken any steps to generate awareness among companies against conducting business with shell companies; and
- (d) if so, the details thereof and if not , the reasons therefor?

ANSWER

Minister of State (Independent Charge) of the Ministry of Statistics  and  Programme  Implementation;  Minister  of  State (Independent Charge) of the Ministry of Planning and Minister of State in the Ministry of Corporate Affairs.

सांख्यिकी और कार्यक्रम कार्ायन्वर्न मंत्रालर् क े राज्य मंत्री ( स्वतंत्र प्रभार ) ; र्ोजना मंत्रालर् क े राज्य मंत्री ( स्वतंत्र प्रभार ) और कॉपोरेट मामलों क े मंत्रालर् में राज्य मंत्री।

(Rao Inderjit Singh) राव इंद्रजीत ससंह

(a), and (b): The term ' Shell Compan y' is  not defined under the Companies Act, 2013.

However,  the  Government  undertook  Special  Drive  for identification and  striking off  companies  u/s  248(1)  of  the Companies  Act,  2013  read  with  the  Companies  (Removal  of

Names of Companies from the Register of Companies) Rules, 2016 (amended  Rules  2019),  which  had  not  filed  their  Financial Statements and/or Annual Returns for a continuous period of two immediately  preceding  financial  years.  A  number  of  1,27,952 companies have been struck off in last 3 years.

(c) and (d): For the purpose of creating safeguard measures with regard  to  the  transaction  with  such  struck  off  companies,  the Government  has  amended  Schedule  III  of  the  Companies  Act, 2013 vide notification number G.S.R (E) dated 24.03.2021 read as under:

Relationship with Struck off Companies (applicable to both DIV-I & DIV-II entities) Where the company has any transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956, the Company shall disclose the following details:

| Name of struck off Company   | Nature of transactions with struck-off Company   | Balance outstanding   | Relationship with the Struck off company, if any, to disclosed   |
|------------------------------|--------------------------------------------------|-----------------------|------------------------------------------------------------------|
|                              | Investments securities                           |                       | be                                                               |
|                              | in                                               |                       |                                                                  |
|                              | Receivables                                      |                       |                                                                  |
|                              | Payables                                         |                       |                                                                  |
|                              | Shares held by struck off company                |                       |                                                                  |
|                              | Other outstanding balances (to be specified)     |                       |                                                                  |

- …………….