Lok Sabha Question No. 183 (UNSTARRED), answered on 2024-07-22
Subject: Shell Companies in India
Ministry: CORPORATE AFFAIRS
Asked by: Shri Krishna Prasad Tenneti

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

LOK SABHA UN-STARRED QUESTION NO. 183 ANSWERED ON Monday, July 22, 2024 31 Ashadha, 1946 (Saka)

## SHELL COMPANIES IN INDIA

## QUESTION

183. SHRI KRISHNA PRASAD TENNETI:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a) whether  the  Government  has  undertaken  any  action,  via  the Serious  Fraud  Investigation  Office  and  other  such  investigative divisions, to identify shell companies in India and if so, the details of such companies during the last five years, State-wise and especially in the State of Andhra Pradesh;
- (b) if not, the reasons therefor;
- (c) the details of actions, legal or otherwise, as undertaken by the Government  in  regard  to  the  identification  and  regulation  of  shell companies in India;
- (d) whether  there  has  been  an  increase  in  the  number  of  shell companies during the last five years and if so, the steps taken by the Government to address this issue; and
- (e) the  list  of  companies  that  have  been  identified  as  shell companies and have been struck off the roll of companies over the last five years in the State of Andhra Pradesh?

## ANSWER

Minister of State in the Ministry of Corporate Affairs; Minister of State in the Ministry of Road Transport and Highways

(Shri Harsh Malhotra)

- (a) to (e): There is no definition of the term "Shell Company" in the Companies Act. However, there are some companies which are inactive as per the provision of sub section (1) of Section 455 of the Companies Act, 2013 (the Act). These are companies which have not

been carrying on any business or operation, or have not made any significant accounting transaction during the last two financial years, or have not filed financial statements and annual returns during the last two financial years.

Further, under Section 248 (1) of the Act read with the Companies (Removal of names of companies from the Register of Companies) Rules, 2016 (Amended Rules, 2019), Registrar of Companies (ROCs) can  strike  off  companies  for  certain  violations  such  as  failure  to commence business within one year of incorporation, not carrying on any business or operation for a period of two immediately preceding financial years and not making any application within such period for obtaining  the  status  of  a  dormant  company,  not  carrying  on  any business or operation, as revealed after the physical verification etc. From  time  to  time  action  has  been  taken  for  striking  off  such companies.

## The number of Companies identified and struck off under section 248 (1) of the Act during the last five years are shown below :

| State                |   FY 2019- 2020 | FY 2020- 2021   |   FY 2021- 2022 |   FY 2022- 2023 |   FY 2023- 2024 |   Grand Total |
|----------------------|-----------------|-----------------|-----------------|-----------------|-----------------|---------------|
| Andaman & Nicobar    |              14 | 2               |               3 |              53 |               6 |            78 |
| Andhra Pradesh       |             935 |                 |            1354 |            2402 |             400 |          5091 |
| Arunachal Pradesh    |              24 | 3               |              27 |              32 |               4 |            90 |
| Assam                |             330 | 65              |             362 |             588 |              90 |          1435 |
| Bihar                |            1942 | 184             |            1771 |            2815 |             185 |          6897 |
| Chandigarh           |             329 | 169             |             461 |             303 |              51 |          1313 |
| Chhattisgarh         |             345 | 47              |             324 |             446 |              67 |          1229 |
| Dadra & Nagar Haveli |              10 | 1               |              14 |              13 |               1 |            39 |
| Daman and Diu        |               7 | 2               |               5 |              12 |              12 |            38 |
| Delhi                |           10284 | 1972            |            5166 |           16064 |            2151 |         35637 |
| Goa                  |             286 | 34              |             213 |             184 |              78 |           795 |
| Gujarat              |            1740 | 252             |            3401 |            2626 |             665 |          8684 |
| Haryana              |            2165 | 408             |            1076 |            4813 |             585 |          9047 |

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| Himachal Pradesh   | 173   | 201   | 260   | 303   | 27    | 964    |
|--------------------|-------|-------|-------|-------|-------|--------|
| Jammu & Kashmir    | 135   |       | 322   | 451   | 29    | 937    |
| Jharkhand          | 401   | 136   | 975   | 888   | 185   | 2585   |
| Karnataka          | 5439  | 1027  | 6117  | 4342  | 2317  | 19242  |
| Kerala             | 2666  | 956   | 2124  | 1558  | 459   | 7763   |
| Ladakh             |       |       | 5     | 5     |       | 10     |
| Lakshadweep        | 1     | 1     |       |       | 2     | 4      |
| Madhya             | 1128  | 107   | 541   | 2427  | 446   | 4649   |
| Pradesh            |       |       |       |       |       |        |
| Maharashtra        | 7619  | 2250  | 11662 | 12049 | 3276  | 36856  |
| Manipur            | 31    | 4     | 52    | 147   | 4     | 238    |
| Meghalaya          | 33    | 10    | 29    | 21    | 7     | 100    |
| Mizoram            | 5     |       | 9     | 18    | 2     | 34     |
| Nagaland           | 19    | 2     | 19    | 27    | 6     | 73     |
| Orissa             | 704   | 75    | 1014  | 1332  | 81    | 3206   |
| Pondicherry        | 115   | 35    | 80    | 82    | 18    | 330    |
| Punjab             | 559   | 330   | 902   | 927   | 125   | 2843   |
| Rajasthan          | 4458  | 505   | 1707  | 1902  | 426   | 8998   |
| Sikkim             |       |       | 1     |       |       | 1      |
| Tamil Nadu         | 3141  | 1294  | 6077  | 4666  | 965   | 16143  |
| Telangana          | 2518  | 693   | 4992  | 3798  | 1763  | 13764  |
| Tripura            | 25    | 3     | 27    | 91    | 4     | 150    |
| Uttar Pradesh      | 5789  | 1934  | 1594  | 12093 | 1234  | 22644  |
| Uttarakhand        | 78    |       | 244   | 960   | 73    | 1355   |
| West Bengal        | 6547  | 4     | 9345  | 3687  | 721   | 20304  |
| Grand Total        | 59995 | 12706 | 62275 | 82125 | 16465 | 233566 |

(Source: Data has been provided from MCA-21) *******