Lok Sabha Question No. 182 (UNSTARRED), answered on 2024-11-25
Subject: Action Taken against Shell Companies
Ministry: CORPORATE AFFAIRS
Asked by: Shri Shafi Parambil, Shri B K Parthasarathi

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA UN-STARRED QUESTION NO. 182 ANSWERED ON MONDAY, 25 th  NOVEMBER 2024 Agrahayana 4, 1946 (Saka)

Action Taken against Shell Companies

182. Shri Shafi Parambil: Shri B K Parthasarathi:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

कारपोरेटकार्यमंत्री

(a)whether the Government has detailed information about the dormant  and  fraudulent  companies  in  the  country  which  do  not conduct any real business but register only for tax evasion and money laundering and if so, the details thereof, State-wise including Andhra Pradesh;

- (b)  whether  the  Government  has  taken  any  action  against  such companies  via  Serious  Fraud  Investigation  Office  and  other  such Investigative Divisions to identify shell companies in the country and if so, the details thereof along with the list of such companies identified by  the  Government  during  the  last  three  years,  State-wise  including Andhra Pradesh and if not, the reasons therefor;
- (c)  whether  there  has  been  an  increase  in  the  number  of  shell companies during the last five years; and
- (d)  if  so,  the  measures  taken  by  the  Government  to  control  such fraudulent companies known as shell companies?

## 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  (d): 'Dormant  Company'  is defined  under  Section  455  of  the Companies Act, 2013 (the Act) as (i) any company  formed for a future project  or  to  hold  an  asset  or  intellectual  property  and  has  no significant accounting transaction or (ii) any  inactive company which has not been  carrying business  or operation or  has  not  made significant accounting transactions during last two Financial Years or has not filed Financial Statements and Annual Returns during last two Financial Years and such company or inactive company, as the case may  be, has obtained 'dormant status' from the Registrar of Companies (ROC) with due compliance of Companies (Miscellaneous) Rules, 2014. T here is no definition of the terms 'fraudulent company' or 'shell company' under the Act.

However,  in  terms  of  Section  248  (1)  of  the  Act  read  with  the Companies  (Removal  of  Names  of  Companies  from  the  Register  of Companies) Rules, 2016, Registrar of Companies can strike off name of  companies  for  certain  defaults  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. Action has been taken from time-to-time 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, listed state-wise including Andhra Pradesh, 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 |
| 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 Pradesh       | 1128            | 107             | 541             | 2427            | 446             |          4649 |
| 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       | 5789  | 1934  | 1594   | 12093  | 1234  | 22644  |
| Pradesh     |       |       |        |        |       |        |
| 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 Portal)

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