Government to disqualify around 1 lakh company directors over association with shell firms

The government on Tuesday said that it would disqualify more than 1 lakh company directors over their association with shell firms.

The corporate affairs ministry has “identified 1,06,578 directors for disqualification under Section 164(2)(a) of the Companies Act, 2013 as on September 12, 2017,” an official release said.

The government has also asked banks to restrict the operation of the companies’ accounts by the disqualified directors.

Under Section 164, a director in a company that has not filed financial statements or annual returns for three financial years continuously would not be eligible for re- appointment in that company or any other firm for five years.

Signalling that more regulatory action is expected, the ministry is further analysing the data of the 2.09 lakh firms available with the Registrar of Companies (RoCs) to identify the directors and the significant beneficial interests behind these entities.

"Profiles of directors such as their background, antecedents and their role in the operations/functioning of these companies are also being compiled in collaboration with the enforcement agencies," the release said.

"The fight against black money shall be incomplete without breaking the network of shell companies. Possibility of using the shell companies for laundering the black money cannot be undermined," Minister of State for Corporate Affairs P P Chaudhary said.

According to the release, there are about 11 lakh companies with active status after deregistration of over 2.09 lakh firms.

The minister is also monitoring the situation emerging out of cancellation of registration of the companies and is holding regular meetings with officials of the ministry and various related organisations.