Modi govt freezes bank accounts of over 200,000 suspected shell companies

shell companies

NEW DELHI: The bank accounts of 209,032 suspected shell companies have been frozen as part of a crackdown on illegal transactions and tax evasion and aware banks about the active ones accounts, the Finance Ministry said.

The Registrar of Companies (RoCs) of 24 jurisdictions have deregistered the firms and “the existing directors and authorised signatories of these companies will now become ex-directors or ex-authorised signatories,” the statement said.

According to ministry, after the order, the owners and their nominated signatories will not be able to operate the bank accounts until legally restored.

“The department of financial services has… advised all banks that they should take immediate steps to put restrictions on bank accounts of such struck off companies,” the statement said.

Tax officials say the owners of shell companies create elaborate smokescreens, including naming personal servants and chauffeurs as board directors, to obscure the ultimate beneficiaries, conceal political investment, evade tax, commit fraud or manipulate tenders.

An RoC can strike off the name of a company on several grounds:

If it fails to commence its business within a year of its incorporation

If it will not carry on its business in two preceding financial years

and not making an application to obtain the status of a dormant company.

Prime Minister Narendra Modi also described such firms as “looters of the nation’s wealth”.

Wefornews Bureau

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