E-filing axe over 1.5 lakh errant companies
Company affairs minister Prem Chand Gupta has asked the registrars of companies (RoCs) to strike off over 1.5 lakh defaulting firms from official records, after he made it mandatory for them last month to file all their statutory documents electro...
By Gireesh Chandra Prasad, TNN |
NEW DELHI: Corporate India is set to shrink in number by a fifth in six months. Company affairs minister Prem Chand Gupta has asked the registrars of companies (RoCs) to strike off over 1.5 lakh defaulting firms from official records, after he made it mandatory for them last month to file all their statutory documents electronically.
Of the 7.5 lakh existing companies, nearly 20% default filing statutory documents like annual returns. And, most of them are believed to be defunct ones without carrying out any business. However, the shell companies floated by corporates do not usually default on statutory norms even though they churn out little business.
These defaulting firms will legally cease to exist in six months as the RoCs have already initiated proceedings against them under Section 560 of the Company Law, said a senior government official. However, the claims of lenders will be valid for the next 20 years.
The ministry’s action following this year’s peak filing season is indicative of how swiftly it can enforce Company Law provisions as the software used in its e-governance project makes it easier to spot defaulters in a matter of seconds.
It also plugs all possibilities of companies escaping punitive action by taking unfair advantage of the massive paper-based system run by sometimes lethargic officials. Notices are now being sent in physical form to all the firms shortlisted through the e-governance system and they would get a total of five months in a 3-step process to respond.
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The company would be out of operation if it does not respond even in the final three months when its name would be published in the official gazette.The ministry’s main worry is only 26,000 companies availed its previous simplified exit scheme that allowed defunct companies without any asset or liability to get out of official records. “Loading the digital record system with their documents is not desirable. We do not want to carry the dead wood,” said a source.
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