MCA planning to intensify drive against shell companies

The Ministry of Corporate Affairs (MCA) is planning to intensify the crackdown against non-functional (shell) companies, having already struck off hundreds of thousands of such firms that are often used to funnel black money, people aware of the development said.

The physical verification of "non-functional or non-compliant firms" by the Registrar of Companies (RoC) will pick up further. "The drive under Section 12 of the Companies Act is only going to intensify now," a person told ET. "The move may foster some discipline among companies so that they will take various compliance requirements more seriously," said another person.

According to Section 12, a company must have a registered office "within thirty days of its incorporation and at all times thereafter", which will be capable of receiving and acknowledging all communications and notices.


As many as 127,952 companies were struck off the official records in the last three years, minister of state for corporate affairs Rao Inderjit Singh told the Lok Sabha in February. The MCA has kept alive the drive that gained unprecedented traction in the immediate aftermath of the 2016 demonetisation exercise.

The latest decision would complement the ongoing drives by the taxman and the Enforcement Directorate against various shell companies, one of the people said.

The database being generated under the latest version of the MCA21 portal, meant for various filings under the Companies Act and the LLP Act, will also come in handy in such drives in the coming months, said another person.