September 19th, 2017
In a unique, first-of-its-kind “name-and shame” exercise, the Ministry of Corporate Affairs is making public the names of disqualified directors of struck-off shell companies as well as the names of those associated with these companies.
The Ministry was acting as per its September 12 statement that declared that it had identified 1.06 lakh directors of shell companies for disqualification under the relevant provisions of the Companies Act, 2013.
According to The Hindu, the disqualified individuals in the lists are those who are or had been director in a company that has not filed financial statements or annual returns for any continuous period of three financial years. Such directors will not be eligible for re-appointment as a director in that company or for appointment in other companies for five years from the date of non-compliance.
Prominent names featured in the lists include former Kerala Chief Minister Oommen Chandy, Leader of Opposition in Kerala Assembly Ramesh Chennithala and jailed politician and former AIADMK leader Sasikala.
The maximum number of directorships that were listed was reportedly from Delhi (74,920). This was followed by
- Mumbai (66,851),
- Hyderabad (41,156),
- Ernakulam (around 14,000),
- Cuttack (13,383),
- Ahmedabad (10,513),
- Gwalior (9,628),
- Pune (4,449),
- Puducherry (1,605),
- Himachal Pradesh (1,363),
- Coimbatore (1,299),
- Shillong (1,290) and
- Chhattisgarh (889).
Earlier this month, the Ministry of Corporate Affairs had cancelled the registration of 2,09,032 shell companies.
The Department of Financial Services and the Ministry of Finance have also reportedly directed all banks to restrict operations of bank accounts of such companies by the Directors of such companies or their authorised representatives.
The Ministry stated that it has also decided to track down the beneficial owners of suspected shell companies and take penal action against those who divert funds from companies that are struck off the records of the Registrar of Companies (RoC).
The decisions had been taken with the intention of improving corporate governance and checking financial irregularities through the use of shell companies.