No definition of ‘Shell Company’ in Companies Act, 2013: Centre

Hardeep Singh Bedi

Representational Image (Pixabay)

New Delhi: The Centre on March 15, 2022, said that there is no definition of ‘Shell Company’ in Companies Act, 2013.

Giving a written reply to a question in Rajya Sabha, Union Minister of State for Corporate Affairs Rao Inderjit Singh said: “There is no definition of the term ‘Shell Company’  in the Companies Act, 2013 (the Act). It normally refers to a company without active business operation or significant assets, which in some cases are used for illegal purpose such as tax evasion, money laundering, obscuring ownership, benami properties etc.”

The Minister further said that the Special Task Force set up by the Government of India to look into the issue of ‘Shell Companies’ has, inter-alia, recommended the use of certain red flag indicators as alerts for identification of suspected Shell Companies.

Over 3.82 lakh companies struck off

The Minister also informed the House that the Registrar of Companies (RoC) has struck off 3,82,875 u/s 248 (1) of the Companies Act till the financial year 2020-21.

The Minister stated that the Registrar of Companies (RoC) struck off those companies after following the due process of law from the Register of companies when RoC has reasonable cause to believe that those companies are not carrying on any business or operation for a period of two, immediately preceding financial years.

He added that the RoC also verifies that such company has not made any application within such period for obtaining the status of a dormant company under Section 455 of the Act.


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