Govt blacklists 300000 directors of shell companies

[Soumitra]

Govt blacklists 300,000 directors of shell companies
The corporate affairs ministry will also track down owners of suspected shell companies and take penal action against those who divert funds from firms that are struck off the records of Registrar of Companies
Gireesh Chandra Prasad

MoS (corporate affairs) P.P. Chaudhary. The shell companies crackdown and freezing of bank accounts is aimed at curbing black money, checking financial irregularities, and improving corporate governance and ease of doing business in India. Photo: PTI
Mumbai: The government on Wednesday decided to bar as many as 300,000 directors of companies that have defaulted on statutory compliances from serving on the boards of other firms to improve corporate governance and check financial irregularities through the use of shell companies.

The ministry of corporate affairs, which regulates unlisted companies, 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 ministry said it is also monitoring the action being taken by regulatory bodies against professionals such as chartered accountants, company secretaries and cost accountants who have been found to have colluded with the shell companies in committing financial irregularities.

The move came a day after the government froze the bank accounts of more than 200,000 companies struck off the records of RoC to prevent their directors from accessing the accounts.

The idea is to ensure companies take their statutory obligations seriously and to deter firms from using a complex corporate structure to divert funds raised from financial institutions or to launder money.



“Weeding out shell companies would not only help in checking the menace of black money but also would promote an ecosystem of ‘ease of doing business’ and enhancing investors’ confidence to which the present government is fully committed,” minister of state for corporate affairs P.P. Chaudhary said in a statement. He took charge on Monday.

Filing annual reports on time will minimize the possibility of fraud and tax evasion, the statement said, adding that it will also protect stakeholder interest and improve India’s image globally. At a review meeting on Wednesday, the ministry decided to take comprehensive steps to address the issue of shell companies and their role in money laundering and circulation of unaccounted money, the statement said.

The government’s move is a clean-up exercise mainly targeting shell companies suspected of money laundering in the aftermath of the 8 November demonetization of high-value currency notes, said Kamlesh Vikamsey, former president of the accounting rules maker, the Institute of Chartered Accountants of India.

“The government will take action against companies which have not complied with the Companies Act and not filed returns for the past three years. However, the decision to strike off companies’ name from records can be reversed if the companies are able to prove that they were operational in all these years,” said Vikamsey.

“It is a step towards improving corporate governance, shaking the culture of non-compliance,” said J.N. Gupta, co-founder and managing director of corporate governance advisory firm Stakeholder Empowerment Services.



Sahib Sharma and Komal Gupta contributed to this story.

http://www.livemint.com/Companies/O...ists-300000-directors-of-shell-companies.html

 

[Soumitra]

For those Indians (I am not interested in Pakistani or Chinese trolls who know didly squat about demonetization) who said Demonetization is a failure can you please explain how did Govt come to know about these 3 Lakh directors

It is possible only because of Big Data analytics after Demonetization

@The_Showstopper @jaunty @padamchen @duhastmish @danger007 @baajey any answers on how these people were identified

 

[noksss]

Govt blacklists 300,000 directors of shell companies
The corporate affairs ministry will also track down owners of suspected shell companies and take penal action against those who divert funds from firms that are struck off the records of Registrar of Companies
Gireesh Chandra Prasad

MoS (corporate affairs) P.P. Chaudhary. The shell companies crackdown and freezing of bank accounts is aimed at curbing black money, checking financial irregularities, and improving corporate governance and ease of doing business in India. Photo: PTI
Mumbai: The government on Wednesday decided to bar as many as 300,000 directors of companies that have defaulted on statutory compliances from serving on the boards of other firms to improve corporate governance and check financial irregularities through the use of shell companies.

The ministry of corporate affairs, which regulates unlisted companies, 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 ministry said it is also monitoring the action being taken by regulatory bodies against professionals such as chartered accountants, company secretaries and cost accountants who have been found to have colluded with the shell companies in committing financial irregularities.

The move came a day after the government froze the bank accounts of more than 200,000 companies struck off the records of RoC to prevent their directors from accessing the accounts.

The idea is to ensure companies take their statutory obligations seriously and to deter firms from using a complex corporate structure to divert funds raised from financial institutions or to launder money.



“Weeding out shell companies would not only help in checking the menace of black money but also would promote an ecosystem of ‘ease of doing business’ and enhancing investors’ confidence to which the present government is fully committed,” minister of state for corporate affairs P.P. Chaudhary said in a statement. He took charge on Monday.

Filing annual reports on time will minimize the possibility of fraud and tax evasion, the statement said, adding that it will also protect stakeholder interest and improve India’s image globally. At a review meeting on Wednesday, the ministry decided to take comprehensive steps to address the issue of shell companies and their role in money laundering and circulation of unaccounted money, the statement said.

The government’s move is a clean-up exercise mainly targeting shell companies suspected of money laundering in the aftermath of the 8 November demonetization of high-value currency notes, said Kamlesh Vikamsey, former president of the accounting rules maker, the Institute of Chartered Accountants of India.

“The government will take action against companies which have not complied with the Companies Act and not filed returns for the past three years. However, the decision to strike off companies’ name from records can be reversed if the companies are able to prove that they were operational in all these years,” said Vikamsey.

“It is a step towards improving corporate governance, shaking the culture of non-compliance,” said J.N. Gupta, co-founder and managing director of corporate governance advisory firm Stakeholder Empowerment Services.



Sahib Sharma and Komal Gupta contributed to this story.

http://www.livemint.com/Companies/O...ists-300000-directors-of-shell-companies.html

Measures should be taken to stop such fake shell companies being created in the future .That's more important because once you ban these companies they shouldn't come up with a new name and continue do the same

 

[lastone]

Not only directors should be banned but also bank officials who give large loans to pvt cos without collateral .
Very common in India to take large loans for projects , divert a large part of the funds to your own pockets , and after a few years declare the project or company loss making and close shop.

 

[jetray]

For those Indians (I am not interested in Pakistani or Chinese trolls who know didly squat about demonetization) who said Demonetization is a failure can you please explain how did Govt come to know about these 3 Lakh directors

It is possible only because of Big Data analytics after Demonetization

@The_Showstopper @jaunty @padamchen @duhastmish @danger007 @baajey any answers on how these people were identified

some ppl will worry more about loss of blood during life saving surgery than losing life.

 

[thesolar65]

During Samandar Manthan, when Devas and Asuras tried to churn sea as much as they can "Poison" came out first.

Similarly when you squeeze out all the evils in the financial system, naturally business will get affected. You go to any mall...for example even reliance store one will find not much stock of any essential product is there. Like I have been searching for Aluminium foil, but it is not there. I went to the sanitary store and asked for a particular faucet which I use and the answer is "That product has not come for two months now and the store keeper says the factory is closed. When I asked why, the answer was GST. The answer is same for reliance store.

But he says the factory will again start within one week after the pland computer and invoice become GST compliant.

So wait for another three months, production will again pick up and GDP will again be back in the next quarter.

But I am particularly worried about employment and rather underpaid employment. If the Govt did not do anything about it 2019 will be very difficult.

@Soumitra

 

[pothead]

some ppl will worry more about loss of blood during life saving surgery than losing life.

Stop talking about yourself.

 

[jetray]

During Samandar Manthan, when Devas and Asuras tried to churn sea as much as they can "Poison" came out first.

Similarly when you squeeze out all the evils in the financial system, naturally business will get affected. You go to any mall...for example even reliance store one will find not much stock of any essential product is there. Like I have been searching for Aluminium foil, but it is not there. I went to the sanitary store and asked for a particular faucet which I use and the answer is "That product has not come for two months now and the store keeper says the factory is closed. When I asked why, the answer was GST. The answer is same for reliance store.

But he says the factory will again start within one week after the pland computer and invoice become GST compliant.

So wait for another three months, production will again pick up and GDP will again be back in the next quarter.

But I am particularly worried about employment and rather underpaid employment. If the Govt did not do anything about it 2019 will be very difficult.

@Soumitra

temporary problems, we need to get basics right. There is no point even if economy grows as we will not get taxes due to most of ppl using loop holes to avoid it.

 

[pothead]

temporary problems, we need to get basics right. There is no point even if economy grows as we will not get taxes due to most of ppl using loop holes to avoid it.

So, we should STOP trying to plug the loop holes, right?

 

[baajey]

For those Indians (I am not interested in Pakistani or Chinese trolls who know didly squat about demonetization) who said Demonetization is a failure can you please explain how did Govt come to know about these 3 Lakh directors

It is possible only because of Big Data analytics after Demonetization

@The_Showstopper @jaunty @padamchen @duhastmish @danger007 @baajey any answers on how these people were identified

i was never a critic of demonetization, neither a fan; basically because i m not a student of economics.
however, the so called 3 lakh directors could have been found without the pretext of
- ending corruption
- ending the funding for terror
- ending black money (well, here the govt succeeded as all black became all white)
- improving cashless economy
- et al
if the govt machinery is so inept in finding out shell companies (most of whom were opened during both cong n nda1 regimes), i guess we deserve demonetization.
moreover, the IT deptt could have singled out the big fishes without having to dry out the whole ocean.

 

[Soumitra]

i was never a critic of demonetization, neither a fan; basically because i m not a student of economics.
however, the so called 3 lakh directors could have been found without the pretext of
- ending corruption
- ending the funding for terror
- ending black money (well, here the govt succeeded as all black became all white)
- improving cashless economy
- et al
if the govt machinery is so inept in finding out shell companies (most of whom were opened during both cong n nda1 regimes), i guess we deserve demonetization.
moreover, the IT deptt could have singled out the big fishes without having to dry out the whole ocean.

These shell companies were used to launder the black money and try to turn it to white. For example if I have 25 crore in cash and 5 shell companies i will show 5 crore cash transactions in each and try to put it in the account. How ever when scrutiny is done it will be shown that these companies had no business and no transactions and suddenly after 8 Nov they were flush with funds. This is how the companies were identified

 

[Soumitra]

Deregistered cos deposited Rs 17,000 cr post note ban: Govt

PTI | Nov 5, 2017, 17:07 IST


New Delhi, Nov 5 () Cash deposits worth over Rs 17,000 crore were made and later withdrawn post demonetisation by as many as 35,000 companies, which are now deregistered, the government said today.

As it steps up the fight against illicit fund flows, so far names of around 2.24 lakh companies that have been inactive for long have been struck off from the official records and 3.09 lakh directors have been disqualified.

To keep a tab on dummy directors being appointed to the boards of corporates, work is on to put in place a mechanism wherein new applications for directorship would be linked with PAN and Aadhaar numbers of the individual concerned.

Stating that around 2.24 lakh companies have been struck off till date for remaining inactive for two years or more, an official release said restrictions have been imposed on operation of their bank accounts as well as on sale and transfer of their properties.

"Preliminary enquiry on the basis of information received from 56 banks in respect of 35,000 companies involving 58,000 accounts has revealed that an amount of over Rs 17,000 crore was deposited and withdrawn post demonetisation," the release said.

In one case, a company which had a negative opening balance on November 8, 2016, deposited and withdrew Rs 2,484 crore post demonetisation, it added.

Last November, the government cancelled old Rs 500 and Rs 1,000 currency notes as legal tenders as part of larger efforts to fight the black money problem and corruption.

According to the government, one company was having as many as 2,134 accounts.

The information regarding such firms have been shared with enforcement authorities for further action.

With respect to deregistered companies, state governments have been advised to disallow registration of properties of such entities.

The government has initiated steps to disqualify directors who are on the boards of the companies that failed to file annual returns for three financial years -- 2013-14 to 2015-16.

While noting that about 3.09 lakh directors have been affected by the action, the government said preliminary enquiry has shown that over 3,000 disqualified directors are "directors in more than 20 companies each, which is beyond the limit prescribed under the law".

"With a view to checking the problem of dummy directors, action is underway to seed DIN with PAN and Aadhaar at the stage of DIN application through biometric matching for new applications. The same may be extended to legacy data in due course," the release said.

Director Identification Number (DIN) is a unique number assigned to an individual under the Companies Act that allows him or her to serve as a director on the board of a company.

"A high level committee has been constituted for suggesting revamp of the disciplinary systems for chartered accountants, company secretaries and cost accountants.

"Further, steps are underway for setting up National Financial Reporting Authority (NFRA), an independent body, to check financial statements, prescribe accounting standards and take disciplinary action against errant professionals," the release said.

Also, an 'Early Warning System' would be developed under the Serious Fraud Investigation Office (SFIO).

The Prime Minister's Office has also constituted a Special Task Force under the joint chairmanship of Revenue Secretary and Corporate Affairs Secretary to oversee the drive against such defaulting companies. The task force has met five times so far, the release said. RAM BAL

 

[Gadkari]

These shell companies were used to launder the black money and try to turn it to white. For example if I have 25 crore in cash and 5 shell companies i will show 5 crore cash transactions in each and try to put it in the account. How ever when scrutiny is done it will be shown that these companies had no business and no transactions and suddenly after 8 Nov they were flush with funds. This is how the companies were identified

Can you give Names of at least 5 Big Black Money hoarders who has gone to Jail after Modi came to power ?

If putting them to jail is not a priority, then why are they in such a hurry to declare them criminals ?

 

[ashok321]

Govt blacklists 300000 directors of shell companies

Read "directors" and not the actual owners:
Why?

Ambanis and Adani names are embedded there. Thats why not even a name & shame process for them.

Na khaunga na khane dunga:

 

[Soumitra]

Can you give Names of at least 5 Big Black Money hoarders who has gone to Jail after Modi came to power ?

If putting them to jail is not a priority, then why are they in such a hurry to declare them criminals ?

A year after demonetisation, hunt for black money getting more intense

Sidhartha| TNN | Updated: Nov 6, 2017, 04:04 IST
HIGHLIGHTS

• Starting this week, the I-T department will start dispatching notices under the I-T Act to nearly 70,000 entities.
• Also under scrutiny are around 22,000 tax returns filed by those who did not file their returns before note ban.
• With over 99% of scrapped notes back in the system, questions arose whether the exercise flushed out black money at all.

Representative image
NEW DELHI: The income tax department's data analysis team in Ghaziabad has had a busy few months, scanning through a few million data points to build a case against those who are suspected to have misused the cash deposit facility during demonetisation.

Starting this week — which coincides with demonetisation anniversary — it will start dispatching notices under the I-T Act to nearly 70,000 entities that deposited over Rs 50 lakh old notes into bank accounts but have not cared to respond to data uploaded in their accounts or even file returns, something that 1.3 lakh others with similar deposits have done.

"We have been waiting for people to file their returns before sending notices," said an officer. While individuals were to file returns by August 5, the extended deadline for those whose accounts had to be audited ended on Sunday. Of the 18 lakh cases with suspect deposits, around 12 lakh have responded to the department's queries. The lens is on the remaining 5-6 lakh, many of whom are expected to have filed their returns.

"We want to set an example by going after the big fish. We will go after the smaller depositors later and will given them one more call to respond. If they don't respond, then formal notices will start going from January," explained a high-ranking officer monitoring the entire exercise. The plan is to complete the assessment of these cases in two years. Action against the "big fish" will start this week.

Also under scrutiny are around 22,000 tax returns filed by those who either did not file returns earlier or those who revised their returns after demonetisation was announced on November 8, 2016. "These are cases where we noticed erratic behaviour. In many cases the numbers are not matching," explained the senior officer.

With over 99% of the demonetised Rs 500 and Rs 1,000 notes back in the banking system, the government is being questioned whether the entire exercise flushed out any black money at all.

Critics are questioning Prime Minister Narendra Modi's move arguing that it only resulted in further slowing down the economy and massive job losses in the unorganised sectors.
The government has countered the criticism saying that the move will yield results over time. The focus is now on the revenue department to detect and draw out black money. It proposes to scan the returns filed during the current financial year to match sales trends of companies and their taxable income. There is greater reliance on statement of financial transactions which deals with property and share transactions apart from cash deposits.
There are revenue officers who warn of the long haul "You have data but then you need to establish the link, build a case and then fight it in various levels. It's not easy. Will the department retain its focus for 10 years?" said an officer in the Central Board of Direct Taxes.

Senior officers in the board, however, believe that the results are already visible with compliance on the rise. They point to a rise in the number of permanent account numbers that have been issued in recent months. In addition, they said, more returns are being filed this year.