12,889 Shell Companies Struck off in FY 2020-21

There is no definition of the term “Shell Company” in the Companies 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. This was stated by Union Minister of State for Corporate Affairs Shri Rao Inderjit Singh in a written reply to a question in Rajya Sabha today.

On the identification shell companies, the Minister stated that the Special Task Force set up by the Government to look into the issue of “Shell Companies” has inter-alia recommended the use of certain red flag indicators as alerts for identification of Shell Companies.

Giving more details, the Minister stated that the Government has undertaken a Special Drive for identification and strike off of Companies by invoking the provisions of section 248 (1) of the Act by which 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 and has not made any application within such period for obtaining the status of a dormant company under section 455.

The Minister listed the total number of companies struck off u/s 248 State/Union Territory-wise as under:

Sate/ UT-wise2018-192019-202020-21
Gujarat63982494257
Andaman24152
Karnataka417155681038
UT of Chandigarh3514893501
Tamil Nadu and Coimbatore910732141322
Orissa290771978
NCT of Delhi and Haryana30544126532396
Kerala28015339977
Goa25031136
Madhya Pradesh33861168111
Himachal Pradesh481176201
Telangana163642686730
Rajasthan40384466507
Jammu and Kashmir2551380
Jharkhand1306403139
Uttar Pradesh758958211936
West Bengal839066275
Maharashtra (Mumbai and Pune)4757578242298
Bihar25401956185
UT of Puducherry3711735
Assam, Tripura, Arunachal Pradesh, Nagaland, Mizoram, Meghalaya, Manipur, and Sikkim37279688
Uttarakhand476790
Andhra Pradesh38649580
Chhattisgarh53934747
Grand Total1569286476812889

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