Govt tightens noose around ‘fly by night’, shell companies : The Tribune India

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Govt tightens noose around ‘fly by night’, shell companies

NEW DELHI:Continuing with its crackdown on “fly by night and dummy” entities through stringent KYC regulations, the government has made it mandatory for over 12 lakh active registered companies in India to upload all their particulars, including details of registered offices in an e-filing to the government.



New Delhi, February 22 

Continuing with its crackdown on “fly by night and dummy” entities through stringent KYC regulations, the government has made it mandatory for over 12 lakh active registered companies in India to upload all their particulars, including details of registered offices in an e-filing to the government.

The Ministry of Corporate Affairs has notified the Companies (Incorporation) Amendment Rules, 2019, under which all companies registered before December 31, 2017, are required to file e-Form ACTIVE (Active Company Tagging Identities and Verification)-INC22A on or before April 25, 2019.

Failure to file e-Form ACTIVE will lead to a penalty of Rs 10,000 with companies in default being declared ACTIVE non-compliant.

Once a company is marked as ACTIVE non-compliant, it would not be able to make changes to its capital structure or go ahead with merger or amalgamation deals. Such non-compliant companies would also not be able to rotate their directors or make changes in their registered office.

“The rule makes it amply clear that companies have to e-file all their details so that a proper check is maintained on their operations and creation of shell companies is prevented,” said a government official not wanting to be identified.

Last year, the Ministry of Corporate Affairs had introduced new Know Your Customer (KYC) norms affecting about 33 lakh directors of companies. Under it, directors were required to e-file forms providing details such as personal mobile number, e-mail address, Permanent Account Number (PAN) and Aadhaar number. A video verification, which required directors to upload a 30-second clip introducing themselves, was also made mandatory. — PTI

New guidelines 

  • All companies registered before December 31, 2017, are required to file e-Form ACTIVE (Active Company Tagging Identities and Verification)-INC22A on or before April 25 
  • Failure to file e-Form ACTIVE will lead to a penalty of Rs 10,000 with companies in default being declared ACTIVE non-compliant
  • Once a company is marked as ACTIVE non-compliant, it would not be able to make changes to its capital structure or go ahead with merger or amalgamation deals
  • Such non-compliant companies would also not be able to rotate their directors or make changes in their registered offices.

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