These companies made only on paper are often used to move black money here and there. Image Credit source: Unsplash
The Modi government, alert from the beginning regarding black money, is now going to do another big job. The Ministry of Corporate Affairs has made complete planning to create cots of fake companies in the country. The ministry has prepared a list of thousands of such fake companies, against whom action can be taken anytime now.
In fact, these companies made only on paper are often used to move black money here and there. Actually they do not do any work. Sources who are aware of the decision of the corporate matter say that now the government is in the mode of strict action against them.
Government will do physical verification
The Registrar of Companies (ROC) will do physical verification of the companies included in the list of fake companies prepared by the government. From this, it will be ascertained whether these companies are ‘non-functional’ (meaning they do not do any work) or ‘non-compliant’ (those who have not given correct documents and timely information).
Under Section-12 of the Companies Act, the government will intensify the campaign to catch such fake companies. Sources say that this campaign will help the government to improve its accounts by some companies, as they will start taking compliance of the rules seriously.
What does Section 12 of the Companies Act say?
According to Section-12 of the Companies Act, a company must have a registered office within 30 days of its formation. It should always be with him. All information should be exchanged at this address.
1.27 lakh bogus companies removed from records
In February, Minister of State for Corporate Affairs Rao Inderjit Singh made a statement in the Lok Sabha about shell companies. He had said that after three years of hard work, the government has removed 1,27,952 fake companies from the government records. After the demonetisation of 2016, the Ministry of Corporate Affairs has done this work very fast.
