In just 5 years, almost 4 lakh companies have been struck from public records, according to a Union Minister
The Ministry of Corporate Affairs has removed 4,32,796 firms from its official records during the last five years.
The most businesses (2,26,116) have been deleted from the Registrar of Companies in the last five years in 2017–18.
Minister of State for Corporate Affairs Rao Inderjit Singh responded in writing to a question on Monday, "Section 248 of the Companies Act, 2013 (the Act) provides for the removal of the name of the company from the Register of Companies,
if it is not carrying on any business or operation for a period of 2 immediately preceding financial years and has not made any application within the said period for obtaining the status of a Dormant Company under section 455 of the Act."
In all, 2,26,166 corporations were dissolved during the 2017–18 fiscal year, 1,12,797 during the 2018–19 fiscal year, 43,912 during the 2019–20 fiscal year, NIL during the 2020–21 fiscal year, and 49,921 during the 2021–22 fiscal year.
According to Singh, Section 59 of the 2016 Insolvency and Bankruptcy Code, titled "Voluntary Liquidation for Corporate Persons," does not grant the authority to make rules. A inactive firm is covered under the Act's section 455 requirements.
The minister stated that there were a total of 451 businesses that became dormant in 2017–18, 362 in 2018–19, 570 in 2019, 81 in 2020–21, and 116 in 2021–22.
The Registrar of Corporations has just declared 1,12,509 companies to be invalid, according to Singh in a response to a question in Parliament. Out of all the businesses that were disqualified,
Delhi had the most—19,464—followed by Maharashtra (16,023 businesses), Uttar Pradesh (12,823), West Bengal (11,044), and Tamil Nadu (11,044). (6,989).
According to Singh, the government has launched a particular push to identify and deregister sham firms. Corporations without significant assets or active commercial operations are referred to as shell companies.
These businesses are occasionally used for nefarious activities including tax evasion, money laundering, hiding ownership, and benami properties. The phrases "shell company" and "fraudulent shell company" are not defined under the Companies Act, nevertheless.
Nirmala Sitharaman, the minister for corporate affairs, stated in a recent Rajya Sabha reply that the government has launched specific campaigns to identify and strike down non-operational firms in accordance with Section 248 of the Companies Act.