Companies doing zero business to face closure
June 16, 2018The ministry of corporate affairs (MCA) is planning to proceed against 25-30% Indian companies with zero turn-over in the last two years. These dormant companies which have remained passive for two consecutive years may lose their registration in view of Section 248 of the Companies Act even if they have filed returns.
The Company law in India empowers the government to strike off the name of a company under specific provisions. If a company hasn't undertaken business in two years then it becomes a sufficient ground for the government to serve a notice on the dormant companies about the cancellation of their registration. Once the notice is sent, the company’s directors are required to respond within 30 days to the notice served on them.
Till date, the government has de-registered over 2.25 lakh companies for not filing returns as mentioned under Companies Act. It is now going against the shell companies for not complying with the requirement of doing business during the last two consecutive years.
The action which the government is beginning to take against these shell companies is aimed at cracking down the entities that are used to route funds and circulate black money. At the same time, the government is also moving against benami holdings in companies.