35,000 companies deposited, withdrew more than Rs 17,000 crore post-note ban


NEW DELHI: Of the 2.24 lakh companies that were recently struck off from the government’s official records for remaining inactive for two or more years, 35,000 deposited and withdrew more than Rs 17,000 crore after demonetisation, the Centre has said.

In fact, one such company was found to have as many as 2,134 accounts, while another, which had a negative opening balance on November 8, 2016, deposited and withdrew Rs 2,484 crore post the note ban.

The data is based on information about 58,000 accounts received from 56 banks.

The new information has been shared with enforcement authorities, including the Central Board of Direct Taxes, Financial Intelligence Unit, Reserve Bank of India, etc. There already exists a Special Task Force to oversee the drive against defaulters.

Restrictions have been imposed on the bank accounts of the companies whose names were struck off, and action has also been taken to restrict the sale and transfer of their moveable and immoveable properties until they are restored.

The government has also disqualified around 3.09 lakh directors on the boards of companies that have failed to file financial statements and/or annual returns for a continuous period of three financial years during 2013-2014 to 2015-2016. In fact, preliminary enquiries have shown that over 3,000 disqualified directors hold the post in more than 20 companies each, which is beyond the limit prescribed by the law.

To prevent abuse of the corporate structure through multi-layering, not more than two layers will now be permitted beyond the wholly-owned subsidiary.

In order to address the criminality angle, the director, additional director or assistant director of the Serious Fruad Investigation Office (SFIO) have been authorised to arrest anyone believed to be guilty of any fraud punishable under the Companies Act, 2013. Punishment under this includes imprisonment of up to 10 years.

Further, a reference has been made to the Ministry of Finance to include it as a scheduled offence under the Prevention of Money Laundering Act.

The government will also act against professionals guilty of fraud. To this end, a high level committee has been constituted to suggest a revamp of the disciplinary systems of chartered accountants, company secretaries and cost accountants.

“An independent body, the National Financial Reporting Authority (NFRA), will be created to test check financial statements, prescribe accounting standards and to take disciplinary action against errant professionals,” the government has said.

The government is also looking to solve the problem of dummy directors by seeding the DIN with the PAN and the Aadhaar, during the application stage through biometric matching for new applications. This may be extended to legacy data in the future.

Interestingly, the government is working on a separate initiative to develop a state-of-the-art software application to put in place an ‘Early Warning System’ (EWS) which will be housed in SFIO, in a bid to strengthen the regulatory mechanism.

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