MCA has struck off around 2.24 lakh companies for remaining inactive for 2 years or more. In furtherance to striking off the defaulting companies, MCA has so restricted operation of their banks accounts in accordance with law. In addition, Govt has also directed that defaulting companies are restricted to sale and transfer of moveable and immoveable properties until they are restored.
Govt. has also decided to disqualify Directors from the Board of Companies who have failed to file Financial Statements and/or Annual Returns for a continuous period of three (3) financial years during 2013-14 to 2015-16. Around 3.09 lakh Directors have been affected by this action.
MCA INITIATIVES IN REFERENCE TO DISQUALIFIED COMPANIES & DIRECTORS
- SPECIAL TASK FORCE
“Special Task Force” has been constituted to oversee the drive against such defaulting companies under the Joint Chairmanship of Revenue Secretary and Secretary, Corporate Affairs with the help of various enforcement agencies.
- DIRECTOR CAN BE ARRESTED FOR ANY FRAUD U/S 477
In order to curb money laundering and address the criminality angle, MCA has empowered Director, Additional Director or Assistant Director of SFIO to arrest any person believed to be guilty of any fraud under the Act. MCA highlights that Section 447 of the Act, which defines fraud, states stringent punishment including up to 10 years imprisonment. In addition, Ministry of Finance has decided to include it as a Scheduled Offence under the Prevention of Money Laundering Act. In order to strengthen the Regulatory Mechanism, MCA has decided to develop State-of-the-Art software application to put in place an ‘Early Warning System’ (EWS) which would be housed in SFIO.
- DUMMY DIRECTORS
In order to solve the problem of dummy directors, MCA is underway to seed DIN with PAN and Aadhaar at the stage of DIN application through biometric matching for new applications.
- CONSTITUTION OF HIGH LEVEL COMMITTEE TO CONSTRAINT PROFESSIONALS FRAUD
MCA has constituted High Level Committee (HLC) to revamp of the disciplinary systems of Chartered Accountants, Company Secretaries and Cost Accountants and constraint Professionals fraud.
- SETTING UP OF NATIONAL FINANCIAL REPORTING AUTHORITY (NFRA)
In addition, an independent body, National Financial Reporting Authority (NFRA) has been also set up to test check Financial Statements, prescribe Accounting Standards and take disciplinary action against errant professionals.
- SHARING OF DEFAULTING COMPANIES INFORMATION WITH ENFORCEMENT AUTHORITIES
The information with respect to defaulting companies has been shared with enforcement authorities, including Central Board of Direct Taxes(CBDT), Financial Intelligence Unit (FIU), Department of Financial Services (DFS) and Reserve Bank of India (RBI) etc., for further necessary action. Companies have also been identified for inquiry/inspection/investigation under the Companies Act, 2013 and necessary action is underway.
- PROHIBITS INVESTMENT IN NO MORE THAN 2 LAYERS OF INVESTMENT IN WHOLLY OWNED SUBSIDIARY
In order to restraint abuse of the Corporate Structure through multi-layering, not more than two (2) layers are permitted beyond the wholly owned subsidiary. This is in addition to the existing restriction which prohibits a company to make investment through more than two layers of investment companies.