Government Says 1.28 Lakh Companies Struck Off From Records For Non-Compliance

"A number of 1,27,952 companies have been struck off in last 3 years", the Minister of State for Corporate Affairs said.

<div class="paragraphs"><p>(Source:&nbsp;pch.vector on Freepik)</p></div>
(Source: pch.vector on Freepik)

The government has struck off 1,27,952 companies from the records for failing to submit their financial statements for two continuous financial years, Union minister Rao Inderjit Singh said on Monday.

In a written reply to the Lok Sabha, he also said the term 'shell company' is not defined under the Companies Act, 2013.

The government undertook a special drive for identification and striking off companies u/s 248(1) of the Act read with the Companies (Removal of Names of Companies from the Register of Companies) Rules that had not filed their financial statements and/or annual returns for a continuous period of two immediately preceding financial years.

"A number of 1,27,952 companies have been struck off in last 3 years", the Minister of State for Corporate Affairs said.

He was responding to a query on whether the government has implemented any safeguard measures for firms that unknowingly conduct business with the shell companies.

To put in place safeguard measures with respect to transactions with such struck off companies, Singh said the ministry had amended a schedule of the Act in Mar. 2021. With the amendment, companies having relationship with struck off companies will have to make certain disclosures.

When asked whether the government has notified the rules to permit companies, especially startups to allow them to directly list their securities on foreign stock exchanges, the minister replied in the negative.

"Section 5 of the Companies (Amendment) Act, 2020 (amending Section 23 of the Companies Act, 2013) has not yet been brought into force. Hence, no rules have been notified for direct listing of securities on foreign stock exchanges as of now", he said in another written reply.

To a question related to Work From Home, Singh said the Ministry of Electronics & Information Technology had constituted an Inter-Ministerial Working Group to address the challenges faced by IT/ITES industry in implementing Work From Home for their employees.

The Department of Telecommunications, Ministry of Communications has issued new Other Service Providers guidelines to reduce the compliance burden for BPO and other IT-enabled service providers. The guidelines have also enabled companies to adopt hybrid working models by enabling 'Work from Anywhere' in the country.

"Further, the MeitY has stated on 02.02.2023 that they have not conducted any further study on the challenges faced during work from home", the minister said in a separate written reply.