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Owners of 3 lakh blacklisted shell firms may get jail term for 10 years over use of unauthorised bank accounts

If the director or authorised signatory of any delisted company tries to unauthorisedly makes monetary transactions from its bank account, then he/she might attract imprisionment of at least six months

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After blacklisting as many as 300,000 directors of shell companies, the government further tightened noose on black money hoarders. 

The Centre has now decided that if the director or authorised signatory of any delisted company tries to unauthorisedly makes monetary transactions from its bank account, then he/she might attract imprisonment of at least six months which can further exceed up to 10 years. 

However, if the fraud includes public interest, the punishment shall not be less than 3 years and a fine of three times the amount involved may also be imposed, a government release said.

“Consequent to instructions issued by Department of Financial Services to all the banks on September 5, 2017, the Directors (ex-) or their authorised signatories had been restricted from operating the Bank accounts of such companies and they cannot siphon off money from the accounts of these “struck off” companies. However, even prior to such action, if they have siphoned off any money, strict action would still be taken against them,” the release said.

The decision came after Minister of State for Corporate Affairs P P Chaudhary chaired a review meeting on Wednesday, which led to the decision that directors of these firms hadn't paid any tax for more than three years, so they would be disqualified from being appointed in any other company as Director and should vacate the office with immediate effect. 

Chartered accountants evading taxes are also under government radar. "All efforts are also being made to identify the actual beneficiaries and persons behind such shell companies. Profiles of directors such as their background, antecedents and their role in the operations/functioning of these companies are being compiled in collaboration with enforcement agencies. Identification of more shell companies is also in progress. The professionals, chartered accountants/ company secretaries/ cost accountants associated with such shell companies and involved in illegal activities have been identified in certain cases and the action by professional institutes such as ICAI, ICSI and ICAoI are being monitored,” the release stated. 

Over debarring these directors, the press released quoted P P Chaudhary as saying, "The financial status of the companies would be reflected in a true and fair manner which would minimise the possibility of frauds and tax evasion. Further, the availability of funds for illegal purposes will also be choked". 

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