Over 1L shell-co directors face axe

Over 1.06 lakh directors will be disqualified for their association with shell companies, according to the Ministry of Corporate Affairs.

This has come after the ministry cancelled the registration of 2.09 lakh companies that have not been carrying out business activities for a long period. Banks have been asked to restrict operations of these companies’ bank accounts by their directors or their authorised representatives.

The ministry has “identified 1,06,578 directors for disqualification under Section 164(2)(a) of the Companies Act, 2013 as on September 12, 2017,” the official statement from the ministry said.

Under Section 164, a director in a company that has not filed financial statements or annual returns for three financial years continuously would not be eligible for re-appointment in that company or any other firm for five years.

The ministry said it is further analysing the data of the 2.09 lakh firms available with the Registrar of Companies (RoC) to identify the directors and the significant beneficial interests behind these entities.