The Ministry of Corporate Affairs said that about 2.24 lakh companies have been de-registered for remaining inactive and not filing financial statements for two years or more. Likewise, around 3.09 lakh directors on the board of companies that failed to file financial statements and/ or annual returns for a continuous period of three financial years during 2013-14 to 2015-16 have been disqualified.
Over 3,000 disqualified directors have exhausted the prescribed limit of maximum number of directorships.
The MCA also said that steps are under way to set up National Financial Reporting Authority (NFRA), an independent body to test check financial statements, prescribe accounting standards and take disciplinary action against errant professionals.
Another initiative is also undertaken to develop software application to put in place an ‘Early Warning System’ to strengthen the regulatory mechanism. After de-registration process, restrictions have been imposed on operation of their bank accounts in accordance with the law.
Also, Preliminary Enquiry on the basis of information received from 56 banks in respect of 35,000 companies involving 58,000 accounts has revealed that over Rs. 17,000 crores was deposited and withdrawn post-demonetisation. In one case, a company, which had a negative opening balance on November 8, 2016, deposited and withdrew Rs. 2,484 crores post-demonetisation.
In order to address the criminality angle, the Director, Additional Director or Assistant Director of SFIO have been recently empowered to arrest any person believed to be guilty of any fraud punishable under the Act. Under Section 447 of the Act, which defines fraud, stringent punishment including imprisonment up to 10 years is stipulated.