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Over 2 lakh companies' bank accounts frozen

Over 2 lakh companies' bank accounts frozen
The Finance Ministry has imposed restrictions on the operation of bank accounts of more than 2 lakh companies which have been "struck off" from the Register of Companies.The bank accounts of these companies will remain frozen unless they are legally restored by the National Company Law Tribunal (NCLT).

All banks have been asked to take immediate and appropriate action.

The Finance Ministry's official statement

These individuals will not be able to operate bank accounts till such companies are legally restored by an order of the NCLT.Struck-off companies failed to respond to show-cause notices

Most of these companies have been removed from the RoC due to issues with filing of returns and other formalities related to compliance. This was done after notices had been served to 2.97 lakh companies which had failed to respond to show-cause notices sent earlier.

The existing directors and authorized signatories of these companies will now become ex-directors and ex-authorized signatories.The government continues to crackdown on black money

This step by the Finance Ministry might be seen as a continuation of the Modi government's crackdown on black money.Shell companies are often used as conduits for illicit flows of funds and tax evasion.

Banks have also been asked to employ "enhanced diligence for dealing with companies" and keep a watch on companies defaulting on filing returns and annual statements.

The Economic Times, New Delhi, 06th September 2017

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