Skip to main content

Define'shell companies' in companies act, panel asks govt

By
Define'shell companies' in companies act, panel asks govt
At present, the term 'shell company' is not defined under the Companies Act, which is implemented by the corporate affairs ministry
A Parliamentary panel has asked the government to define "shell company" in the Companies Act and ensure distinction between those guilty of fraud and those irregular with filings.
The recommendation assumes significance at a time when the government is cracking down on companies that have not been carrying out business activities for long as well as those entities being allegedly used for illicit fund flows.As part of larger efforts to curb the black money menace, the corporate affairs ministry has already struck off the names of more than 226,000 companies from the official records besides disqualifying a large number of directors associated with such entities.
The Parliamentary Standing Committee on Finance, headed by senior Congress leader and former Corporate Affairs Minister M Veerappa Moily, has said that out of the 226,000 deregistered companies some may have been merely dormant ones without any fraudulent intent.
"Therefore, it is necessary that while cracking down on shell companies, the ministry needs to make distinction between those guilty of fraud and those irregular with filings," the panel said in a report tabled in Parliament on March 9.At present, the term 'shell company' is not defined under the Companies Act, which is implemented by the corporate affairs ministry.
"To avoid any legal ambiguity and pre-empt avoidable litigation in the absence of a clear cut definition of 'shell companies' may be suitably included in the Act itself by bringing in the element of 'fraudulent' intent," the committee said.According to the report, the ministry has decided to attempt a commonly accepted definition and attributes of shell companies.Amid instances of corporate frauds, the panel has also called for "real time data sharing" among the ministry and other agencies.
"To prevent corporate misfeasance/ malfeasance, there should be real time data-sharing amongst Ministry of Corporate Affairs and other regulatory enforcement agencies such as CBI, ED, DRI, CBDT, SFIO, Department of Financial Services, Financial Intelligence Unit, Central Economic Intelligence Bureau and Sebi," it said. In this regard, the committee has said that it may be apprised of the progress made within three months.
The Business Standard, New Delhi, 12th March 2018

Comments

Post a Comment

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...
Post a Comment
Read more

SFBs should be vigilant, proactive to mitigate risks: RBI deputy guv

By
  The Reserve Bank of India’s Deputy Governor Swaminathan J on Friday instructed the directors of small finance banks (SFBs) to be vigilant and proactive in identifying emerging risks in the sector.Speaking at a conference for directors on the boards of SFBs, Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models.Additionally, he highlighted the need for strengthening cybersecurity to protect the entities against digital threats and urged for a stronger focus on financial inclusion, customer service, and grievance redressal to ensure a broader reach of banking services.Executive Directors S C Murmu, Rohit Jain, and R L K Rao, along with other senior officials representing the Supervision, Regulation, and Enforcement Departments of the RBI, also participated in the conference.   -  Business Standard  30 th  September, 2024
Post a Comment
Read more

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

By
  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...
Post a Comment
Read more