More than 3.8 lakh companies have been struck off from official records under the companies law during the past three years, according to the government.

In a written reply to the Rajya Sabha, Minister of State for Corporate Affairs Anurag Singh Thakur also said the term “shell company” is not defined under the Companies Act. 

“It normally refers to a company without active business operation or significant assets, which in some cases are used for illegal purpose such as tax evasion, money laundering, obscuring ownership, benami properties etc,” he noted.

The Special Task Force set up by the government to look into the issue of shell companies has recommended the use of certain red flag indicators as alerts for identification of shell companies.

Based on non-filing of financial statements consecutively for two years or more, companies were identified and after following due process of law, “3,82,581 number of companies were struck off during the last three years”, Mr. Thakur said.

This was done as provided under Section 248 of the Companies Act, 2013, read with the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

In a separate written reply, the minister said that under Section 182 of the Companies Act, companies, other than government companies and companies less than three years old, are allowed directly or indirectly to contribute to any political party with the approval of their boards of directors.

“Such companies shall have to disclose in its profit and loss account the total amount contributed by them during the financial year to which the account relates and the name of the party is not required to be disclosed. Therefore, political party-wise data is not maintained,” he said.