Onsite address verification mandatory for RoC firms
The move aims at weeding out bogus, shell companies
New Delhi: In a bid to eliminate bogus and shell companies and curtail shady practices, the central government has made it mandatory for registrar to visit the registered office of every company. The idea is to ensure that the company does exist in reality too, and not just on paper, official sources told Bizz Buzz.
A bogus or shell a company is one that directly doesn't own or run a business, but is a cover for a person's or another company's activities, often illegally. As the menace of terror funding made its presence felt all over the world, especially after the twin tower attack on September 11, 2001, governments across continents have been trying to check, if not end, the phenomenon of shell companies. India is no exception.
Apart from terror funding, India has also been facing the problem of Chinese companies registering in our country by indulging in crooked practices.
According to a new directive by the Ministry of Corporate Affairs (MCA), if need be, the registrar concerned may order the physical verification of the said registered office. This would be done in the presence of two independent local witnesses. The registrar's officials may also seek the assistance of the local police, if required.
They shall also take a photograph of the registered office of the company, while carrying out physical verification, officials said.
It may be mentioned here that shell companies are being targeted from all sides. While the MCA has made physical verification of the registered office of every company mandatory, the Indian Chartered Accountants' Institute (ICAI) has also tightened the screws on its own wayward members. The ICAI recently has issued disciplinary notices to over 200 chartered accountants for their alleged support to Chinese firms.
The Chinese companies have been accused of breaching the Companies Act, 2013. The Centre has also been restricting foreign direct investment (FDI) from countries that share land borders with India; the move targets China. In case the registered office of a company is not found to be capable of receiving and acknowledging communications and notices, the company and its directors will be asked to sort out the matter within 30 days.
