April 21, 2021
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Uncertainty looms over ‘govt’s move to deregister nearly one lakh companies

A state of uncertainty is slowly looming in the India corporate society over the central government’s move to deregister nearly one lakh companies, with some prominent lawyers and charted accountants expressing doubt about the existence of such an authority which enables the concerned department to implement such a step. Last day, the Registrar of Companies cancelled the registration of nearly one lakh companies, citing these companies were doing some kind of suspicious or questionable operations. Later, immediately after the action, the Prime Minister, Narendra Modi, asserted that the government would take tougher actions against the shell companies, indicating that the Registrar of Companies’ move was one such action. There are nearly fifteen lakh registered companies exists in our country. The Registrar of Companies has the authority to seek an explanation from those companies which has not started its operation within one year of its incorporation and has been in an inactive state for two consecutive financial years. The authorities have the power to cancel the registration if the companies’ explanation is not satisfactory. At this movement, it is not clear did the authorities serve such a notice to the respective companies before taking the action. Some believe that the ‘deregistration of one lakh, so called, shell companies with one stroke of a pen’ is an appreciable move and it will give a clear warning to the corporate sector. Anyway, there are still many questions that the authorities have to answer if they want to justify their move beyond any doubt.


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