Shell companies must e-file details for all firms

Failing to file e-Form ACTIVE will result in a penalty of Rs 10,000 with organizations in a fault being declared ACTIVE non-compliant.

Advancing with its crackdown on "fly by night and dummy" entities by rigorous KYC regulations, the government has made it obligatory for over 12 lakh existing listed companies in India to upload all their particulars including details of registered offices in an e-filing to the government.

The Ministry of Corporate Affairs has stated the Companies (Incorporation) Amendment Rules, 2019, following which every company enlisted before December 31, 2017, are expected to file e-Form ACTIVE (Active Company Tagging Identities and Verification)-INC22A on or before April 25, 2019.

Failure to file e-Form ACTIVE will commence a penalty of Rs 10,000 with companies in a fault being declared ACTIVE non-compliant.

Once a company is identified as ACTIVE non-compliant, it would not be authorized to make modifications to its capital structure or proceed ahead with incorporation or amalgamation deals. Such non-compliant companies would also not be capable of rotating their directors or making adjustments in their registered office.

 A government official not wanting to be recognized said "The rule makes it amply clear that companies have to e-file all their details so that a proper check is maintained on their operations and creation of shell companies is prevented."

In Previous year, the Ministry of Corporate Affairs had launched new Know Your Customer (KYC) standards concerning about 33 lakh directors of companies. Following it, directors were obliged to e-file forms presenting details such as personal mobile number, e-mail address, Permanent Account Number (PAN) and Aadhaar number. A video confirmation that demanded directors to upload a 30-second clip introducing themselves was also made compulsory.

According to the latest announcement for the filing of Form INC22A or ACTIVE, a corporation must have listed its annual gains for the FY18. Although, if an organization is struck off or is in the procedure of being under liquidations or struck off, Form ACTIVE doesn't need to be filed.

If ACTIVE is filed on or after April 20, it can only be given after giving a penalty of Rs 10,000. Just following this, will the organization be reported ACTIVE-compliant.

The e-Form will get all features of a company - its directors, annual filings and a photo (internal and external) designating one of the directors in its certified office.

This tightening of the rope about companies occurs after a significant crackdown by the government post-demonetization in FY18 in which it struck off 2.26 lakh companies that had neglected to file their financial records or annual gains over 2 or more successive years.

Likewise, more than 3 lakh directors were disbarred for non-filing of annual gains by their companies for 3 years.

In another crackdown previous year, the Ministry identified 2.25 lakh additional companies for action.