Not filing financials isn't an option anymore for firms: Govt plans strong action

Taking action against non-filing of financial statements, the government has identified companies and may strike them off during the current financial year.

According to a finance ministry statement, around 2,25,910 companies have been identified and will be struck off under section 248 of the Companies Act, 2013 for non-filing of financial statements for 2015-16 and 2016-17.

Besides, 7,191 Limited Liability Partnerships (LLPs) have been identified.

Many e-commerce companies also are under the radar. They too often are found delaying their financial filings.

The Ministry of Finance also shared the development through his twitter handle in a series of tweets.

For 2nd drive to be launched during current FY 2018-19, 2,25,910 companies have been further identified for being struck-off u/s 248 of Companies Act,2013 along with 7191 LLPs for action u/s 75 of the LLP Act, 2008 due to non-filing of financial statements for 2015-16 & 2016-17.

— Ministry of Finance (@FinMinIndia) June 8, 2018

The Ministry of Corporate Affairs (MCA) has cut off over 2.26 lakh companies for non- filing of financial statements or annual returns for a continuous period of 2 years or more. More than 3.09 lakh directors were disqualified for not filing financial statements or annual returns for preceding 3 years. The struck-off companies have been restricted from operating the bank accounts of these companies.

The companies will be barred from withdrawing any amount from bank accounts, other than for specified purposes, till the company is restored as per the provisions under Companies Act.

The companies will be served notices regarding their default. After failing to respond will result in government action against the defaulters.

Earlier in Feb 2017, under Finance Secretary Hasmukh Adhia and MCA Secretary Injeti Srinivas a task force was set up to check the menace of shell companies.

It has asked all member of law enforcement agencies to send to Institute of Chartered Accountants of India, the details of action taken against Chartered Accountants by them, the statement added.