SHELL COMPANIES

Shell Companies as such not defined in the Companies Act, 2013. However, post demonetisation lead to evolvement of a buzz word "shell companies". Thirteen banks, recently submitted to government data on bank account operations and post-demonetisation transactions of some of the 209,032 companies that had been struck off the Registrar of Companies this year. The data received from these banks reveals that mere 5,800 companies have 13,140 accounts. It is interesting to note that a few of the companies have been found to have more than 100 bank accounts in their names. One company had as many as 2,134 accounts! All these reveal the existence of shell companies.

However, from 9th November, 2016 i.e. after the announcement of demonetization, till the date of their being struck off, shell companies have altogether deposited a huge amount of Rs 4,573.87 crore in their accounts and withdrawn an equally large amount of Rs 4,552 crore. Remember, only 13 banks submitted their initial report to government. Thus we can think about the impact of shell companies in our economy.

This data is only about 2.5% of the total number of suspected companies that have been struck off by the Government. The huge money game played by these companies may well be the tip of an iceberg of corruption. See the press release