Government to deregister over 40,000 dormant companies

The corporate affairs ministry (MCA) plans to deregister over 40,000 dormant companies which did not start business activities even after six months since incorporation.

The government's motive behind the move is to counter money laundering through the shell and dormant companies.

Out of the 40,000 companies identified for the deregistration, more than 7,500 have been identified by the registrar of companies (RoC) in Delhi and Haryana alone, the report said.

According to the ministry, there are more than 23 lakh registered companies in India, of which approximately 14 lakh are active. As many as 800,000 companies have closed operations.

The government had conducted a similar exercise after the demonetisation in 2016, as per the report.

The government had undertaken a similar exercise after the demonetisation in 2016. "However, during that exercise, the companies which were dormant for over two years and didn't show any business operations were identified and struck off… In this case, we are taking action against those which haven't started any business six months from their incorporation," a senior government official told the business newspaper.

It is to be noted that the deregistration of the company would not remove the liabilities of the company.

Officials told ET that striking off the names would not remove the liability on the directors or the companies. The company and its directors would be liable for prosecution if law enforcement agencies find any dubious transactions in the name of the company, the report said.