Crackdown on shell companies: MCA unlikely to extend June 15 deadline for filing ACTIVE form

The Ministry of Corporate Affairs (MCA) does not intend to extend the June 15 deadline for companies incorporated before December 2017 to file the mandatory requirements under the ACTIVE or INC 22 form, senior government officials told CNBC-TV18.

The MCA had introduced the mandatory KYC norms to help it track down bogus or shell companies as well as to ensure timely compliance by firms through the ACTIVE or INC 22 form.

"MCA will not extend the June 15 deadline for the ACTIVE compliance. The government is very clear that it has zero tolerance when it comes to the existence of shell companies. The government has given a fair amount of time to companies to comply with the new norms," said the official, who did not want to be named.

ACTIVE, which stands for Active Company Tagging Identities and Verification and is known as INC 22, has serious non-compliance implications. Non-compliance would empower the government to change the status for such companies as ‘ACTIVE non-compliant’ on the MCA 21 portal, leading to removal of the name by the registrar of companies.

As a result, banks will be wary of lending money. The companies will also not be allowed to undergo amalgamation and de-merger. They will be charged a late filing fee of Rs 10,000 among others. The action will be taken under sub-section (9) of Section 12 of the Companies Act, 2013.

The MCA initially had proposed April 25, 2019 as the deadline for filing the ACTIVE form, however, after receiving representations, it had extended the deadline to June 15, 2019.

So far, close to 50 percent of the 11.35 lakh active companies have complied with the new norms.

Photographs of the registered office showing external building.

A photograph of the office interior.

A picture should also show at least one director or key management personnel.

A photo of the director to be affixed a digital signature to this form.

Details of its directors, chief executive officer, chief financial officer, auditor, cost auditor and company secretary.

Govt will change the status for such companies as ‘ACTIVE non-compliant’ on the MCA 21 portal.

Directors of such ACTIVE non-compliant companies would be marked as ‘Director of ACTIVE non-compliant company’.

Companies will be liable for action for removal of the name by the registrar of companies.

Companies will also be barred from filing several forms.

Companies will be charged a late filing fee of Rs 10,000.

Directors of non-compliant companies would be ineligible to undertake corporate filings and would constrain their ability to act as directors.

Banks will be wary of lending money to 'non-complaint' companies.

Companies will be barred from carrying out regular compliance functions such as changing their authorised capital, paid-up capital, registered office or their directors.

Companies will also not be allowed to undergo amalgamation and de-merger.