In its attempt to further clamp down shell companies in the country, the corporate affairs ministry will soon come up with the process of know your customer or KYC for companies that will be made mandatory.
Shell companies are companies with no real existence and their presence is merely on papers to carry out illegal activities as well as hold unaccounted for money.
Last year, the MCA had started the KYC process for directors of all registered firms. And of the 3.3 million directors who possess the DIN or Director Identification Numbers, only around 1.6 million are reported to complete the KYC process so far. The process of identifying shell companies shall be facilitated through this KYC process as those not complying with such norms will be brought under closer scrutiny.
The KYC process will also require the companies to mandatorily share details of its key executives as well as professionals that include CAs, CS and ICWAs. "It will be very soon, maybe as early as this month", an official with knowledge on the development is quoted as saying in a leading dailies report.
"Companies would not be able to carry out too many substantive operations if they don't do their KYC," said the official quoted above. Also, as per the Corporate affairs secretary, for registration under the MCA 21 portal, KYC compliance will be a must.