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Stringent Compliance Norms In Place To Crackdown Shell Firms

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In a bid to curb the rise of shell firms and keep a track of dormant entities as also check fly-by-night operators, the MCA has put in place more stringent compliance norms and amended the Companies (Appointment and Qualification of Directors) Rules, As per the new rules, in a case when the firm does not files the e-form ACTIVE, the directors of such firms will be labelled as 'director of ACTIVE non-compliant company'.

Stringent Compliance Norms In Place To Crackdown Shell Firms
 

The amendment made earlier in the month puts forth that "Where a company governed by Rule 25A of the Companies (Incorporation) Rules, 2014, fails to file the e-form ACTIVE within the period specified therein, the Director Identification Number (DIN) allotted to its existing directors, shall be marked as 'Director of ACTIVE non-compliant company'".

And in such a case, when the company director has been tagged this way, he or she can take all necessary steps to ensure that their company is governed as per rule 25A. The active concept is in place for tagging the registered office of a company. Firms incorporated on or before December 31, 2017, were required to file particulars in e-Form ACTIVE by April 25, 2019.

Experts point out that with the measure corporate governance will be taken to the next level.

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