Non-compliance to be “very costly” for companies: Centre

Sending out a strong message to corporates, the centre government has said non-compliance will be "very costly" and strong deterrents will be there to curb the dangerous adventure of using companies for wrongful purposes.
Non-compliance to be “very costly” for companies: Centre
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Sending out a strong message to corporates, the centre government has said non-compliance will be "very costly" and strong deterrents will be there to curb the dangerous adventure of using companies for wrongful purposes.

Continuing the clampdown on illicit fund flows, the Ministry of Corporate Affairs has already struck off more than 2.24 lakh companies that have not been doing business for long and has disqualified over three lakh directors associated with such entities.

Against this backdrop, Corporate Affairs Secretary Injeti Srinivas said things are being simplified for legitimate businesses while checks are being strengthened against illegal business activities.

"It should be very easy to be compliant and very costly to be non-compliant. We want this… There should be a strong deterrent against illegal business. People using the company for wrong purposes, that should be a very dangerous adventure," he told PTI in an interview.

About the ongoing action with respect to suspected shell companies, he said investigations are being carried out with urgency.

"When you go for prosecution, it should serve as a deterrent. Imprisonment option should essentially be confined to violations involving criminality and fraud," Srinivas said.

On the scenario of certain genuine entities also facing the heat in the clampdown, Srinivas said every effort is made to ensure that "innocent companies are not inconvenienced", adding that investigations are carried out only after preliminary scrutiny.

"In any such large exercise, it is not unusual that there could be some collateral damage. It cannot be so perfect but effectively, it is very focussed and every effort is made that innocent companies are not inconvenienced," he noted.

To provide a three-month window for defaulting companies to submit their filings, the ministry would be coming out with the Condonation of Delay Scheme. It is to be in place from January 1 to March 31, 2018.

While making it clear that a law should not be too onerous, he said there is a continuous effort to simplify the law "but non-negotiable in terms of essential compliance". 

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