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Govt. ‘names and shames’ disqualified directors of shell companies

(Top) Oommen Chandy and Ramesh Chennithala; V.K. Sasikala and Illavarasi (below). File photos  

In a first-of-a-kind ‘name and shame’ exercise, the Ministry of Corporate Affairs (MoCA) has begun making public lists of disqualified directors across the nation as well as those associated with companies that have been struck off. Former Kerala Chief Minister Oommen Chandy, jailed politician V.K. Sasikala, Leader of the Opposition in the Kerala Assembly Ramesh Chennithala and Gulf-based business tycoon M.A. Yusufali are some of the prominent names figuring in these lists.

Four ‘shell companies’ linked to Sasikala, jailed aide of former Tamil Nadu Chief Minister Jayalalithaa, are among the companies struck off by the Registrar of Companies (RoC) in Chennai.

 

This follows a MoCA September 12 statement, which stated that as on that day, it had identified 1.06 lakh directors of ‘shell companies’ for disqualification under the relevant provisions of the Companies Act, 2013.

The move is apart of actions to break the network of ‘shell companies’ and further the fight against black money/money laundering, it said. Several Malayalee businessmen, leading politicians, top civil servants, and police officers figured in the lists.

Govt. ‘names and shames’ disqualified directors of shell companies
 

Mr. Yusufali, a hugely successful non-resident Indian businessman, has been hit by his association with NoRKA-Roots, which plays a key role in firming up policies and strategies for the welfare of non-resident Keralites. The four shell companies with links to Sasikala that have been dissolved include Fancy Steels Private Limited, Rainbow Air Private Limited, Sukraa Club Private Limited and Indo Doha Chemicals and Pharmaceuticals Limited.

In May, The Hindu reported in detail about the operations of companies linked to Sasikala, her family and friends. As per the information available on the MoCA website, Sasikala, Illavarasi (wife of Sasikala’s late brother Jayaraman) and V. Kulothungan were the directors of Indo Doha Chemicals and Pharmaceuticals Limited.

In Pune, among the 11,285 companies, notable names among the 4,449 disqualified directors include Mahesh Motewar, chairman and managing director of the scam-hit Samruddha Jeevan Foods India Ltd., flamboyant Pune builder Aniruddha Seolekar of Oxford Suites Pvt. Ltd. and Jyoti Andhalkar of Andhalkar Agro Products Ltd.

The disqualified in the lists are those who are, or were a director, in a company that has not filed financial statements or annual returns for any continuous period of three financial years. Such directors will not be eligible for re-appointment as a director in that company or for appointment in other companies for five years from the date of non-compliance.

 

The maximum number of directorships in this category was from Delhi (74,920), which included the names of some foreign nationals as well. This was followed by Mumbai (66,851), Hyderabad (41,156), Ernakulam (around 14,000), Cuttack (13,383), Ahmedabad (10,513), Gwalior (9,628), Pune (4,449), Puducherry (1,605), Himachal Pradesh (1,363), Coimbatore (1,299), Shillong (1,290) and Chhattisgarh (889).

The offices of the RoC in Bangalore, Chandigarh, Chennai, Goa, Jaipur, Jammu and Kashmir, Jharkhand, Kanpur, Kolkata, Patna and Uttarakhand are yet to put out any list in this category.

In addition, the published lists include the names of directors whose position became vacant as they were directors in companies struck off from the RoC. The government had said that there were around 2.09 lakh such de-registered companies. In this category, the maximum cancelled directorships were in Chennai (24,048), followed by Ahmedebad (12,692), Ernakulam (around 12,000), Cuttack (4,760) and Shillong (670).

The office of the RoC has not brought out any such list in this category in regions, including Bangalore, Chandigarh, Chhattisgarh, Delhi, Coimbatore, Goa, Gwalior, Himachal Pradesh, Jaipur, Jammu and Kashmir, Jharkhand, Kanpur, Kolkata, Mumbai, Patna, Puducherry, Pune and Uttarakhand.

Earlier this month, the government instructed banks to ensure that the directors (present or former) or their authorised signatories are restricted from operating the bank accounts of the companies that were struck off. Directors were also warned of tough action if they have siphoned off any money even before the banks were alerted.

Impact on SMEs

In the Coimbatore list, many of those who have been disqualified were directors in small and medium companies. Some of these firms have gone bankrupt.

A. Rayappan, chairman of Hi-Tech International Trade Fair, who figures in the list of companies whose directors have been disqualified, told The Hindu that he was not aware of the action taken. “About three years ago, one of the events made a loss. We did not file the balance sheet for two years after that. We have no bank loans and we are a profit-making company now. I am not aware of the action taken,” he said.

Many of them are also planning to challenge the decision. A director of a Tirupur-based garment exporting company, who is among the directors disqualified and did not want to be named, said, “We have not been operating the company for the last six years or so. We have informed the RoC too. We closed the bank account three or four months ago. Problems in this company had led to collapse of our entire business. Regarding action taken by the RoC now, I need to speak to our auditor and we will challenge it.”

(With inputs from Sanjay Vijaykumar, S. Anil Radhakrishnan, Arun S, Shoumojit Banerjee & M. Soundariya Preetha)


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Printable version | Nov 29, 2021 4:55:21 PM | https://www.thehindu.com/news/national/shell-shock-govt-names-and-shames-directors/article19710912.ece

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