SIT on black money recommends taking steps to detect shell companies


New Delhi: The Special Investigation Team on black money has recommended that law enforcement agencies take steps to detect shell companies after it was found that there were 2,627 people who were directors on the board of over 20 companies in violation of the Companies Act.

The finance ministry said in a statement here on Tuesday that the SIT findings showed the total number of companies sharing their address with at least 19 other companies are 13,581 in number.

“The SIT has requested the Ministry of Corporate affairs to take necessary action with respect to the violation of the Companies Act noted above. The SIT has further requested CBDT, CBEC, and Enforcement Directorate to undertake due diligence on the Company data referred to above,” the statement said.

“While there is no specific Act/Rule, which debars Companies from having the same address, SIT has desired that greater vigilance is accorded by law enforcement and intelligence agencies like CBDT, CBEC, ED, and FIU while examining the operations of such Companies,” it added.

It has also asked the Serious Frauds investigation office (SFIO) under the ministry of company affairs to regularly mine the MCA database for such shell companies.

Shell companies are the entities that are incorporated as companies, and are used only for routing funds, without undertaking any real business activity.

SIT looked into the matter after a panel headed by CBDT chairman in 2012 had said that the use of shell companies to provide accommodation entries to launder black money was noticed in a number of high profile cases investigated.