Black money crackdown: Directors of deregistered companies to face up to 10-year jail for siphoning off funds

It was also decided that the directors of shell companies which have not filed returns for three or more years would be disqualified from holding such position in any other firm.

New Delhi: Directors of deregistered companies trying to siphon off money from bank accounts can face up to 10 years imprisonment, Ministry of Corporate Affairs said on Wednesday.

The move, part of a crackdown on illegal transactions and tax evasion, comes a day after authorities froze the bank accounts of 2.09 lakh suspected shell companies.

"In case the director or authorized signatory of any “struck off” company tries to unauthorizedly siphon-off money from its bank account, he/she may attract punishment of imprisonment of not less than six months extendible to 10 years," the Ministry of Corporate Affairs said in a statement.

"If it is found that the fraud involves public interest, the punishment shall not be less than 3 years and fine may also be imposed which would be three times the amount involved," it added.

In a review meeting chaired by the Minister of State for Corporate Affairs,  P P Chaudhary today, it was also decided that the directors of shell companies that have not filed their returns for three or more years would be disqualified from holding such position in any other firm.

"It is expected that as a result of this exercise, at least two to three lakh of such disqualified directors shall get debarred," the statement said.

The government has also identified chartered accountants, company secretaries and cost accountants associated with shell firms in certain cases.

Professionals, CAs/ CSs/ Cost Accountants associated with Shell Cos & involved in illegal activities have been identified in certain cases.

— Ministry of Finance (@FinMinIndia) September 6, 2017

On Tuesday, the government directed freezing bank accounts of more than 2.09 lakh companies whose names have been struck off from the records and had said action would be taken against more such firms.

About the directors and signatories of the over 2.09 lakh firms, the government had said they would not be able to operate bank accounts of such companies till these entities are legally restored.