The Corporate Affairs Ministry said on Monday that around 30 per cent of the 80,000 public limited companies are not filing their annual returns.The Ministry has asked the Registrar of Companies (RoC) not to strike off the names of companies by classifying them as defunct, even if they have not filed their annual returns for three years. This is to find out if any of such companies have committed violations of law.
Besides, the Ministry has also found that though 26,000 companies are qualified to be listed on stock exchanges, there are only around 5,000 listed companies in the country, said Mr Avinash K Srivastava, Joint Secretary, Corporate Affairs Ministry.
Mr Srivastava told reporters here that “according to the Companies Act, if a company has not filed its balance sheet for three years, its name can be struck off by RoCs. But now we want to find out how many of those companies have some inspections going on against them or are being prosecuted for some offense.”
“We also want to find out how many of such companies have taken deposits from the public and have not returned the money. Therefore we have asked RoCs not to strike off their names,” he said.
Mr Srivastava said a company has to start filing returns after 18 months of being incorporated.
He said the Ministry has developed an Early Warning System to find out if any Satyam-like frauds are happening in any company. The Early Warning would be sounded if a company’s profits show an absurd jump (that is, if they exceed a certain threshold limit) or if companies cite absurd values regarding their related party transactions. Besides, the warning would be sounded if a company has huge cash balances remaining unutilised for several years, he said.
The official said the Ministry has asked RoCs and Regional Directors to spread awareness about the advantages of getting a company listed. “Listed companies have a better corporate profile and they have more borrowing opportunities,” he said. A company needs to have a paid-up capital of Rs 3 crore to get listed.
The RoCs and RDs have also been asked to hold 150 seminars across the country in the next year to increase awareness on the Investor Awareness and Protection Fund managed by the Ministry. The Ministry will also advertise in English and vernacular languages in the media on the IEPF. The RoCs and RDs will also disseminate information on Limited Liability Partnerships, the official said.