Government is setting up an independent body, National Financial Reporting Authority (NFRA) to check Financial Statements, prescribe Accounting Standards and take disciplinary action against devious accounting professionals.

Around 2.24 lakh companies have been struck-off till date for remaining inactive for a period of 2 years or more by the Ministry of Corporate Affairs (MCA), Government of India.

Restrictions have been imposed on the operation of their bank accounts in accordance with the law.

Apart from the restrictions on bank accounts, action has also been taken to restrict sale and transfer of movable and immovable properties of struck-off companies until they are restored.

Companies have been identified for inquiry/inspection/investigation under the Companies Act, 2013 and necessary action is underway. The information with respect to such companies has been shared with enforcement authorities, including Central Board of Direct Taxes(CBDT), Financial Intelligence Unit (FIU), Department of Financial Services (DFS) and Reserve Bank of India (RBI) etc., for further necessary action.

Action has also been taken to disqualify Directors on the Board of Companies that have failed to file Financial Statements and/or Annual Returns for a continuous period of 3 financial years during 2013-14 to 2015-16.

With a view to checking the problem of Dummy Directors, the action is underway to seed DIN with PAN and Aadhaar at the stage of DIN application through biometric matching for new applications. The same may be extended to legacy data in due course.

Finally, a separate initiative is underway to develop a State-of-the-Art software application to put in place an ‘Early Warning System’ (EWS), which will be housed in SFIO. The objective is to strengthen the Regulatory Mechanism.

Source: CAclubindia