Presently, there are 87 companies falling under the category, “Vanishing Companies”. Giving this information in written reply to a question in the Lok Sabha, Shri Sachin Pilot, Minister of Corporate Affairs, said that the FIRs have been lodged against all 87 companies and their Directors to trace their whereabouts and also to take action under Indian Penal Code (IPC). Prosecutions have also been filed against these companies and their Promoters/ Directors under sections 162 and 220 of the Companies Act, 1956 for non-filing of Statutory Returns and under Sections 62/ 63, 68 and 628 of the Companies Act, 1956 for mis-statement in prospectus/ fraudulently inducing persons to invest money/ false statements made in the offer documents, etc.

Shri Pilot also informed the House that Instructions have been issued to the Registrars of Companies for physical verification of the registered offices of listed companies which have defaulted in filing their Balance Sheets and Annual Returns. Following measures have been taken by the Ministry to check the incidents of vanishing companies:

i) In 2006, the Ministry has amended the Companies Act, 1956 by inserting Sections 266A to 266G which makes it mandatory for every existing or prospective director to obtain a ‘Director Identification Number’. This process requires detailed verification of particulars of a person along with a photograph, identity proof, residence proof, etc. so that traceability of the directors is ensured.

ii) In case of incorporation of a new company or change of address of an existing company, Ministry has made it mandatory for the professionals verifying its details to personally visit the premises and certify that the premises are indeed at the disposal of the company. Further, in such cases, proof of registered address has also been made mandatory to be furnished at the time of incorporation or change of registered office address;

iii) Instructions have also been issued to the Registrars of Companies to scrutinise the Balance Sheets and other records of the companies which raise money through public issue so as to monitor the utilisation of such funds.

Director Identification Number requirement enhances director traceability and supports criminal and company law action against vanishing companies. Criminal proceedings and FIRs target vanishing companies and their directors for non filing and misstatements, while Director Identification Number requirements mandate verified personal particulars and photographs to ensure director traceability. Professionals must physically verify premises and furnish proof of registered address at incorporation or address change, and Registrars are instructed to verify registered offices and scrutinise balance sheets and records of public issue companies to monitor fund utilisation.