There is no definition of the term “Shell Company” in the Companies Act and it normally refers to a company without active business operation or significant assets, which in some cases are used for illegal purpose such as tax evasion, money laundering, obscuring ownership, benami properties etc. This was stated by Union Minister of State for Corporate Affairs Shri Rao Inderjit Singh in a written reply to a question in Rajya Sabha today.

The Minister further stated that the Special Task Force set up by the Government to look into the issue of “Shell Companies” has inter-alia recommended the use of certain red flag indicators as alerts for identification of Shell Companies.

The Government has undertaken a Special Drive for identification and striking off Shell Companies during the last three years, the Minister stated.

The Minister tabled a list of the total number of companies struck off u/s 248 State/ Union Territory-wise as under:

Name of the State/ UT	No. of Struck off Companies
	2018 to June 2021
RoC-Ahmedabad	9243
RoC-Andaman	41
RoC-Bangalore	11185
RoC-Chandigarh	4908
RoC-Chennai	11217
RoC-Chhattisgarh	947
RoC-Coimbatore	2992
RoC-Cuttack	3731
RoC-Delhi	45595
RoC-Ernakulam	9189
RoC-Goa	597
RoC-Gwalior	4920
RoC-HimachalPradesh	858
RoC-Hyderabad	20488
RoC-Jaipur	9222
RoC-Jammu	393
RoC-Jharkhand	1848
RoC-Kanpur	15803
RoC-Kolkata	15022
RoC-Mumbai	52869
RoC-Patna	4683
RoC-Pondicherry	191
RoC-Pune	5552
RoC-Shillong	1256
RoC-Uttarakhand	555
RoC-Vijayawada	4918
Total	238223

Shell company identification: government used red flag indicators and strike off powers to remove non operational entities from the register. The Government announced an administrative initiative targeting entities characterised as shell companies-companies without active operations or substantial assets that may facilitate tax evasion, money laundering, concealment of ownership and benami holdings-noting the Companies Act has no statutory definition and relying on red flag indicators recommended by a Special Task Force. A Special Drive used the statutory strike off mechanism, with RoC wise strike off data published to show removal of non operational entities from the register.