Quick Summary
There is no definition of the term Shell Company in the Companies Act. 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
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FAQ :
A shell company is generally understood as a company that has no active business operations or significant assets. In some instances, they are used for illegal purposes such as tax evasion, money laundering, or obscuring ownership.
A Special Task Force recommended using certain 'red flag' indicators as alerts to help identify shell companies.
The government has undertaken a Special Drive to identify and strike off companies. This involves the Registrar of Companies (RoC) removing companies from the register if they have not been carrying on any business or operation for two preceding financial years and have not applied for dormant status.
A total of 12,889 shell companies were struck off in the financial year 2020-21.
Maharashtra (Mumbai and Pune) had the highest number of companies struck off in FY 2020-21, with 2,298.
No, the Companies Act does not provide a specific definition for the term 'shell company'.
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