MCA imposes strict penalty for siphoning off money from bank accounts of “Struck Off” Companies

MCA imposes strict penalty for siphoning off money from bank accounts of “Struck Off” Companies

September 11, 2017 Corporate 0

In a recent press release, dated 6th September, 2017, the Ministry of Corporate Affairs (“MCA”) has resolved to strengthen the rules and procedures of Corporate Governance by declaring stricter punishments for siphoning off money from bank accounts of “Struck Off” companies and disqualification of directors from being appointed or reappointed in companies.

The MCA has decided that in case the Director or authorized signatory of any “struck off” company tries to siphon-off money in unauthorised manned from the bank account, he/she may attract punishment of:

Imprisonment – From 6 months upto 10 years.

If it is found that the fraud involves public interest, the punishment shall not be less than:

Imprisonment – 3 years; and

Fine -may also be imposed upto times the amount involved.

Through instructions issued by Department of Financial Services (“DoFS”) to all the Banks on 5th September 2017, the Directors (ex-) or their authorized signatories had been restricted from operating the Bank accounts of such “struck off” companies with the view to prevent siphoning off money from the company accounts.  MCA has further clarified that if any Directors have siphoned off any money prior to this, strict action would still be taken against them.

MCA has decided to disqualify the Directors of shell companies, which have not filed returns for three or more years, from being appointed in any other company as Director or being re-appointed in the same company. In order to identify the actual beneficiaries and persons behind these shell companies the profiles of Directors such as their background, antecedents and their role in the operations / functioning of the companies will be considered. Professionals, Chartered Accountants/ Company Secretaries/ Cost Accountants associated with such companies will also be under the scanner.

Source: Press Information Bureau

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