The Ministry of Corporate
Affairs (MCA) has started the process of elimination of ghost directors in
companies. Less than 12 lakh individuals, or just over 35% of the 33 lakh
“active directors†have complied with the newly-mandated know-your customer or
KYC requirement to be eligible for board positions in companies.
Earlier this year, MCA had
mandated that individuals with DINs complete KYC formalities by September 15.
The move was part of a clean-up drive meant to rid several company boards of
drivers, domestic helps, and others who were nominated on company boards
without their knowledge. The ineligible directors
again become eligible after they comply with the registration requirement and
pay a fee of Rs 5,000. While close to
50 lakh DINs have been issued, only 33 lakh were considered to be active
directors. Even among this lot, a large number is likely to be ghost directors. The KYC rules are part of a
larger exercise to shut down shell companies and identify those with “significant
beneficial ownership†or entities that hold over 10% stake in listed and
unlisted companies. As part of the crackdown on shell companies nearly three
lakh companies that had not filed returns have been deregistered and over three
lakh directors have been disqualified.
The deadline ended on Saturday midnight and MCA is unlikely
to extend it. The MCA will freeze the director identification number (DINs) of
those who do not meet the new guidelines.
The Ministry of Corporate
Affairs (MCA) has started the process of elimination of ghost directors in
companies. Less than 12 lakh individuals, or just over 35% of the 33 lakh
“active directors†have complied with the newly-mandated know-your customer or
KYC requirement to be eligible for board positions in companies.
The deadline ended on Saturday midnight and MCA is unlikely
to extend it. The MCA will freeze the director identification number (DINs) of
those who do not meet the new guidelines.
Earlier this year, MCA had
mandated that individuals with DINs complete KYC formalities by September 15.
The move was part of a clean-up drive meant to rid several company boards of
drivers, domestic helps, and others who were nominated on company boards
without their knowledge.
The ineligible directors
again become eligible after they comply with the registration requirement and
pay a fee of Rs 5,000. While close to
50 lakh DINs have been issued, only 33 lakh were considered to be active
directors. Even among this lot, a large number is likely to be ghost directors.
The KYC rules are part of a larger exercise to shut down shell companies and identify those with “significant beneficial ownership†or entities that hold over 10% stake in listed and unlisted companies. As part of the crackdown on shell companies nearly three lakh companies that had not filed returns have been deregistered and over three lakh directors have been disqualified.