The unmaking of shell companies

Legal experts say revealing the identity of the real owners of such entities must be made mandatory

As the government looks at measures to stop the practice of using shell companies as conduits for money laundering and tax evasion, a key legal challenge facing enforcement agencies relates to piercing the corporate veil behind which such companies operate. A release from the Prime Minister’s Office points out: Of 1.5 million registered companies in India, only 600,000 file their annual returns. The challenges are in gathering data and distinguishing genuine business transactions from those that are not.

Incorporating a company in India does not require a person to disclose the beneficial ownership of the firm’s shareholders. “This makes it easier