The corporate affairs ministry is betting on artificial intelligence and data analytics as key elements in the fight against the menace of shell companies as it works to put in place an ecosystem that will have "zero tolerance" for non-compliance with regulations.
Continuing efforts to have a robust corporate governance system and ensure high level of compliance, the ministry is also in the process of having an advanced MCA 21 portal.
The portal is used for submission of requisite filings under the companies law and is also a repository of data on corporates in the country.
Corporate Affairs Secretary Injeti Srinivas told PTI that once the third version of MCA 21 becomes fully operational, the portal would make it "almost impossible for a shell company to survive."
Generally, shell companies are those which are not complying with regulations and many such entities are allegedly used for money laundering and other illegal activities.
Noting that the third version of the portal might be fully operational in a year from now, the secretary said the ecosystem would have zero tolerance for non-compliance.
"Surveillance with respect to compliance will be on auto pilot mode with artificial intelligence (AI) and data analytics," he said.
MCA 21 system was started in 2006 and currently, the second version is operational.
There are nearly 12 lakh active companies in the country. Active companies are those that are in compliance with various regulatory requirements under the Companies Act.
Over the past two to three years, the ministry has been deregistering the names of companies from official records for prolonged non-compliance.
"From the trend I see, after 4.25 lakh shell companies having got struck off, the numbers getting added each year is reducing. This is a clear indication that the earlier scenario of shell companies openly indulging in accommodation entries has become a matter of past," Srinivas said.
Along with weeding out shell companies, the KYC (Know Your Client) drive for directors and companies has encouraged greater compliance.
"Now, more and more companies are becoming compliant. Compliance levels in terms of filings has crossed 80 per cent. The latest fresh start scheme for companies and settlement scheme for LLPs (Limted Liability Partnerships) are expected to further improve compliance levels it should soon cross 90 per cent," he noted.
At the end of February, there were around 19,89,777 registered companies in the country. Out of them, 7,44,014 companies were closed, 41,974 entities were in the process of being struck-off and 2,170 were assigned dormant status, as per data compiled by the ministry.
According to the ministry, there were 11,95,045 active companies as on February 29.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)