Anti-shell company provision impractical, feels India Inc

Mumbai, May 27: A regulatory mandate, which seeks to pin down a company’s location accurately, is giving India Inc sleepless nights. Called ACTIVE (Active Company Tagging Identities and Verification), it was introduced in February by the corporate affairs ministry to crack down on shell companies and protect public money and financial irregularities.
According to the directive, the government has made e-filing of a company’s particulars, including details of registered office and location (with latitude and longitude), mandatory for all registered companies in India. The provision under the Companies (Incorporation) Amendment Rules 2019 — also called INC-22 form, which is applicable to over 12 lakh firms, requires them to upload a photograph of the company’s registered office, with the director or key managerial person (KMP), outside and inside their premises.
Only a handful — over a lakh — companies have submitted the form, industry experts say, adding the provision is “impractical and bizarre”, even as large corporate business groups are finding it tough to fly down their directors to pose for the photograph, to prove the company’s credentials.
Sai Venkateshwaran, partner and head, CFO advisory services at KPMG India, said, “One can understand the intent to crack down on shell companies and those who would be abusing the system. While many of the requirements in the new form are relatively straightforward, the practicality of some of the requirements is very much debatable.