Government has initiated steps to trace whereabouts of 87 companies as well as their directors so as to take action against them for 'vanishing' after raising funds from public, with Gujarat being home to largest number of such entities.
Gujarat tops the list with 26 such firms, followed by Andhra Pradesh (13), Tamil Nadu (10), Maharashtra (9), 5 each from Delhi, West Bengal and Madhya Pradesh, 4 each from Uttar Pradesh and Bihar, 2 each in Chandigarh and Karnataka and 1 each in Punjab and Orissa.
According to the latest data with the Corporate Affairs Ministry, FIRs (First Information Reports) have been lodged against these firms and their directors in respective states.
After tracing their whereabouts, appropriate action would be taken against them for vanishing after collection of funds from the public investors, according to officials.
The entities are classified as 'vanishing companies' if they cease to file their balance sheets and other documents after raising capital, and whereabouts of their offices or directors become untraceable.
Prosecution action has been launched against these companies and their promoter/directors under the Companies Act for non-filing of statutory returns, false statements in prospectus and fraudulently inducing people to invest money, according to a Corporate Affairs Ministry document.
Instructions have been issued to the Registrar of Companies (RoCs) to scrutinise the balance sheets and other records of the companies which raised money through public issue so as to monitor the utilisation of such funds.
ROCs have also been asked to physically verify the registered office of listed companies which have defaulted in their balance sheets and annual returns.
To check on such incidents, there are provisions in the Companies Act, which makes it mandatory for every perspective director to obtain a 'Director Identification Number'. This process requires detailed verification of particulars so that traceability of the director is ensured.