Shell companies: Omar Abdullah, Mohanlal in the list of disqualified directors

 The Economic Times, September 21, 2017, Ruchika Chitravanshi

There are some prominent names among the thousands of directors of defaulting companies disqualified by the government. 

Malayalam film star Mohanlal, former Jammu and Kashmir chief minister Omar Abdullah, Maharashtra sales tax commissioner Rajeev Jalota and leading consultant Rama Bijapurkar are among those in the list released by the corporate affairs ministry. 

The directors have been disqualified under Section 164 (2)(A) of the Companies Act. Entities named by the government include state government-owned firms such as MIDC Infrastructure Projects Ltd, of which Jalota is named a director, and Jammu and Kashmir State Power, where Abdullah is said to be on the board. 

According to an earlier order, directors who have been disqualified for holding posts in companies that failed to submit financial returns for three years in a row will not be eligible for reappointment as board members in any other company for a period of five years from the date of default. 

For promoter-directors this could mean they cannot float new companies. While there is need for clarity on board memberships held by disqualified persons in other companies, experts feel the move will lead to significant disruption. 

“A distinction has to be made between the liability of a promoter-director and an independent director. Idea of the government is to name and shame, which is a positive step as it exerts public pressure,” said Pranav Haldea of Prime Database.

It’s not clear how current the information is. Mohanlal has been disqualified for the default by his firm Pranavah Taste Buds, which was sold in 2007, and Bijapurkar has been named for her tenure in Subhiksha Trading Services in 2007-8. That company has since collapsed. 

As part of its crackdown against shell companies, the government had cancelled the registration of around 200,000 and restricted ba nk account operations of such firms by their directors. 

Following this, the corporate affairs ministry disqualified over 100,000 directors of defaulting companies. Of these, 55,000 names were made public on Tuesday. 

The government is analysing data available with the Registrar of Companies to identify not just the directors but also significant beneficial interests behind these entities. 

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