Dear
Hugo,
Following
news appeared a few days back
Problem
( in nut shell ) :
In
India , dozens of FAKE companies , use identical / same , POSTAL ADDRESS as
their “ Registered Office “
This
is one CLUE to suspect that these are FAKE companies
But
can a 3M x 3M square be given a SINGLE three word location using What3Words ?
Or
is it so that , a dozen persons , occupying that same
square ( of office space ) can each give it , a different
3 word combination ?
With
regards,
hemen
Companies
may soon have to geo-tag their registered offices in the statutory filings with the
Registrar of Companies (RoC), as the government seeks to prevent fraud by
tightening regulatory systems.
Geo-tagging,
or attaching data of the exact location of the office,
will allow the online return filing system to alert government officials
wherever it detects far too many companies are registered in the same premises,
a trend noticed in past investigations into fraudulent companies.
“This
will help us identify instances of one building being used by
hundreds of shell companies as their registered office or of companies
citing vacant plots as their registered office address.
It
will serve as an early warning system for detecting mushrooming of shell
companies,” minister of state for corporate affairs P.P. Chaudhary said in an
interview.
“ We
are seriously thinking of introducing this requirement.”
With
this move, the ministry seeks to prevent abuse of the corporate structure by
companies that inflate costs by issuing fake invoices and laundering
unaccounted wealth in the form of loans or equity through bogus transactions.
Many companies
that exist only on paper with the same address were found in the past
offering what is referred to as “accommodation entries” or bogus transactions
without commercial substance.
A
special investigation team led by Justice M.B. Shah, a former judge of the
Supreme Court, in 2015 highlighted the role played by such entities in money
laundering.
The coordinates
of the registered premises will act as a key input for mining data in
the ministry’s IT infrastructure, called MCA21, to zero in on companies
with a common address, common contact numbers, common directors and sudden and
unexpected changes in revenue, etc. that may warrant a closer look into their
affairs.
The
idea is to seek the coordinates of the registered office at the
time of incorporation in the case of new companies and at the time of filing annual
returns in the case of existing ones.
“Over
a period of time, the disclosure and transparency requirements for companies
have increased. Geo-tagging
will certainly help in identifying clusters of companies with the same
address,” said Amit See page 14
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