The term shell company is a business organization lacking any present business operations or substantial assets. Presently, neither the Companies Act nor a different Act explains a Shell corporation. Thus, a shell company is a company that merely exists on paper. The corporation does not have any concrete active business operations or any noteworthy amount of assets. Such corporations do not involve themselves in any financial activities but have roughly some corporate legal personality. The foremost reason for setting up a native company is to realize a tax haven abroad. Most of the large companies, e.g. Apple, have placed their jobs and proceeds offshore, thereby taking a benefit of less strict tax statutes
A lot of affluent people in India are developing a great number of shell corporations for unlawful transactions for the sole reason of evading tax, etc. Some recent cases involved shell corporations in India which are:
1) Yes Bank Scam: The creator of the Bank Mr. Kapoor, with his family drifted past almost 100 shell corporations according to the information circulated by the “Central Bureau of Investigation” and “Enforcement Directorate” for misuse of financial resources. Such corporations were created to protect the unlawful money earned from tax and were developed in the name of the relatives of Mr. Rana. As a result of loose regulations governing shell corporations, Mr. Kapoor was freely allowed to develop around 100 companies to commit such a financial crime.
2) In the second case involving the “Punjab National Bank”, the ED had concluded that a certain Nirav Modi, by developing 17 shell corporations in India, tricked an amount up to Rs. 6000 Crores in 2017. Further, a relative of Mr. Modi i.e. Mehul Choksi, being a fellow billionaire jewelry dealer, looked after the majority of the shell corporations. In the process, the ED had accepted 140 shell firms & the SFIO was searching for almost 400 companies. Nirav Modi & Mehul Choksi turned fugitive after misleading the Punjab National Bank of Rs 14 Thousand crores by acquiring Letters of Undertakings deceitfully.
3) In another case of NX Media, Previous Minister P Chidambaram was accused of giving away Illegal foreign investment (FIPB) clearances to receive bribes. Most of the bribes were remunerated via the shell corporations functioned by his son Mr. Karti Chidambaram. The inquiry department recognized that there were numerous shell corporations listed in India and overseas which had investment amounting to Rs. 300 Crore. Further, his son had also accepted payments of a huge sum from a corporation situated outside India which was included in the Panama Paper.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.
