The directors of shell companies who have siphoned off money from the bank accounts of such firms may face jail term for up to 10 years and a fine of three times the amount diverted, the government said on Wednesday.

The directors of such shell companies which have not filed returns for three or more years will also be disqualified from being appointed as directors in any other companies or from being reappointed as director in the same company.

“In case the director or authorised signatory of any “struck off” company tries to unauthorisedly siphon-off money from its bank account, he/she may attract punishment of imprisonment of not less than six months extendable to 10 years.

“If it is found that the fraud involves public interest, the punishment shall not be less than three years and fine may also be imposed which would be three times the amount involved,” a review meeting chaired by Minister of State for Corporate Affairs P P Chaudhary decided.

The decision came a day after the banks were asked to immediately freeze accounts of about two lakh shell companies which had not filed returns and met other formalities.

Meanwhile, the government has stepped up efforts to identify the actual beneficiaries and persons behind such shell companies.

Profiles of directors such as their background, antecedents and their role in the operations and functioning of these companies are being compiled in collaboration with enforcement agencies.

DH News Service

'10-year jail term for siphoning off funds'