The rapid development in the field of technology and its accelerated adoption has elevated the standards of living. Incorporation of digital practices in the all major aspects of life has simplified the lifestyle and also offers safer and increased quantity of retention of essential data for a longer duration. As the Government introduces and promotes the availability of more and more services online, the citizens find themselves at ease to access such facilities. This has also helped to maintain the records of necessary information in a more organized form enabling the Government to take appropriate actions as required.

Shell Companies Menace

Shell companies are the non-trading entities incorporated under the multiple layers of subsidiary companies. Generally, such companies hold assets, recruit employees only on paper and mostly deal with holding the ownership of assets, intellectual property, etc. for the parent company and act as vehicle for various financial manoeuvres which may be kept dormant for future use.

Formed with the purposes of flouting laws by carrying out illegal transactions like channelization of black money, tax evasion, money laundering, etc. some of the Shell Companies have been an issue of much concern. The Government has been actively taking steps to handle the problem of these companies by way of putting them under the scanner of Serious Fraud Investigation Office. A number of such companies (more than 200,000) have already been struck off from the Register of Companies along with the disqualification of their directors (over 100,000).

Controlling Tactics

With the miracles of technical advancement, the Government may soon tackle the problems posed by the Shell companies taking recourse to geo-tagging.[1]

The process of geo-tagging requires the companies to have their registered premises enrolled with the Registrar of Companies. Attaching the data of the exact location of the registered office will help the Government identify cases where one building houses multiple of shell companies or companies citing vacant plots as their addresses. Acting as an early warning issued by the online return filing system will help in detecting the fraudulent companies.

The coordinators of the registered premises will act as key input for mining data in the Government’s information technology infrastructure which shall aid in scrutinizing companies with common addresses, common contact numbers, common directors, sudden unexpected revenue fluctuations, etc.

With a progressive view, the Government aims to use the technology to keep a check on the shell companies established to defraud the legal framework. It is working towards the creation of a more transparent and efficient system of prevention of unlawful activities by abuse of corporate structures and bogus transactions.