CURRENT AFFAIRS

Detailed explanation-1: -In a written reply to the Lok Sabha, minister of state for finance and corporate affairs, Rao Inderjit Singh reiterated that there is no definition of the term ‘shell company’ in the Companies Act, 2013.

Detailed explanation-2: -Nearly 50,000 dormant companies struck off in the last fiscal.

Detailed explanation-3: -A shell company scheme is a financial arrangement in which individuals will attempt to create offshore shell companies in order to mask their true identity from the government. Doing this enables the individual to avoid paying taxes or hide various sources of funds that the individual doesn’t want to disclose.

Detailed explanation-4: -Owning a shell company is not illegal as explained above, but it’s illegal use is the most prominent in today’s day and age. The most famous illegal use of a shell company has to be money laundering. Since the Shell Companies lack the basic transparency of ownership and financial transactions.

Detailed explanation-5: -A shell company is one that exists in name only and is used as a vehicle for deft financial manoeuvres or one that is kept dormant and activated for future use in some other capacity. Such a corporation exists only on paper and has no office or employees.