KYC of Active Companies – MCA’s spree to clean up the waste
– CS Aditi Jhunjhunwala
– Mayank Kumar
In its further endeavour to eradicate the sham companies the Ministry of Corporate Affairs has come up with Notification dated 21st February, 2019 inserting Rule 25A vide Companies (Incorporation) Amendment Rules, 2019 providing for KYC of companies pursuant to powers under section 12 (9) and 469 of the Companies Act, 2013.
The introduction of ACTIVE is another fall out of the MCA’s drive after striking of lakhs of companies and issuance of letters under section 248 of the Act, to ensure KYC of companies as well and to wipe out the sham companies which are non-operating and/or non-compliant with their filings. While one may feel this compliance as a burden but the intent of such rule is clear enough to gather. We may soon also face KYC of professionals in due course of time. However, this move comes at a time when the corporate are already juggling with other newly introduced compliances, so it is to see how the professionals in cooperation with the management handle such compliance burden in the given time.