In an effort to keep a tab on shell companies, the Ministry of Corporate Affairs may amend the LLP Act to tighten regulation for companies which seek to change their status to limited liability partnership (LLP), reported Business Standard, citing people in the know.
The number of companies converted to LLP has more than doubled after the government launched up a crackdown on shell companies, added the report, citing a senior government official. The official added that by converting into an LLP, they are trying to escape the law.
The MCA will set up a committee to brainstorm changes in the LLP Act, said the report, adding that the ministry is also looking to bring measures that would allow only small firms to change into an LLP.
By this, the government is taking measures to eliminate shell companies and illegal money. Earlier in June, CNBC-TV18 reported that the revenue department has asked tax authorities to look into the suspicious claims related to input tax credit and integrated goods and service tax (GST) involving shell companies.
The revenue secretary has told his office that there is an urgent need to weed out shell companies, shell proprietorship and shell partnership from the system, sources told CNBC-TV18.
