41 companies operating as private enterprises against the law

Aug 04, 2020 11:26 AM Merolagani

 Apparently, companies with more than 100 shareholders are also functioning as private company which is against legal provision.

According to the data provided by the Company Registrar Office, there are 41 companies with more than 100 shareholders. Neither have they been converted into public nor are they eligible to operate as a private group. However, they are operating as private companies for years against the law.

Although they are operating against law under private enterprises for years, Company Registrar Office has not taken any legal action against them.

 Sub-section 9 of Section 6 of the Companies Act 2063 states that the number of shareholders in a private company should not exceed one. However, 41 companies are still in the private group against the act.

One of the reasons these companies have not been converted into public companies is frequent change of Registrar of Company Registrar Office. As per Company Registrar Office, the companies are ignoring the Act as the Registrar is changed too soon every time.

Moreover, the office said that if any Registrar tries to bring the companies under the legal provision, the Registrar themselves got transferred due to power play.

Sources say that the company registrar has not been able to work as planned due to the fact that the companies have collaboration with powerful people in the state and have access to high level leaders.

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