The government on Wednesday barred three lakh directors of companies, which defaulted on laws related to their functioning, from serving on the boards of other firms, Mint reported. The Ministry of Corporate Affairs also decided to crack down on beneficial owners of suspected shell companies.

The Centre also warned of action against those who divert funds from firms delisted by the Registrar of Companies. The ministry said it was monitoring the steps taken by regulatory authorities against chartered accountants, company secretaries and cost accountants who helped shell companies commit financial irregularities.

“Weeding out shell companies will not only help check the menace of black money, but also promote an ecosystem of ease of doing business,” Minister of State for Corporate Affairs PP Chaudhary said, adding that such action will also enhance investor confidence.

Filing annual reports on time will minimise the possibility of fraud and tax evasion, protect shareholders’ interests and improve India’s image globally, Chaudhary explained.

The Centre’s move comes a day after it froze the bank accounts of more than two lakh firms struck off by the Registrar of Companies.