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Consider the following statements with respect to Shell Companies:
1.It is a corporate entity without significant assets.
2.In India, Shell companies derive their definition from Companies act.
3.It is created for the purpose of diverting money or for money laundering.
How many of the statements given above are correct?
Only One
Only Two
All Three
None
1 and 3 only
"It is a corporate entity without significant assets." - This statement is correct. Shell companies are often characterized by having little to no significant assets or real business activities. They may exist on paper but are used for various purposes, including potentially illicit activities.
"In India, shell companies derive their definition from the Companies Act." - This statement is not correct. In India, the term "shell company" is not precisely defined, but various provisions in the Companies Act and other regulatory guidelines are used to identify and regulate such entities.
"It is created for the purpose of diverting money or for money laundering." - This statement is correct. One of the common characteristics of shell companies is their use in financial schemes to divert money or for money laundering purposes.
Therefore, the correct option is 3, "1 and 3 only."
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