Over 51,600 companies being removed from records

At the end of September, over 2,450 companies were given dormant status, and will not face any action for not filing annual returns, the ministry said in a monthly update. It also said that 51,693 companies are in the process of getting struck off from the register.

Companies face the risk of being removed from official records under section 248 of the Companies Act if the Registrar of Companies has reason to believe that a firm has not been carrying out any business for two immediately preceding financial years and has not applied for dormant status.

The action against defaulting companies is significant given that it can expose directors of those companies to regulatory action as well. 

“One consequence of not being compliant with the filing of annual returns or financial statements for three consecutive financial years is that it results in disqualification of directors,” said Noorul Hassan, partner with Lakshmikumaran & Sridharan Attorneys.

In a departure from the recent past, the government this year did not waive the additional fees levied on companies for late filing of financial statements and annual returns as the economy has stabilised and the country is on its way out of the pandemic.

Companies are required to hold their annual general meeting (AGM) within six months of the end of the financial year and they have one month from the date of the AGM to file financial statements and 60 days from the AGM date to file annual returns. The additional fee is ₹100 for each day of delay.

The ministry is currently in the process of revamping its electronic filing portal with a new version aimed at making data analytics, research and oversight easier for the regulator.

The new security features being implemented in the MCA21 portal are set to facilitate tech-enabled real-time oversight of company incorporation and statutory filings, so that government officials will be able to detect entities that match risk parameters.