HomeBUSINESS525,800 failed cos wound up since 2016

525,800 failed cos wound up since 2016

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NEW DELHI : Over 525,800 companies have been wound up since April 2016 as part of a drive to clean up the system of inactive companies which have not filed statutory documents for two consecutive years, minister of state for corporate affairs Rao Inderjit Singh said on Tuesday.

The minister said in a written reply to a question in Rajya Sabha that these companies have been struck off from records as per section 248 of the Companies Act where the Registrar of Companies has cause to believe that they were not carrying on any business or operation for a period of two financial years and have not made any application for dormant status. 

As per official data, the latest round of clean up which started in FY17 saw a high number of inactive companies getting removed from the records in FY18 and in FY19. In FY18, over 236,000 companies were removed from records, followed by over 143,000 in FY19. 

The minister said that due process of law is followed in striking off inactive businesses from records.

Singh said that the government had in 2020 offered a Companies Fresh Start Scheme to make a fresh start for companies to be a fully compliant company by allowing them to file belated documents in MCA 21 registry without any additional fee.

That scheme also gave immunity from prosecutions and proceedings for imposition of penalty on account of delayed filing of documents. 

As per records, 473,131 number of Indian companies and 1065 number of foreign companies have been benefited by the scheme. The ministry had also introduced an LLP Settlement Scheme, 2020 to provide one-time relaxation in additional fees to defaulting Limited Liability Partnerships to make good their defaults.

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