Lok Sabha Question No. 2488 (UNSTARRED), answered on 2022-08-01
Subject: Promotion of Existing Companies
Ministry: CORPORATE AFFAIRS
Asked by: N.K. Premachandran

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

## ANSWERED ON MONDAY THE 1 ST  AUGUST, 2022

## LOK SABHA UNSTARRED QUESTION NO. 2488 SRAVANA 10, 1944 (SAKA)

## PROMOTION OF EXISTING COMAPNIES QUESTION

2488. SHRI N.K. PREMACHANDRAN:

Will the Minister of CORPORATE AFFAIRS

be pleased to state:

- (a) whether the Government proposes to promote the existing companies and if so, the details thereof including the number of companies wind up during the last six years;
- (b) whether the Government taking initiatives to protect the companies working for more than ten years and if so, the details thereof;
- (c) the  State-wise  number  and  the  details  of  companies  wind  up  in  manufacturing sector during the last six years;
- (d) the  State-wise  number  and  the  details  of  companies  wind  up  in  community, personal and social service sector during the last six years;
- (e) the State-wise number and the details of companies wind up in agriculture and allied activities during the last six years; and
- (f)  whether  the  Government  proposes  to  introduce  special  scheme  for  revival  of companies closed during the Covid-19 and if so, the details thereof along with the initiatives of the Government to protect the companies facing financial crisis?

## ANSWER

MINISTER OF STATE (INDEPENDENT CHARGE) OF THE MINISTRY OF STATISTICS AND PROGRAMME IMPLEMENTATION; MINISTER OF STATE (INDEPENDENT CHARGE) OF THE  MINISTRY  OF  PLANNING;  AND  MINISTER  OF  STATE  IN  THE  MINISTRY  OF CORPORATE AFFAIRS

[RAO INDERJIT SINGH]

(a), (b) & (f): The steps taken from time to time to provide ease of doing business, to reduce  the  compliance  burden  upon  law  abiding  corporates  and  simplifying  the procedures to start a business in the country is annexed as Annexure-A. Further, in 914  companies,  order  for  winding  up  has  been  passed  under  the  Companies  Act 1956/2013 and in 1620 companies order for liquidation has been passed under the Insolvency and Bankruptcy Code, 2016 (the Code) in the last six-years.

(c ) to (e ) : the Official Liquidator-wise and sector-wise number of companies in which winding up order under Companies Act, 1956/2013 has been passed in the last sixyears is annexed as Annexure-B. Further, the State-wise and sector-wise number of companies in which liquidation order has been passed under the Code in the last sixyears is annexed as Annexure-C.

*******

The Ministry of Corporate Affairs have taken a number of steps to provide Ease of Doing Business, to reduce compliance burden to law abiding corporates and simplified procedure for Starting a Business in the Country which are as under:-

- (a) Decriminalization  of  sections  under  Companies  Act:-  Decriminalization  of  46 Penal  provisions  under  Companies  Act,  2013  was  carried  out  through  the Companies (Amendment) Act, 2020 thereby taking the total number of provisions decriminalized to 62  (including the 16 decriminalized in 2018). Such decriminalization  would  remove  the  fear  of  criminal  prosecutions  for  non -substantive  minor  and  procedural  omissions  and  commissions  in  the  normal course of business and incentivize micro and small, medium business enterprises to   convert into body corporates.
- (b) Section 446 B of the Act: - Lesser Penalties for Small Companies, OPC, Start-ups, Producer Companies etc. :- Through Companies (Amendment) Act, 2020, lesser penalties    for  Small  Companies/  One  Person  Companies  /  Start-  ups/  Producer Companies or by any of its officer in default, or any other person in respect of such company has been provided   for the non-compliance of any of the provisions of  the  Companies  Act,  2013  which  are  to  be  dealt  with  under  In-house Adjudication Mechanism (IAM). It shall lessen the cost of running businesses.
- (c) Simpler process for Incorporation of new companies:- The Ministry of Corporate Affairs has deployed a new Web Form christened SPICe+ and AGILE PRO-S which provides   eleven services by three Central Government Ministries i.e. Ministry of Corporate Affairs, Ministry of Labour and Department of Revenue in the Ministry of  Finance)  and  two  State  Governments  (Maharashtra  and  Karnataka),  and various Banks namely (i) Name Reservation, (ii) Incorporation, (iii) PAN, (iv) TAN, (v) DIN, (vi) EPFO Registration, (vii) ESIC   Registration, (viii) GST number, (ix) Bank Account  (x)  Profession  Tax  Registration  (Mumbai and  now  Karnataka  w.e.f. 08.10.2020  and  West  Bengal  (Kolkata)  with  effect  from  12.03.2021  (xi)  Delhi Shops and Establishment Registration from June, 2021 onwards. The  new Web Form facilitates on-screen filing and real time data for seamless incorporation of new companies.  This has resulted in reduction in the number of processes and time taken   for Starting a Business in the country.
- (d) Simpler process for renewal of reserved names:- This Ministry vide notification no.  GSR (E) 795 dated 24.12.2020 through the Companies (Incorporation) Third Amendment  Rules, 2020 has provided for extension of reservation of name in certain cases through a   simple web service available at www.mca.gov.in. Rules amended to provide a framework   for Renewal of Company Names beyond 20 days period.
- (e) Central Registration Centre (CRC):- Setting up Central Registration Centre (CRC) for  name  reservation  and  incorporation  of  companies  &  Limited  Liability Partnership (LLP) within 1 day as opposed to an average of at least 15-20 days

earlier.

- (f) Zero fee is for incorporation of all companies with authorized capital upto Rs. 15 lakh or upto 20 members where no share capital is applicable.
- (g) One Person Companies:- Provisions with regard to incorporation and functioning of  one- person  companies  (OPCs)  revised  significantly  so  as  to  incentivize incorporation of more OPCs. Now NRIs are also allowed to incorporate OPCs. Earlier  only  Indian  resident  citizens  were  permitted.  Such  companies  are  now allowed to convert into private or public   companies at any point of time. The restrictions with regard to maximum amount of paid- up Capital and turnover for OPCs has also been removed so that there is no undue restriction   on the growth of OPCs.
- (h) Small Companies:The thresholds in respect of 'small companies' have been revised  so    that  at  least  2  lakh  more  companies  get  classified  as 'small companies' and  take  advantage of  a  lighter  compliance  framework  provided under the Companies Act, 2013 and rules made   thereunder. (The limits in respect of paid-up share capital enhanced from Rs. 50 Lakh to Rs. 2 crore and in respect of turnover enhanced from Rs. 2 crore to Rs. 20 crores).
- (i) Revision of definition of listed companies:- Certain class of companies has been excluded from the definition of listed company under the Companies Act, 2013 vide notification  no.  GSR  (E)  123  dated  19.02.2021.  Henceforth,  Private Companies which opt to list debt securities on stock exchanges are not required to  fulfil  compliances  as  required from  listed  Companies  and  accordingly compliance burden has been reduced for such companies.
- (j) Adequate  Remuneration  for Non-executive Directors of companies  with inadequate  or  no  profits:-  This  Ministry  vide  Notification  no.  S.O.  1256  dated 18.03.2021 has amended Schedule V of the Companies Act, 2013 and provided the  maximum  limit  on  the  yearly  remuneration that can be paid to the nonexecutive  directors  in  case  when  company  is  making   losses  or  having inadequate profits.
- (k) Incentives  for  Producer  Companies:-  Section(s)  378A  to  378ZU,  related  to Producer  Companies  have  been  inserted  in  the  Companies  Act,  2013  and accompanying Rules  namely  the Producer Companies Rules, 2021 have been notified  vide  notification  no.  GSR  (E)  112  dated   11.02.2021.  This  would incentivize incorporation of producer companies and formalization of unorganized primary sector.
- (l) Extended the fast track process for mergers under the Companies Act, 2013 to also include   mergers of Startups with other Startups and with Small companies, so that the process of mergers & amalgamations is completed faster for such companies.
- (m) Companies allowed to conduct Board Meetings, EGMs and AGMs through Video Conference (VC).
- (n) Rules amended to ease the compliance burden on Independent Directors.
- (o) Rules amended to make it sufficient for companies to pass only one previous special resolution in order to make an offer or invitation of any securities to qualified  institutional  buyers  on  private  placement  basis  during  the  year  to make it easier for companies to raise capital.
- (p) Rules amended to enable purchase of minority shareholding held in demat form.
- (q) Introduction of fast track process for mergers & amalgamations of Start ups with other Start  ups and Small companies.
- (r) Reduction of time limit up to which Rights Issues are required to be kept open.
- (s) New  abridged  &  concise  version  of  Annual  Return  introduced  for  Small companies and One person companies (OPCs).
- (t) Easier Process for conversion of a public company into a private company -Notification Issued on 25 January 2021.
- (u) Quality of disclosures strengthened through amendments made in the formats of financial statements, Companies (Accounts) Rules, Companies (Audit and Auditor's) Rules and the Companies (Auditor's Report) Order, 2020.
- (v) Relaxations provided under the Companies Act, 2013 and LLP Act, 2008 in view of Covid related disruption:-
- o Companies Fresh Start Scheme, 2020 was launched from 01 April 2020 to 31 December 2020 to provide opportunities to Companies to make good any previous  filing related defaults, regardless of duration of defaults, and make a fresh start as a  fully  compliant  entity. LLPs Settlement Scheme, 2020 was also modified for  granting similar opportunity to LLPs.
- o Scheme  for  relaxation  of  time  for  filing  forms  related  to  creation  or modification of  charges.
- o Companies (Auditor's Report) Order, 2020 has been made applicable from the financial year 2021-22 instead of earlier proposed from FY 2019-20.
- o Companies allowed to conduct Board Meetings through Video Conference (VC)  or  other  audio  visual  means  for  passing  resolutions  in  respect  of matters which were  earlier required to be passed in meetings with physical
- presence of directors.
- o Enhanced period allowed within which existing Independent directors may apply online for inclusion of their names in the databank for Independent Directors.
- o Relaxations  for  FY  2019-20  given  with  regard  to  holding  of  at  least  one meeting by   independent Directors without attendance of Non-independent directors and members of management.
- o Relaxed  time  lines  w.r.t.  creation/maintenance  of  deposit  repayment reserve and debenture redemption reserve.
- o Additional period granted for filing of declaration of commencement of business.
- o Relaxations for FY 2019-20 and FY 2020-21 with regard to 'resident director'.
- o Video  Conferencing/  Other  Audio  Visual  Means  allowed  for  holding  of general meetings/transacting business through postal ballot.
- o Relaxation from dispatch of notices through post/courier w.r.t. holding of meetings/right offers.
- o Scheme launched for Condonation of Delay for companies restored on the register  of companies during the month of December, 2020 by NCLT under section  252.  Such  companies  were  allowed  condonation  of  delay  and exemption from payment  of additional fees in respect of forms filed during 01/02/2021 - 31/03/2021.
- o Keeping in view the second Covid wave, additional period upto 31st July, 2021  has been  given  to  companies  to  file  their  forms/returns  under Companies  Act,  2013  as  well  as  LLP  Act,  2008  without  payment  of  any additional fees.

*********

## Annexure-B

| Official Liquidator (OL) wise and Sector wise number of companies in which winding up order under Companies Act, 1956/2013 has been passed in last six   | Official Liquidator (OL) wise and Sector wise number of companies in which winding up order under Companies Act, 1956/2013 has been passed in last six   | Official Liquidator (OL) wise and Sector wise number of companies in which winding up order under Companies Act, 1956/2013 has been passed in last six   | Official Liquidator (OL) wise and Sector wise number of companies in which winding up order under Companies Act, 1956/2013 has been passed in last six   | Official Liquidator (OL) wise and Sector wise number of companies in which winding up order under Companies Act, 1956/2013 has been passed in last six   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
| Sl. No .                                                                                                                                                 | Name of OL                                                                                                                                               | Manufacturing                                                                                                                                            | Community personal and social service                                                                                                                    | Agriculture and allied activities                                                                                                                        |
| 1                                                                                                                                                        | Delhi                                                                                                                                                    | 76                                                                                                                                                       | 1                                                                                                                                                        | 10                                                                                                                                                       |
| 2                                                                                                                                                        | Chandigarh                                                                                                                                               | 11                                                                                                                                                       | 1                                                                                                                                                        | 0                                                                                                                                                        |
| 3                                                                                                                                                        | Allahabad                                                                                                                                                | 5                                                                                                                                                        | 6                                                                                                                                                        | 0                                                                                                                                                        |
| 4                                                                                                                                                        | Dehradun                                                                                                                                                 | 0                                                                                                                                                        | 0                                                                                                                                                        | 0                                                                                                                                                        |
| 5                                                                                                                                                        | Jammu                                                                                                                                                    | 0                                                                                                                                                        | 0                                                                                                                                                        | 0                                                                                                                                                        |
| 6                                                                                                                                                        | Shimla                                                                                                                                                   | 1                                                                                                                                                        | 0                                                                                                                                                        | 0                                                                                                                                                        |
| 7                                                                                                                                                        | Chennai                                                                                                                                                  | 50                                                                                                                                                       | 30                                                                                                                                                       | 0                                                                                                                                                        |
| 8                                                                                                                                                        | Kochi                                                                                                                                                    | 7                                                                                                                                                        | 0                                                                                                                                                        | 0                                                                                                                                                        |
| 9                                                                                                                                                        | Hyderabad                                                                                                                                                | 14                                                                                                                                                       | 0                                                                                                                                                        | 1                                                                                                                                                        |
| 10                                                                                                                                                       | Bangalore                                                                                                                                                | 16                                                                                                                                                       | 22                                                                                                                                                       | 0                                                                                                                                                        |
| 11                                                                                                                                                       | Mumbai                                                                                                                                                   | 121                                                                                                                                                      | 30                                                                                                                                                       | 0                                                                                                                                                        |
| 12                                                                                                                                                       | Goa                                                                                                                                                      | 3                                                                                                                                                        | 0                                                                                                                                                        | 0                                                                                                                                                        |
| 13                                                                                                                                                       | Nagpur                                                                                                                                                   | 1                                                                                                                                                        | 1                                                                                                                                                        | 1                                                                                                                                                        |
| 14                                                                                                                                                       | Kolkata                                                                                                                                                  | 33                                                                                                                                                       | 7                                                                                                                                                        | 6                                                                                                                                                        |
| 15                                                                                                                                                       | Cuttack                                                                                                                                                  | 3                                                                                                                                                        | 0                                                                                                                                                        | 0                                                                                                                                                        |
| 16                                                                                                                                                       | Patna                                                                                                                                                    | 1                                                                                                                                                        | 0                                                                                                                                                        | 0                                                                                                                                                        |
| 17                                                                                                                                                       | Ranchi                                                                                                                                                   | 3                                                                                                                                                        | 0                                                                                                                                                        | 0                                                                                                                                                        |
| 18                                                                                                                                                       | Guwahati                                                                                                                                                 | 1                                                                                                                                                        | 0                                                                                                                                                        | 1                                                                                                                                                        |
| 19                                                                                                                                                       | Indore                                                                                                                                                   | 12                                                                                                                                                       | 0                                                                                                                                                        | 0                                                                                                                                                        |
| 20                                                                                                                                                       | Jodhpur                                                                                                                                                  | 3                                                                                                                                                        | 0                                                                                                                                                        | 0                                                                                                                                                        |
| 21                                                                                                                                                       | Jaipur                                                                                                                                                   | 11                                                                                                                                                       | 0                                                                                                                                                        | 0                                                                                                                                                        |
| 22                                                                                                                                                       | Ahmedabad                                                                                                                                                | 19                                                                                                                                                       | 13                                                                                                                                                       | 0                                                                                                                                                        |
| 23                                                                                                                                                       | Bilaspur                                                                                                                                                 | 1                                                                                                                                                        | 0                                                                                                                                                        | 0                                                                                                                                                        |
|                                                                                                                                                          | Total                                                                                                                                                    | 392                                                                                                                                                      | 111                                                                                                                                                      | 19                                                                                                                                                       |

## State-wise and sector-wise number of companies in which liquidation order has been passed under the Insolvency and Bankruptcy Code, 2016 in the last six years

| State                                    |   Agriculture, Hunting and Forestry |   Manufacturing |   Other Community, Social and Personal Service Activities |
|------------------------------------------|-------------------------------------|-----------------|-----------------------------------------------------------|
| Andhra Pradesh                           |                                   0 |              10 |                                                         0 |
| Assam                                    |                                   0 |               0 |                                                         0 |
| Bihar                                    |                                   0 |               0 |                                                         0 |
| Chandigarh                               |                                   0 |               3 |                                                         0 |
| Chhattisgarh                             |                                   1 |               5 |                                                         0 |
| Dadra and Nagar Haveli and Daman and Diu |                                   0 |               2 |                                                         0 |
| Delhi                                    |                                   4 |              95 |                                                         9 |
| Goa                                      |                                   0 |               5 |                                                         0 |
| Gujarat                                  |                                   5 |             100 |                                                         2 |
| Haryana                                  |                                   0 |              12 |                                                         0 |
| Himachal Pradesh                         |                                   1 |               1 |                                                         0 |
| Jammu and Kashmir                        |                                   0 |               0 |                                                         0 |
| Jharkhand                                |                                   0 |               4 |                                                         0 |
| Karnataka                                |                                   4 |              26 |                                                         1 |
| Kerala                                   |                                   1 |               5 |                                                         0 |
| Madhya Pradesh                           |                                   2 |               9 |                                                         0 |
| Maharashtra                              |                                   5 |             143 |                                                         6 |
| Meghalaya                                |                                   1 |               0 |                                                         0 |
| Odisha                                   |                                   0 |               6 |                                                         0 |
| Pondicherry                              |                                   0 |               1 |                                                         0 |
| Punjab                                   |                                   1 |              21 |                                                         0 |
| Rajasthan                                |                                   1 |              10 |                                                         0 |
| Tamil Nadu                               |                                   4 |             107 |                                                         4 |
| Telangana                                |                                   2 |              41 |                                                         1 |
| Tripura                                  |                                   0 |               0 |                                                         0 |
| Uttar Pradesh                            |                                   2 |              26 |                                                         0 |
| Uttarakhand                              |                                   0 |               0 |                                                         0 |
| West Bengal                              |                                   8 |              71 |                                                         0 |
| Total                                    |                                  42 |             703 |                                                        23 |