Lok Sabha Question No. 5230 (UNSTARRED), answered on 2023-04-03
Subject: Deregistration of Companies
Ministry: CORPORATE AFFAIRS
Asked by: Kalyan Banerjee

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

## UN-STARRED QUESTION NO. 5230

ANSWERED ON MONDAY, 03 rd  APRIL, 2023 / CHAITRA 13, 1945 (SAKA)

## DEREGISTRATION OF COMPANIES

## QUESTION

5230. SHRI KALYAN BANERJEE:

Will the Minister of CORPORATE AFFAIRS   be pleased to state:

- (a) whether it is a fact that nearly 25-30 per cent Indian companies have lost  their  registration  due  to  zero  turnover  during  the  last  two  years among the 14,51,501 registered companies;
- (b)  if  so,  whether  it  is  a  fact  that  as  high  as  four  lakh  of  registered companies have not undertaken any business during the last two years during COVID-19 pandemic; and
- (c)  if  so,  the  details  thereof  along  with  the  steps  taken  by  the Government to support these companies to revive their business?

## ANSWER

The 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) and (b): In terms of Section 248(1) of the Companies Act, 2013 ( the Act) read with the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 (amended in 2019), names of certain  companies have been struck off for certain  non compliances such as failing to commence business within one year of incorporation, not  carrying  on  any  business  or  operation  for  a  period  of  two

immediately preceding financial years and not making any application within such period for obtaining the status of a dormant company, not carrying on any business or operations, as revealed after the physical verification etc. In the light of above said provisions of the Act, action for striking off names of companies is taken by Registrars of Companies (ROCs) for the companies which have failed to file the statutory returns for  a  period  of  two  immediately  preceding  financial  years  as  it  is presumed that the company is not carrying on business activity.

From time to time, Ministry has undertaken drives for striking off noncompliant Companies under Section 248 of the Act. During the last two years i.e. 2020-21 and 2021-22, 29059 Companies have been struck off under Section 248 (1) of the Act. However, as against this 3,21,325 new companies were incorporated during 2020-21 and 2021-22. The total number of registered companies as on 31.03.2022 are 23,26,640 and active companies are 14,37,045 thus approximately 1.2  percent of the total registered companies have been struck off under section 248 (1) of the Companies Act. Further, as per MCA record it is observed that 97,023 companies had zero turnover during 2020-21 and 2021-22.

(c): The Government has under taken a number of steps to provide Ease of Doing Business which are as under:-

1. Decriminalization of sections under Companies Act:Decriminalization of 46 more Penal provisions under the Act was carried out through the Companies (Amendment) Act, 2020 which
2. was notified in 28.09.2020.
2. 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 Act which are to be dealt with under In-house Adjudication Mechanism (IAM). It shall lessen the cost of running businesses.
3. Revision  of  definition  of  listed  companies:-  Certain  class  of companies  have  been  excluded  from  the  definition  of  listed company under the Companies Act, 2013 vide notification no. GSR
5. (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.
4. Revision of definition of SMCs under the Companies (Accounting Standards)  Rules,  2021:-The  Companies  (Accounting  Standards) Rules,  2021  has  been  notified  on  23.06.2021  to  mirror  the Companies (Accounting Standards) Rules, 2006 (notified under the Companies Act, 1956) to bring the same under the Companies Act, 2013.    The  said  rule  also  amended  the  definition  of  Small  and Medium Size companies for applicability of Accounting Standards under which the turnover limit has been increased from rupees fifty crores to not exceeding rupees two hundred and fifty crores and borrowings limit enhanced from rupees ten crores to rupees fifty crores.
5. Companies have been allowed to conduct Board Meeting through Video Conference (VC) or other audio-visual means by amending the Companies (Meeting of Board and its Powers) Rules 2014.
6. The companies whose Annual General Meetings (AGMs) were due to be held in the year 2020 or become due in the year 2021 or 2022 have been allowed to conduct their AGMs  through Video Conferencing  (VC)  or  Other  Audio-Visual  Means  (OAVM)  on  or before 30.06.2022.  Owing to the difficulties in sending physical copies  of  the  financial  statements,  the  companies  were  also allowed  to  send  the  financial  statements,  along  with  Board's reports,  Auditor's  reports  and  other  documents  required  to  be attached therewith, only through email.
7. Requirement for investing 15% of amount of debentures maturing in a particular year in specified instruments has been done away with  for  Listed  companies  &  NBFCs  when  such  debentures  are issued on a private placement basis.
8. IBC  Amendment  Act  2021  provided  for  Pre  Package  Insolvency Resolution  Process.  Also  the  minimum  amount  of  default  under
11. section  4  of  IBC  was  raised  from  one  lakh  to  one  crore  vide notification dated 24.03.2020.
9. The  Ministry  had  also  taken  various  other  measures  during  the COVID-19 pandemic. These included (i) The Companies Fresh Start Scheme, 2020 (ii) LLP Settlement Scheme, 2020 and (iii) Condonation of delay scheme to file belated documents in MCA 21 registry.  Also  the  Ministry  had  come  out  with  a  number  of relaxations/extensions to reduce the compliances to be made by the company during the COVID 19 pandemic.

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