Lok Sabha Question No. 2242 (UNSTARRED), answered on 2021-03-08
Subject: Stressed Companies
Ministry: CORPORATE AFFAIRS
Asked by: Behanan Benny

THE MINISTER OF STATE FOR FINANCE AND CORPORATE AFFAIRS

वित्त एिं कॉरपोरेट कार्य मंत्रालर् में राज्य मंत्री

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS LOK SABHA UN-STARRED QUESTION NO. 2242 ANSWERED ON MONDAY, MARCH 8, 2021/ PHALGUNA 17, 1942 (SAKA) STRESSED COMPANIES QUESTION

2242. SHRI BENNY BEHANAN:

Will the Minister of CORPORATE AFFAIRS

be pleased to state:

(a)  the  details  of  the  number  of  registered  companies which have gone out of business during the year 2020-2021, State-wise; and

(b) the measures taken by the Government to encourage new companies in the country?

## ANSWER

(SHRI ANURAG SINGH THAKUR) ( श्री अनुराग व ंह ठाक ु र )

(a):  The  Ministry  of  Corporate  Affairs  (MCA)  administers  the  Companies  Act,  2013  (the  Act)  and maintains the registry of Companies on the basis of documents and applications filed. The Ministry does not maintain any record of the companies which have gone out of business. A total of 10,113 number of Companies during the year 2020-2021 (from the month of April 2020 to February 2021) have been Struck off under section 248 (2) of the Act. MCA has not run any drive to strike off companies suo moto during 2020-2021. The State-wise details of these Companies are at Annexure-A.

- (b): The measures taken by the MCA to encourage new companies in the country are as under:-
- 1) One Person company:- MCA vide notification no. 91 (E) dated 01.02.2021 through the Companies (Incorporation)  Second  Amendment  Rules,  2021  has  incentivized  the  incorporation  of  One  Person Companies (OPCs) w.e.f. 01.04.2021 as follows-
- i.  One  Person  Company  may  be  converted  into  a  Private  or  Public  Company,  other  than  section  8 company, after increasing the minimum number of members and directors to two or seven members and two or three directors.
- ii.  NRIs  were  not  allowed  to  incorporate  OPCs.  Now  any  natural  person,  who  is  an  Indian  citizen, whether resident in India or otherwise would be allowed to form an OPC.
- iii.  For  being considered as a resident in India, the residency period has been reduced to 120 days from 182 days for NRIs.
- iv.  Rule  relating  to  voluntary  conversion  unless  OPC  has  completed  two  years  from  the  date  of incorporated  omitted  and  with  effect  from  01-04-2021,  Conversion  of  One  Person  Company  into  a Public company or a Private company shall be permitted anytime.
- v. Similarly the limitation of Paid-up capital and turnover presently applicable for OPCs (paid up share capital  of  fifty  lakhs  rupees  and  average  annual  turnover  during  the  relevant  period  of  two  crore rupees) has been done away with so that there are no restrictions on the growth of OPCs in terms of their paid up capital & turnover.
- vi. Rationalization of e-forms applicable for OPCs by omitting e-Form No.INC-5 and modification of eform INC-6 (application for conversion from OPC to a Private company or a Public company and also Private company to OPC).
- 2)  Small  Companies:-  MCA  vide  notification  no.  92  (E)  dated  01.02.2021  through  the  Companies (Specification  of  Definitions  Details)  Amendment  Rules,  2021  has  amended  the  definition  of  small companies and provides that w.e.f. 01.04.2021 the paid up capital and turnover of the small company shall not exceed rupees two crores and rupees twenty crores respectively, previously the limit was paid up capital of Rs 50 lakh and turnover of Rs 2 crore for the small companies.
- i. Simpler process for renewal of reserved names - MCA vide notification no. 795 (E) dated 24.12.2020 through the Companies (Incorporation) Third Amendment Rules, 2020 effective from 26.01.2021 has inserted Rule 9A in respect of extension of reservation of name in certain cases through the web service available at www.mca.gov.in, the Registrar shall extend the period of a name reserved upon payment of specified fees under rule 9 by using web service SPICe+ (Simplified Proforma for

कॉरपोरेट कार्य मंत्री

Company Electronically Plus: INC-32).

- ii.  'SPICe  +  and  AGILE  -  PRO':-  MCA  vide  notification  no.  128(E)  dated  18.02.2020  has  notified  the Companies (Incorporation) Amendment Rules, 2020 effective from 23.02.2020. The said Rules have introduced  new  Web  Forms  christened  'SPICe  +  and  AGILE  -  PRO',  which  provide  ten  different services, from Central Ministries, State Government and various Banks. These services are (i) Name reservation, (ii) Incorporation, (iii) PAN, (iv) TAN, (v) DIN, (vi) EPFO, (vii) ESIC, (viii) GST number, (ix) opening of bank account (x) Profession Tax, Maharashtra (at present Karnataka also) at the time of incorporation itself.

iii.  Zero  Fee -  MCA  vide  notification  no.  180(E)  dated  06.03.2019  effective  from  18.03.2019,  has amended  the  Companies  (Incorporation)  Rules,  2014  whereby  zero  fee  is  being  charged  for incorporation of all companies with authorized capital upto Rs. 15 lakh or upto 20 members where no share capital is applicable.

- iv.  Debenture  Redemption  Reserve  -  Ministry  has  amended  the  Companies  (Share  Capital  and Debentures) Rules, 2014 through Companies (Share Capital and Debentures) Amendment Rules, 2019 vide  notification  dated  16.08.2019.  Through  the  amendment,  the provisions  relating  to  creation  of Debenture Redemption Reserve (DRR) have been revised with the objective of reducing the cost of capital and deepening the bond market through:-
- a) removing the requirement for creation of a DRR of 25% of the value of outstanding debentures in respect  of  listed  companies,  NBFCs  registered  with  RBI  and  for  Housing  Finance  Companies registered with National Housing Bank (NHB) both for public issue as well as private placements;
- b)  Reduction  in  DRR  for  unlisted  companies  from  the  present  level  of  25%  to  10%  of  the  value  of outstanding debentures.
- v.  Differential  Voting  Rights  (DVRs)  -  Ministry  has  amended  the  Companies  (Share  Capital  and Debentures) Rules, 2014 through Companies (Share Capital and Debentures) Amendment Rules, 2019 vide notification dated 16.08.2019 relating to issue of shares with Differential Voting Rights (DVRs) provisions under the Companies Act with the objective of enabling promoters of Indian companies to retain  control  of  their  companies  in  their  pursuit  for  growth  and  creation  of  long-term  value  for shareholders, even as they raise equity capital from global investors.  The amendments have brought in the following changes:-
- a) enhancement in the previously existing cap of 26% of the total post issue paid up equity share capital  to  a  revised  cap  of  74%  of  total  voting  power  in  respect  of  shares  with  Differential  Voting Rights of a company.

b) removal of the earlier requirement of consistent track record of distributable profits for 3 years for a company to be eligible to issue shares with Differential Voting Rights.

- vi. Decriminalization of the offences under the Companies Act, 2013:-
- a)  The  Companies  Act,  2013  has  been  amended  through  Companies  (Amendment)  Act,  2019  (CAA2019) after getting the  assent of Hon'ble President on 31st July, 2019.   The said amendment was effective from 2 nd  November, 2018 and mainly aimed to decriminalize certain offences under the Act for better compliance purposes and to further liberalize the existing regulatory framework for ease of doing  business.  The  CAA-2019  inter-alia  provides  for  re-categorization  of  16  criminal  offences  into civil  wrongs  and  thereby  lapses  that  were  essentially  technical  or  procedural  in  nature  has  been shifted to in-house adjudication process under the Act.
- b) The Companies Act, 2013 has been further amended through Companies (Amendment) Act, 2020 (CAA-2020) after getting the assent of Hon'ble President on 28 th  September, 2020.  The major thrust of the CAA-2020 is to decriminalize the offences under the Companies Act, 2013 and to facilitate ease of  doing  business  and  ease  of  living.   After  enactment  of  the  CAA-2020,  44  provisions  relating  to decriminalization,  12  provisions  relating  to  ease  of  doing  business  and  2  provisions  relating  to producer companies in the CAA-2020 have been commenced on 21 st  December, 2020, 22 nd  January, 2021  and  11 th   February,  2021  respectively. The  amendment  proposed  through  the  CAA-2020  are expected to significantly enhance the confidence of Indian Corporates on the Government's resolve to  provide  greater  ease  and  accord  highest  respect  to  honest  wealth  creators  in  the  country  and reduce the burden on the justice system.

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## Annexure  referred  to  in  reply  to  part  (a)  of  Lok  Sabha  USQ  No.  2242  answered  on 08.03.2021:

## Details of Companies strike off from the month of April 2020 to February 2021:

| S. No.   | State/ UT         | Struck off Companies   | Struck off Companies   |
|----------|-------------------|------------------------|------------------------|
| 1        | Andaman & Nicobar | 2                      |                        |
| 2        | Bihar             | 104                    |                        |
| 3        | Chandigarh        | 501                    | 501                    |
| 4        | Chhattisgarh      | 47                     | 47                     |
| 5        | Delhi             | 2394                   | 2394                   |
| 6        | Goa               | 36                     | 36                     |
| 7        | Gujarat           | 17                     | 17                     |
| 8        | Jharkhand         | 137                    | 137                    |
| 9        | Karnataka         | 836                    | 836                    |
| 10       | Kerala            | 307                    | 307                    |
| 11       | Madhya Pradesh    | 111 10113              | 111 10113              |
| 12       | Maharashtra       | 1279                   |                        |
| 13       | Meghalaya         | 88                     |                        |
| 14       | Orissa            | 78                     |                        |
| 15       | Pondicherry       | 31                     | 31                     |
| 16       | Rajasthan         | 479                    |                        |
| 17       | Tamil Nadu        | 1322                   |                        |
| 18       | Telangana         | 404                    | 404                    |
| 19       | Uttar Pradesh     | 1936                   | 1936                   |
| 20       | West Bengal       | 4                      | 4                      |
|          | Total             |                        |                        |

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