Lok Sabha Question No. 1000 (UNSTARRED), answered on 2025-02-10
Subject: Compliance Regime for Private Limited Companies
Ministry: CORPORATE AFFAIRS
Asked by: Shri Chavda Vinod Lakhamshi, Shri Vishnu Datt Sharma

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

UNSTARRED QUESTION NO. 1000

ANSWERED ON MONDAY, FEBRURAY  10, 2025

MAGHA 21, 1946 (SAKA)

## COMPLIANCE REGIME FOR PRIVATE LIMITED COMPANIES QUESTION

1000. Shri Vishnu Datt Sharma: Shri Chavda Vinod Lakhamshi:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a)  whether  it  is  true  that  compliance  regime  for  private  limited companies in the country under Companies Act, 2013 is still cumbersome and complex in comparison to G7 and other developed countries;
- (b) if so, whether it is true that private limited companies which have very  insignificant  business,  needs  two  years  of  lengthy  period  of  nil business or transactions before their closure;
- (c) if so, whether the Government is making any efforts to reduce the long waiting time;
- (d) if so, the details of the measures taken in this regard; and
- (e) if not, the reasons therefor?

## ANSWER

THE MINISTER OF STATE IN THE MINISTRY OF CORPORATE AFFAIRS AND MINISTER OF STATE IN THE MINISTRY OF ROAD, TRANSPORT AND HIGHWAYS

[ SHRI HARSH MALHOTRA]

- (a) Ease of doing business is an important objective of the compliance requirements provided for private companies under the Companies Act, 2013. The private Limited companies have relaxed compliance norms as

compared  to  public  listed  and  unlisted  companies.  Further,  various exemptions  in  the  form  of  exceptions,  modifications  and  adaptations have also been allowed to private companies under section 462 of the Act, including, inter alia, passing of ordinary resolution instead of special resolution for offering shares to employees under a scheme of employees stock  option;  exemption  from  section  180  of  the  Act  relating  to restrictions on powers of Board to allow operational flexibility to private limited companies etc.

(b) to (e):-

Pursuant to Section 248(2) read with Section 248(1) of the Companies Act, 2013 a company can apply to Registrar for removing its name from the register of companies on any of following grounds viz-

- failure 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 has not made any application within such period for obtaining the status of a dormant company under Section 455,
- subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation and a declaration to  this effect has not been filed within one hundred and eighty days of incorporation,
- the company is not carrying on any business or operations as revealed  after  the  physical  verification  carried  out  under
- Section 12(9) of the Companies Act, 2013

The  Centre  for  Processing  Accelerated  Corporate  Exit  (C-PACE)  has been established to centralise and speed up the process for voluntary removal of name under section 248 (2) of the Companies Act, 2013.

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