**Executive Summary**
This document summarizes the response from the Minister of Corporate Affairs to an unstarred question in Lok Sabha on December 1, 2025, regarding the closing of private companies and rehabilitation of employees. The response provides details on the number of private companies closed in the last five years and addresses queries regarding employee rehabilitation, shell companies, and tax incentives for companies in backward areas. The information covers the financial years 2020-21 to 2024-25.
**Key Points / Main Content**
* **Private Company Closures:**
* 2,04,268 private companies closed in the last 5 years due to amalgamation, conversion, dissolution, and strike-off under the Companies Act, 2013.
* The number of closures per financial year is as follows:
* 2020-21: 15,216
* 2021-22: 64,054
* 2022-23: 83,452
* 2023-24: 21,181
* 2024-25: 20,365
* **Employee Rehabilitation:**
* There is no proposal before the Government to implement a special scheme for the rehabilitation of employees working in closed companies.
* **Shell Companies:**
* The term "Shell Company" is not defined in the Companies Act, 2013.
* The Ministry carries out Strike-Off of companies under Section 248(1) of the Act for companies not carrying on business or operation for two financial years, those that have not applied for dormant status, or when subscribers have not paid the subscription amount and filed a declaration.
* **Tax Incentives:**
* The Government's policy is to gradually phase out exemptions and deductions while rationalizing tax rates.
* The government aims to create a simple, transparent, and equitable tax regime instead of region-specific tax incentives.
* The government has undertaken substantial reductions in corporate tax rates for both existing and new domestic companies.
**Impact Analysis**
**Stakeholder:** Closed Private Companies
**Impact:** The response confirms the closure of a significant number of companies over the past five years, largely due to amalgamation, conversion, dissolution, and strike-off.
**Action Required:** None explicitly stated in the document.
**Stakeholder:** Employees of Closed Private Companies
**Impact:** The response indicates that there are no current proposals for special schemes for employee rehabilitation, potentially leaving them without immediate support.
**Action Required:** None explicitly stated in the document.
**Stakeholder:** Corporate Companies
**Impact:** The government aims to gradually phase out exemptions and deductions and reduce corporate tax rates for existing and new domestic companies, therefore impacting company financial planning.
**Action Required:** None explicitly stated in the document.
Key Entities Referenced
Companies Act, 2013: Governs company law in India; cited regarding the provisions for striking off companies.
Ministry of Corporate Affairs: The primary government body responsible for administering the Companies Act and related regulations.
Section 248(1) of the Companies Act, 2013: Deals with the process of striking off companies that are not carrying on business or operations.
Section 455 of the Companies Act, 2013: Deals with dormant company status under the Companies Act.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
LOK SABHA
UN-STARRED QUESTION NO. 227
ANSWERED on MONDAY, 01 December, 2025
AGRAHAYANA 10, 1947 (SAKA)
Closing of Private Companies and Rehabilitation of employees
QUESTION
227. Shri Ramashankar Vidharthi Rajbhar:
Will the Minister of CORPORATE AFFAIRS
be pleased to state:
(a) the number of private companies closed down during the last
five years;
(b) whether the employees of the said companies have been
rehabilitated, if so, the details thereof;
(c) whether the Government proposes to implement any special
scheme for the rehabilitation of employees working in the
companies which are being closed, if so, the details thereof;
(d) the number of shell companies identified in the country and the
details of the action taken by the Government against them so far;
and
(e) whether the Government proposes to formulate any policy to
provide tax exemption or incentives to Corporate companies for
setting up industries in backward and rural areas, if so, the details
thereof?
ANSWER
Minister of State in the Ministry of Corporate Affairs; Minister of
State in the Ministry of Road Transport and Highways.
(Shri Harsh Malhotra)
(a) 2,04,268 private companies have closed down during the last 5
years on account of amalgamation, conversion, dissolution andstrike off under the relevant provisions of the Companies Act, 2013
as under:
Financial Year Companies Closed
2020-21 15,216
2021-22 64,054
2022-23 83,452
2023-24 21,181
2024-25 20,365
(b) & (c): There is no proposal before the Government.
(d): The term ‘Shell Company’ is not defined in the Companies Act,
2013 (Act). However, from time to time, this Ministry carries out
Strike-Off companies under section 248(1) of the Act against which
are 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 of the Act or the subscribers to the
memorandum have not paid the subscription which they had
undertaken to pay at the time of incorporation of a company and a
declaration to this effect that not been filed within one hundred and
eighty days of its incorporation under sub-section (1) of section 10A
of the Act.
(e): It is the stated policy of the Government to gradually phase out
exemptions and deductions while rationalizing tax rates to create a
simple, transparent, and equitable tax regime instead of providing
region-specific tax incentives. Moreover, the Government has
undertaken several reforms to promote investment and ease of
doing business, including substantial reductions in corporate tax
rates for both existing and new domestic companies.
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