Executive Summary:
This document is a response to questions raised in Lok Sabha regarding the removal of non-operational companies. It clarifies the government's position on shell companies, strike-off procedures, measures to prevent misuse of non-functional firms, and the role of the Serious Fraud Investigation Office (SFIO). The document also provides data on the number of companies struck off under Section 248(2) of the Companies Act, 2013. eForms related to Companies and LLPs filings have been migrated from MCA21 Version 2 to Version 3 w.e.f. 14.07.2025.
Key Points / Main Content:
Strike-Off of Companies:
* The Ministry carries out strike-off drives under section 248(1) of the Companies Act, 2013 for companies not carrying on business for two preceding financial years or have not applied for dormant status.
* Companies can be struck off voluntarily under section 248(2) after extinguishing liabilities.
* The last strike-off drive was carried out in the year 2022-23.
* Annexure A and B provide state-wise data on companies struck off under section 248(2) for the last two years and the current year, including Saharanpur, UP.
Definition of Shell Companies:
* The term "Shell Company" is not defined in the Companies Act, 2013.
* There is no current proposal to formally define "Shell Companies."
Safeguards for Genuine Companies:
* Due process under section 248(1) is followed for striking off companies.
* Aggrieved parties can appeal to the National Company Law Tribunal for restoration under Section 252.
Monitoring and Compliance:
* The Companies Act, 2013, and associated rules provide for accountability and transparency.
* Companies must maintain books of account, returns, and registers, and comply with accounting standards.
* Independent Chartered Accountants must audit books of accounts.
* The Centralized Registrar of Companies (CRC) streamlines company incorporation.
* Threshold limit of small company has been amended by increasing the threshold limit of a small company from having a paidup capital not exceeding Rs.2.00 Crore to Rs.4.00 Crore and turnover not exceeding Rs.20.00 Crore to Rs.40.00 Crore.
* A Centre for Processing Accelerated Corporate Exit (CPACE) facilitates fast-track voluntary strike-offs under Section 248(2), since 01.05.2023.
* Striking off of Limited Liability Partnerships (LLPs) centralized by empowering the CPACE, since 27.08.2024.
SFIO Role and MCA21 V3:
* SFIO investigates company affairs based on reports, resolutions, public interest, or government requests, under Section 212 of the Act.
* SFIO comprises experts in accountancy, auditing, law, IT, capital markets, banking, and taxation.
* eForms related to Companies and LLPs filings have been migrated from MCA21 Version 2 to Version 3 w.e.f. 14.07.2025.
* The E-adjudication module was launched in September 2024 for transparent adjudication of offences under the Act.
Impact Analysis:
Companies:
* Impact: Companies not conducting business or non-compliant with regulations face potential strike-off. Genuine companies need to ensure compliance to avoid erroneous deregistration.
* Action Required: Ensure adherence to compliance requirements, maintain accurate records, and respond to any notices from the Registrar of Companies.
Ministry of Corporate Affairs:
* Impact: Responsible for implementing strike-off procedures, monitoring compliance, and investigating financial frauds.
* Action Required: Continue to enforce the Companies Act, 2013, streamline processes, and ensure transparency in operations.
Serious Fraud Investigation Office (SFIO):
* Impact: Responsible for investigating financial frauds and taking appropriate action.
* Action Required: Investigate cases referred to them and take necessary legal actions.
National Company Law Tribunal:
* Impact: Handles appeals from companies aggrieved by strike-off orders.
* Action Required: Adjudicate appeals fairly and efficiently.
Key Entities Referenced
Companies Act, 2013: A law governing companies in India, frequently referenced regarding definitions, compliance, and strike-off procedures.
Ministry of Corporate Affairs: The Indian government ministry responsible for administering the Companies Act, 2013 and regulating corporate affairs.
Serious Fraud Investigation Office SFIO: An agency in India that investigates financial frauds, operating under Section 212 of the Companies Act, 2013.
MCA21: An e-governance initiative of the Ministry of Corporate Affairs (MCA), Government of India that enables easy and secure access to MCA services for corporate stakeholders.
Saharanpur, Uttar Pradesh: A city in the state of Uttar Pradesh, specifically mentioned in the context of companies struck off from the registry.
National Company Law Tribunal: A quasi-judicial body in India that adjudicates issues relating to Indian companies.
Centralized Registrar of Companies CRC: A centralized body set up by the Ministry to ensure uniformity in the company incorporation process.
Centre for Processing Accelerated Corporate Exit CPACE: A center established to expedite the voluntary strike-off process of companies.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 10
ANSWERED ON Monday, July 21, 2025
Removal of Non-operational Companies
10. Shri Sukhjinder Singh Randhawa:
Shri Chhatrapal Singh Gangwar:
Shri Shankar Lalwani:
Smt. Mala Rajya Laxmi Shah:
Shri Narayan Tatu Rane:
Shri Amrinder Singh Raja Warring:
Shri Anurag Sharma:
Shri Chandan Chauhan:
Shri Parbhubhai Nagarbhai Vasava:
Shri Gajendra Singh Patel:
Shri Vijay Kumar Dubey:
Shri Trivendra Singh Rawat:
Shri P P Chaudhary:
Shri Khagen Murmu:
Shri Imran Masood:
Shri Kripanath Mallah:
Will the Minister of CORPORATE AFFAIRS be pleased to state:
(a) whether it is a fact that several companies/shell companies have
been struck off across the country and if so, the reasons therefor
along with the total number of companies removed during the last
two years and the current year, State-wise including Saharanpur in
Uttar Pradesh;
(b) the steps taken by the Government to ensure that genuine
companies are not mistakenly deregistered;
(c) whether the Government is planning to introduce a formal
definition of shell companies under the Companies Act, 2013 to
improve clarity and enforcement;
(d) the steps taken by the Government to strengthen the monitoring
and compliance mechanism to prevent misuse of non-functional
firms for illegal financial activities and to simplify theregistration/deregistration and reduce regulatory burden on small
companies; and
(e) the role of SFIO in investigating financial frauds and the current
status of implementation of MCA21 V3 for better enforcement?
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): The term ‘Shell Company’ is not defined in the Companies Act,
2013 (Act). However, from time to time, this Ministry carries out
Strike-Off drive under section 248(1) for striking off such companies
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 has not been filed within one hundred and
eighty days of its incorporation under sub-section (1) of section 10A
of the Act. The last strike-off drive was carried out in the year 2022-
23.
Further, under section 248(2) of the Companies Act, 2013 such
companies which voluntarily seek removal of their name from the
Registrar of Companies after extinguishing all its liabilities are
struck-off by following due process in the prescribed manner.
The number of Companies Struck-off under 248(2) of the Companies
Act, 2013 during the last 2 years and the current year, state wise,
including Saharanpur, UP are at Annexure A and B respectively.
(b):Due process for strike-off of Companies as laid down under
section 248(1) of the Companies Act, 2013 is adhered to. Any personaggrieved by the order of dissolution by the Registrar of Companies,
may file an appeal to the National Company Law Tribunal for
restoration of its name in terms of Section 252 of the Act.
(c): Presently, there is no proposal before the government to define
‘Shell Companies’.
(d): The Companies Act, 2013 and rules made thereunder contain
adequate provisions for ensuring accountability and transparency in
the management of companies. It provides for accountability for
management of companies through key managerial personnel,
Board of directors and shareholders. The Act & Rules require
companies to maintain books of account, various returns and
registers etc in the prescribed form and keep them at their
registered offices.
Compliances with applicable accounting standards have also been
mandated under the Act. Thebooks of accounts are required to be
audited by independent Chartered Accountant. In addition, the
Companies are required to file various documents, copies of
resolutions, returns etc., with the Registrar.
Further, as a measure of Ease of Doing Business, the Ministry has
set up a Centralized Registrar of Companies (CRC) for incorporation
of companies and LLPs to provide uniformity in the incorporation
process.
Definition of Small Company has been amended by increasing the
threshold limit of a small company from having a paid-up capital not
exceeding Rs.2.00 Crore to Rs.4.00 Crore and turnover not
exceeding Rs.20.00 Crore to Rs.40.00 Crore. Similarly, the concept
of small LLP has been introduced which is subject to lesser
compliances, lesser fee to reduce the cost of compliances.
A Centre for Processing Accelerated Corporate Exit (C-PACE) has
also been established to centralize and speed up the voluntary
strike off process of Companies under Section 248 (2) of the
Companies Act, 2013 in a fast-track mode in order to facilitate 'Ease
of Doing Business' in India w.e.f. 01.05.2023. The Ministry has also
centralized the striking off of Limited Liability Partnerships (LLPs)by empowering the CPACE for processing of e-Forms related to
striking off of LLPs, w.e.f. 27.08.2024.
(e): The Serious Fraud Investigation Office (SFIO) is assigned
investigations by the Central Government under Section 212 of the
Act to investigate the affairs of a company on formation of an
opinion that such an investigation is necessary, based on:
a) A report from the Registrar or Inspector under Section 208 of
the Companies Act, 2013;
b) A special resolution passed by the company for such
investigation;
c) Public interest; or
d) A request from any department of the Central or State
Government.
SFIO comprises of experts in various fields such as accountancy,
forensic auditing, law, information technology, capital markets,
banking, and taxation.
e-Forms related to Companies and LLPs filings have been migrated
from MCA-21 Version 2 to Version 3 w.e.f. 14.07.2025. The E-
adjudication module was also launched under MCA21 in September
2024 to establish a technology driven adjudication mechanism, for
speedy and transparent adjudication of cases pertaining to
offence(s) committed under the Act.
*******Annexure-A
The number of Companies Struck-off under 248(2) of the Companies
Act, 2013:
Number of Companies
Sl No. FY
2025-
FY 2026 [till
Name of the State /
FY 2024- 16th July Grand
UT
2023-2024 2025 2025] Total
1. Andaman and
Nicobar Islands 6 3 2 11
2.
Andhra Pradesh 400 224 136 760
3.
Arunachal Pradesh 4 2 2 8
4.
Assam 90 86 34 210
5.
Bihar 185 176 97 458
6.
Chandigarh 51 89 44 184
7.
Chattisgarh 67 97 57 221
8. Dadra and Nagar
Haveli and Daman
and Diu 13 7 2 22
9.
Delhi 2,151 2,372 1,350 5,873
10.
Goa 78 72 31 181
11.
Gujarat 665 891 541 2,097
12.
Haryana 585 732 360 1,677
13.
Himachal Pradesh 27 70 29 126
14.
Jammu & Kashmir 29 30 24 83
15.
Jharkhand 185 92 55 332
16.
Karnataka 2,317 1,615 871 4,80317.
Kerala 459 508 246 1,213
18.
Ladakh 0 0 1 1
19.
Lakshadweep 2 0 0 2
20.
Madhya Pradesh 446 358 219 1,023
21.
Maharashtra 3,276 3,290 1,763 8,329
22.
Manipur 4 6 3 13
23.
Meghalaya 7 2 4 13
24.
Mizoram 2 0 2 4
25.
Nagaland 6 3 2 11
26.
Odisha 81 159 71 311
27.
Puducherry 18 22 12 52
28.
Punjab 125 211 117 453
29.
Rajasthan 426 572 293 1,291
30.
Tamil Nadu 964 1,179 628 2,771
31.
Telangana 1,763 860 463 3,086
32.
Tripura 4 8 4 16
33.
Uttar Pradesh 1,234 1,046 558 2,838
34.
Uttarakhand 73 133 54 260
35.
West Bengal 721 922 573 2,216
Grand Total 16,464 15,837 8,648 40,949Annexure-B
The number of Companies Struck-off under 248(2) of the Companies
Act, 2013, in Saharanpur, UP:
Financial Year No. of Companies Struck-off
2023-24 10
2024-25 12
2025-26 till 16.07.2025 1
Total 23