new Delhi The Ministry of Corporate Affairs (MCA) is removing over 52,500 companies from official records for defaulting on annual return filing obligation, it said in an update on the corporate sector for January. These are companies that have not filed returns and financial statements for two or more consecutive years. Troubled companies tend to default on meeting their filing obligations when economic activity comes to a standstill and becomes dormant. Their removal from official records is part of a cleanup drive by the ministry, which is preparing to launch a new version of its compliance portal, MCA21. Cleaning removes dead wood in the system and simplifies regulatory oversight.
This comes against the backdrop of the government giving additional time to businesses to file their tax returns and audit reports for the financial year ended March 31, 2021.
The soon-to-be-launched version of the compliance portal is expected to offer e-decisions and an ‘MCA laboratory’ that will deploy artificial intelligence and data analysis to identify compliance trends that could warrant regulatory intervention .
The ministry said more than 7,000 companies are under liquidation and over 2,300 companies are in a ‘dormant’ state under a special provision in the law that allows them to remain dormant.
Experts say that companies can default in meeting obligations due to various reasons including lack of business activities, losses, management deadlock and lack of awareness.
They are removed from official records either by the entity or by the Registrar of Companies (ROC) on application, told regulator Sumit Naib, director of Nangia Andersen LLP, a consultancy. Nayab said the grounds for removal include failure to commence business within one year of incorporation.
Never miss a story! Stay connected and informed with Mint.
download
Our App Now!!
,