Shreya Nandi
Moneycontrol News
The number of defunct companies in India increased by more than 22 percent in the first eight months of 2018-19, official data showed.
The Ministry of Corporate Affairs (MCA) has struck off 6.07 lakh, about a third of the total 18.28 lakh registered companies, defunct companies from the official records, as of November 30 as a part of the plan to crack down on shell or paper companies.
A total of 6.54 lakh companies that were closed, out of which 10,610 were dissolved, 6.07 lakh were defunct or struck off, 9,746 were converted into Limited Liability Partnership (LLP) firms, government data showed.
In 2017-18, the MCA had identified and removed the names of 2.26 lakh organisations from the registrar of companies (RoC) directory for remaining inactive for two years or more.
Under Section 248 of the Companies Act, 2013, a company’s name can be removed from the RoC if it fails to commence business within one year of its incorporation or is not carrying out operations for three years.
The ongoing move is part of a drive to remove entities that do not contribute to an economic activity and are rather a burden on the system. The corporate affairs ministry is also looking at companies’ data to see if they are involved tax evasion or money laundering.
The data showed that out of the total registered companies, 11.27 lakh, were active, as compared with 11.76 in April. Active companies carry out normal business and trading activities, generating income and meeting the basic requirements such as filing financial statements.
Out of the 11.27 lakh active companies, 11.20 lakh were limited by shares, 6,724 were limited by guarantee and 338 were unlimited companies.
Among registered companies, data reveals that Maharashtra has 2.28 lakh active companies, followed by Delhi and West Bengal, with 1.99 lakh and 1.27 lakh companies respectively.
During November, 8,745 new companies were registered, out of which only 191 companies were government, with rest being non-government.
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