Over 40,000 Non-Operational Companies struck off across India in Past Three Years: Central Govt in Lok Sabha

The Ministry of Corporate Affairs (MCA) has reported that a total of 40,949 companies have been struck off under the Companies Act, 2013, during the past three financial years, cleansing the corporate registry of non-operational and shell entities.

In response to a Lok Sabha unstarred question on Monday, July 21, 2025, Minister of State Shri Harsh Malhotra revealed that the MCA conducted strike-off drives targeting companies that have not carried on any business or operations for the preceding two financial years and failed to comply with statutory obligations such as filing declarations or subscribing capital at incorporation.

The most recent strike-off drive was in the financial year 2022-23.

The data provided by the government state-wise show extensive action particularly in Maharashtra (8,329 companies), Delhi (5,873), Karnataka (4,803), Tamil Nadu (2,771), and Uttar Pradesh (2,838).

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In Saharanpur district, Uttar Pradesh alone, 23 companies were struck off between 2023 and mid-2025, reflecting localized enforcement as well.

To safeguard genuine companies from inadvertent deregistration, the MCA adheres strictly to procedural safeguards under Section 248(1) of the Companies Act. Aggrieved parties can appeal to the National Company Law Tribunal for restoration of their company names. This mechanism ensures due process and prevents wrongful removal from the corporate registry.

Currently, there is no formal legal definition of a "shell company" within the Companies Act. However, the government has indicated no immediate plans to define this term explicitly despite its relevance in financial crime investigations.

The government has also implemented several measures to strengthen regulatory compliance and simplify corporate governance:

Enhanced accountability through requirements for key managerial personnel and board supervision. Mandatory maintenance of books of accounts, regular audits by independent chartered accountants, and filing of resolutions and returns with the Registrar of Companies.

Introduction of the Centralized Registrar of Companies (CRC) to standardize company and LLP incorporation processes nationwide. Amendments to the definition of small companies and introduction of small LLPs with relaxed compliance and fee structures to reduce regulatory burdens.

Establishment of the Centre for Processing Accelerated Corporate Exit (C-PACE) to expedite voluntary company strike-offs and facilitate a faster exit process, reinforcing ease of doing business since May 2023 and Extension of C-PACE powers in August 2024 to cover Limited Liability Partnerships (LLPs).

In tackling financial fraud, the Serious Fraud Investigation Office (SFIO) plays a pivotal role. Mandated to investigate suspicious companies based on reports from registrars, special resolutions, public interest, or government requests, SFIO comprises multidisciplinary experts and uses advanced technology tools. The rollout of the MCA21 Version 3 platform in July 2025 and an e-adjudication module launched in September 2024 have further automated and accelerated compliance monitoring and adjudication processes, enhancing transparency and enforcement effectiveness.

This comprehensive crackdown on dormant companies exemplifies the government’s commitment to maintaining a clean and trustworthy corporate sector, which is essential for boosting investor confidence and ensuring the integrity of India’s financial ecosystem.

Source: Ministry of Corporate Affairs, Government of India, Lok Sabha Unstarred Question No. 10 Answered July 21, 2025.

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