MCA Strikes Off 2.33 Lakh Dormant Firms in Massive Corporate Clean-Up

New Delhi, Dec 6 (KNN) In a historic regulatory sweep, the Ministry of Corporate Affairs (MCA) has removed 2.33 lakh dormant and potentially illicit companies from India’s corporate registry over the past five years. 

The purge, announced by Minister of State for Corporate Affairs Harsh Malhotra in the Rajya Sabha, underscores the government’s intensified efforts to tackle economic offenses like tax evasion and money laundering.

The massive clean-up operation primarily targeted inactive firms that failed to meet statutory compliance requirements for consecutive years. 

Maharashtra and Delhi, economic hubs of the nation, topped the list with 36,856 and 35,637 companies struck off, respectively, from 2019 to 2024. Uttar Pradesh (22,644), Karnataka (19,242), and Tamil Nadu (16,143) followed suit, reflecting widespread non-compliance even in the most industrialized regions.

Smaller Union Territories, including Ladakh and Lakshadweep, reported negligible numbers, attributed to their limited corporate footprint. However, the overall scale of the operation reveals systemic lapses in corporate governance across India.

The fiscal year 2022-23 marked the peak of this crackdown, with 82,125 firms axed. Officials attribute the surge to post-pandemic regulatory vigilance amid suspicions of shell companies exploiting government relief measures. 

Despite no statutory definition for “shell companies,” action has been taken under Sections 455 and 248 of the Companies Act, focusing on dormant firms and those neglecting to file statutory returns for two consecutive years.

Physical verifications and advanced data analytics through the MCA-21 portal have been pivotal in exposing ghost companies. 

Collaborations with investigative agencies like the Serious Fraud Investigation Office (SFIO) have further strengthened the effort, allowing the government to surgically target non-compliant entities.

Industry observers see the move as a critical step toward restoring trust in India’s business ecosystem. By eliminating shell companies and fostering corporate transparency, the government aims to ensure a more robust and compliant economic environment.

(KNN Bureau)