40,949 Companies Struck Off Under Section 248(2) Since FY 2023-24

The Ministry of Corporate Affairs (MCA) provided information to the Lok Sabha regarding the removal of non-operational and “shell companies,” clarifying that the term “shell company” is not formally defined in the Companies Act, 2013. However, the Ministry conducts strike-off drives under Section 248(1) to remove companies that have not conducted business for two preceding financial years, have not applied for dormant status, or whose subscribers have not paid their initial subscription. Additionally, companies can be voluntarily struck off under Section 248(2) after extinguishing all liabilities.

To ensure that genuine companies are not mistakenly deregistered, the MCA adheres to the due process outlined in Section 248(1) and allows aggrieved parties to appeal for restoration under Section 252. The government currently has no plans to formally define “shell companies.” To strengthen monitoring and compliance, the Companies Act, 2013, includes provisions for accountability through key managerial personnel, directors, and shareholders, mandating proper record-keeping, auditing, and filing of documents. The total number of companies struck off under Section 248(2) across India was 16,464 in FY 2023-24, 15,837 in FY 2024-25, and 8,648 until July 16, 2025, in FY 2025-26, totaling 40,949. In Saharanpur, Uttar Pradesh, 23 companies were struck off during this period.

For ease of doing business, the MCA has established a Centralized Registrar of Companies (CRC) for company and LLP incorporation and a Centre for Processing Accelerated Corporate Exit (C-PACE) for voluntary strike-offs. The definition of “Small Company” has been expanded, and the concept of “small LLP” introduced to reduce compliance burdens. The Serious Fraud Investigation Office (SFIO) investigates company affairs based on reports, special resolutions, public interest, or government requests, utilizing experts in various fields. E-forms for company and LLP filings transitioned to MCA-21 Version 3 on July 14, 2025, and an e-adjudication module was launched in September 2024 to streamline penalty adjudication.

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 the registration/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 2022­23.

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 person aggrieved 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.

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Annexure-A

The number of Companies Struck-off under 248(2) of the Companies Act, 2013:

Annexure-B

The number of Companies Struck-off under 248(2) of the Companies Act, 2013, in Saharanpur, UP: