No Evidence of Rising Companies Act Non-Compliance, Govt Informs Parliament

In reply to an unstarred question in the Lok Sabha, the Ministry of Corporate Affairs stated that there is no trend indicating an increase in non-compliance with the Companies Act, 2013 over the past decade. State/UT-wise annexures detail the number of companies penalised, penalties imposed, and amounts recovered, reflecting year-wise fluctuations and a marked rise in enforcement outcomes in recent years rather than a uniform escalation in defaults. Data was also provided on companies struck off since 2020 for non-filing of statutory returns under Sections 248(1) and 248(2). The Government emphasised that the Act and rules provide a comprehensive framework for accountability, transparency, audits, disclosures, and enforcement through adjudication, compounding, and prosecutions, which are monitored regularly. Robust statutory protections for minority shareholders—including remedies before the National Company Law Tribunal—were highlighted as integral to strengthening corporate governance and compliance.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS

LOK SABHA
UNSTARRED QUESTION No.1398
ANSWERED ON MONDAY, FEBRUARY 09, 2026

Penalties under the Companies Act

1398. Shri M K Raghavan
Adv. Adoor Prakash
Dr. Kalyan Vaijinathrao Kale
Shri K Sudhakaran

Will the Minister of CORPORATE AFFAIRS be pleased to state:

a. whether the Government has observed an increase in cases of non­compliance with provisions of the Companies Act, 2013 in the country during the last ten years;

b. if so, the total number of companies penalised for non-compliance under various provisions of the Companies Act, 2013, during the last ten years, year and State/UT-wise;

c. the total number of penalties imposed and amount recovered during this period;

d. the number of companies struck off from the register of companies for non-filing of statutory returns since 2020, year-wise;

e. the action taken by the Government to strengthen corporate governance and protect minority shareholders; and

f. whether the Government has conducted any review of the impact of these enforcement measures on improving corporate governance and compliance levels, if so, details thereof and if not, the reasons therefor?

ANSWER

Minister of State in the Ministry of Corporate Affairs; Minister of State in the Ministry of Road Transport and Highways.

(SHRI HARSH MALHOTRA)

There is no trend indicating an increase in non-compliance with the provisions of the Companies Act, 2013.

a.The details of total number of companies penalised for various provisions of the Companies Act, 2013, during the last ten years, State wise are at Annexure – I.

b. The details of number of penalties imposed and amount recovered during the last 10 years are at Annexure – II and Annexure – III respectively.

c. The details of number of companies struck off are at Annexure -IV.

d. The provisions of the Companies Act, 2013 and the rules made thereunder contain adequate provisions to ensure financial accountability and transparency in the management of companies. The important aspects of the Companies Act, 2013 for safeguarding the interests of all stakeholders including that of minority shareholders is at Annexure-V.

e. The Act provides a legal framework to address minor and major violations, including inter alia adherence to accounting and auditing standards, statutory filings, duties of the Board and its committees, responsibilities of independent directors and auditors, and mandatory disclosures. Enforcement actions including adjudication, compounding and court convictions have led to the penalisation of such companies for non-compliance. These enforcement actions are monitored regularly.

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Annexure – I

Total number of companies penalised for non-compliance

Annexure – II

Total amount of penalties imposed (Amount in Rupees)

Annexure – III

Total amount recovered in the last ten years (Amount in Rupees)

Annexure-IV

The number of companies struck off from the register of companies as per section 248(1) and 248(2) of the Companies Act, 2013.

Annexure – V

Safeguarding the interests of all stakeholders including that of minority shareholders

• Accountability for management of companies through appointment of key managerial personnel, requirement for approvals by Board of directors and shareholders in accordance with the applicable provisions;
• Requirement for audit of financial statements by an independent chartered accountant;
• Requirement to make disclosures (in the form of notices, resolutions, postal ballots etc), from time to time, to the shareholders for information and approval by the shareholders;
• Requirement to make adequate disclosures through Board’s report including with regard to risk management, state of company’s affairs, material changes affecting company’s financial position and other crucial parameters;
• Requirements to file various documents, copies of resolutions, financial statements, returns etc. with the Registrar from time to time;
• The Registrar of Companies take action against the defaulting companies who fail to file their Annual Returns and/or Financial Statements by either filing prosecution under section 92, 96, 99, 137 of the Companies Act, 2013 or by striking off the name of the companies under section 248 (1) of the Companies Act, 2013 read with Companies (Removal of names of companies from the Register of Companies) Rules, 2016.

Provision for the protection of Minority shareholders the following provisions are provided in the Companies Act 2013 and the Rules made thereunder.

(a) Sections 241 to 246, allow minority shareholders to approach the National Company Law Tribunal (NCLT) if the company’s affairs are being conducted in a manner “prejudicial” or “oppressive” to them.

• Under Section 151, a listed company may have one director elected specifically by small shareholders (those holding shares with a nominal value of not more than ₹20,000).
• Under Section 235, In a scheme of arrangement, if a majority (90% in value) agrees to a transfer of shares, the transferee company can acquire the shares of dissenting shareholders, but they have the right to appeal to the Tribunal if the offer is unfair.
• Under Section 236, If a majority acquirer reaches 90% shareholding, they must offer to buy out the remaining minority at a price determined by a registered valuer.
• Under Section 100, Shareholders having not less than 10% of voting power having the Right to requisition an Extraordinary General Meeting (EGM).
• Under Section 94, shareholders have the right to inspect statutory registers and minutes of general meetings.
• Related Party Transactions under Section 188, In all material transactions between the company and its promoters/directors as prescribed in the Rule 15(3) of Companies (Meetings of Board and its Powers) Rules 2014, require shareholders’ approval. The interested shareholders cannot vote on such resolutions, giving the minority shareholders the required protection.

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