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The Ministry of Corporate Affairs nowadays heavily concerned on enhancing corporate compliance level and transparency among the companies and in this regard they have created ‘Ministry of Corporate Affairs Compliance Monitoring System’ (MCACMS) which will be an Artificial Intelligence based mechanism. The intent is to make compliance scrutiny system driven and automated thereby increasing compliance level and also earn revenue through penalties as well!!!. Before introducing this portal, Govt. changed the word ‘Fine’ with the word ‘Penalty’ so that MCA will get power to impose penalty on non-compliant companies.

What is MCA-CMS

Ministry of Corporate Affairs Compliance Monitoring System (MCACMS) is the newly introduced online Compliance tracing mechanism that works on Artificial Intelligence. This portal will catch non-compliance of any company automatically and send show-cause notices to the non-compliant companies/directors digitally. Such defaulting companies/directors will now be required to submit a reply to show-cause notices to the MCA on MCACMS Portal.

What is the need of mca-cms

There were numerous cases of non-compliance or delay in compliance by the companies which were either undetected or detected after a big scam happens. It is very difficult to monitor non-compliance through manual system or traditional scrutiny based method where we have more than 14 Lacs companies. Hence, it is a high time to have some A.I based universal Compliance Monitoring System to detect non-compliance and would issue the Show Cause Notice to the defaulters.

The broad objects behind the introduction of MCACMS are as follows:

  • To avoid any sort of negligence of the provisions of the Companies Act 2013, in respect of company incorporation, or annual compliance of the companies and LLPs;
  • To detect any non-compliance early and issue show-cause notices to defaulting companies/directors;
  • To give opportunity to companies/directors to give reply to show cause notice online;
  • To increase overall compliance level in a country and to prevent shell companies to foster.

Show Cause Notice and its Reply

Upon failure to timely fulfill any sort of compliance, the MCACMS Portal shall send a show-cause notice via email to the defaulting Company/Director or the Company Secretary. This Show Cause Notice shall bear a CMS reference Number like F.No. D/RC000/000/2019/00/11-11.

The Show Cause Notice will mention following details

  • Nature of non-compliance;
  • Section under which the notice has been issued;
  • Deadline for submitting the reply.

The non-compliant company is supposed to serve it to its directors or KMPs. Thereafter the notice shall be deemed to have been served upon each & every officer for the non-compliance of the provisions of the Companies Act 2013.

The director of the non-compliant company to whom the show cause notice has been served has to submit a reply to Show Cause Notice within 15 days from the date the notice.

The following is the Procedure to reply Show Cause Notice issued by MCACMS:

1. Login online to MCACMS Portal;

2. Click on Reply to Show Cause Notice;

3. Input CMS Reference number in portal;

4. Generate OTP; (it will be sent on registered email address)

5. Input OTP in MCACMS Portal;

6. Give reply in 500 words. If reply in more than 500 words it is advisable to print the same on Company letter head and authenticated by a Director/Company Secretary & submit as an attachment;

7. Submit reply & Record acknowledgment.

In case the director of the non-compliant company fails to submit a reply to Show Cause Notice, it would be assumed that the company has nothing to say regarding the matter. As a result, the Register of Companies (ROC) shall take penal actions on the company, for violation of the provisions of the Companies Act 2013.


MCA-21 has gone through various overhauling process during last 13 years. In May 2019, Government has announced that the Ministry of Corporate affairs is planning to implement a Version 3 of MCA for ease of doing process. The Version 3 will ease process of filing details as single source of truth will ensure that common information will automatically get updated over various forms. Second, the entire e-adjudication process will go online. This will ensure that nobody is required to go to a RoC. Everything will be on the front-end where entire e-adjudication and then online compliance monitoring would be done. So if anyone is not complying with the law, e-notice will automatically get generated and reach him.

Author is a Practicing CS based at Mumbai. He can be reached at

Author Bio

CS Dhaval Gusani is a founder of DVG & Associates, Company Secretaries and Corporate Law Professionals. He is a Commerce and Law Graduate and an Associate Member of the Institute of Company Secretaries of India (ICSI). He has cumulative experience of more than 8 years with Listed Company, Charte View Full Profile

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April 2024