The Corporate Affairs Ministry (MCA) has in the last five years removed as many as 4.33 lakh companies from the Register of Companies.

As many as 49, 921 companies got removed in 2021-22, official sources said. The year 2017-18 (post demonetisation) saw the maximum number of companies being struck off at 2.26 lakh, they added. In 2018-19, about 1.13 lakh companies were struck off from the Register of Companies.

Simplified process

Company law experts attribute several reasons for the high numbers of such companies, including the government’s keenness to clean up the system and weed out non-compliant, dormant entities that act as shell companies. Also this trend could also be seen as the Centre’s eagerness to put in place a easier system for voluntary exits by companies.

Earlier, it was so difficult for a company to de-register as the process was complex. In the recent years the process has got simplified and company managements on their own are keen to de-register, a company law expert. Another reason for high number of struck off companies in 2021-22 was closure of several start-ups that did not take off, sources added.

It maybe recalled that Section 248 of the Companies Act, 2013 provides for removal of name of company from the Register of companies, if it is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within the said period for obtaining the status of a Dormant Company under section 455 of the Act.

The removal of the name of the company from the Register of Companies is a continuous process.