16,527 Companies Struck off During April 2020-June 2021 Period

New Delhi: A total of 16,527 companies were struck off from official records during the period from April 2020 to June 2021, according to official data.

Minister of State for Corporate Affairs Rao Inderjit Singh on Monday informed the Lok Sabha that pursuant to provisions of Section 248 of the Companies Act, 2013, "during April 2020 to June 2021, name of total 16,527 number of companies were struck off from the register of companies".

Under Section 248, a company can be struck off the official records subject to certain conditions. These include instances where the Registrar of Companies has a reasonable cause to believe that companies are not carrying on any business or operation for two immediately preceding financial years and have not made any application within such period for obtaining dormant company status.

In written replies, the minister said that terms 'shut down' or 'closed unit' or 'corporate unit' are not defined under the Act.

"As per the records maintained in the MCA portal, number of companies which are running in profits during the financial year 2019-20 is 4,00,375 and number of companies which are running in losses during the financial year 2019-20 is 4,02,431," Singh said.

To a question on whether the government is planning to amend the Insolvency and Bankruptcy Code (IBC) to prevent promoters from delaying the resolution process and to ensure its time-bound completion, the minister replied in the negative.

"No amendment is proposed," Singh said in another written reply.

Lok Sabha: Govt introduces bill to amend insolvency law

Corporate Affairs Minister Nirmala Sitharaman on Monday introduced a Bill in the Lok Sabha to replace an ordinance that amended the insolvency law.

The Insolvency and Bankruptcy Code (Amendment) Bill, 2021 was introduced amid Opposition ruckus over various issues.

Sitharaman is in charge of both finance and corporate affairs ministries.

The ordinance to amend the Insolvency and Bankruptcy Code (IBC) was promulgated on April 4, whereby a pre-packaged resolution process for stressed micro, small and medium enterprises (MSMEs) was introduced under the Code.

Generally, under a pre-packaged process, main stakeholders such as creditors and shareholders come together to identify a prospective buyer and negotiate a resolution plan before approaching the National Company Law Tribunal (NCLT). All resolution plans under the IBC need to be approved by NCLT.