Over 700 firms penalised under Companies Act

The Centre has imposed penalties totalling over Rs 55 crore on 703 companies for violations of the Companies Act, 2013 during the first nine months of the current financial year, Parliament was informed on Monday.

In a written reply to the Lok Sabha, Minister of State for Corporate Affairs Harsh Malhotra said penalties amounting to Rs 55.49 crore were levied on companies for various instances of non-compliance during the period ending December 31, 2025. He noted that the data does not suggest any rising trend in violations of corporate law.

The minister said that out of the penalties imposed between April and December of the 2025–26 financial year, around Rs 7.51 crore has been recovered so far. In comparison, enforcement action during the 2024–25 fiscal year resulted in penalties against 1,066 companies, with fines amounting to Rs 109 crore.

Malhotra also shared details of companies removed from official records under the Companies Act. Over the last nearly six years up to December 31, 2025, a total of 2,03,107 companies were struck off. Of these, 1,05,962 companies were removed under Section 248(1), which empowers the Registrar of Companies to strike off firms on specified grounds such as prolonged inactivity, while 97,415 companies were struck off under Section 248(2), which allows voluntary removal.

The minister said the Companies Act provides adequate safeguards to ensure transparency and financial accountability in corporate management. Enforcement actions such as adjudication, compounding of offences and court convictions are undertaken and monitored regularly.

He added that the Ministry of Corporate Affairs uses red flag indicators and a risk-based analytical system through the MCA-21 portal to identify non-compliant companies and initiate regulatory action.