Voluntary withdrawals by businesses from the Register of Companies (RoC) surpass 8,600 within the initial three and a half months of the fiscal year 26.

Voluntary withdrawals by businesses from the Register of Companies (RoC) surpass 8,600 within the initial three and a half months of the fiscal year 26.

In the bustling business landscape of India, a notable trend has emerged in recent times - the increased voluntary removal of companies from the Registrar of Companies (RoC). This shift can be attributed to a combination of legislative provisions and government initiatives aimed at streamlining corporate exit procedures and promoting ease of doing business in the country.

The Companies Act, 2013, plays a significant role in this change. Section 248(2) of the Act allows companies to voluntarily seek removal from the RoC after clearing all liabilities, facilitating a clean exit without prolonged legal or financial obligations. This provision, along with the government's efforts to clean up the corporate registry and encourage the removal of defunct companies, is likely influencing firms to voluntarily deregister if their business operations have ceased or shifted.

Recent reforms have also contributed to this trend. The government has streamlined corporate compliance, reduced costs, and accelerated procedures for company registration, name reservation, and voluntary closure through centralized processing centers. These measures have made voluntary deregistration more attractive for businesses, particularly for Micro, Small, and Medium Enterprises (MSMEs) and startups, who benefit from simplified rules and digital processes for closure, minimizing the administrative and financial overhead of maintaining inactive or non-operational companies.

However, the reasons for this trend are not limited to regulatory reforms. Disruptions due to geo-political uncertainties might have also pushed some businesses to down their shutters. One reason could be a weak consumption pattern, especially in urban areas, which may have led some companies to reassess their operations and opt for voluntary deregistration.

As of July 16 in the current fiscal, the number of such companies reached over 8,600, compared to over 15,800 in FY25. Between April 1 and July 16, the names of 24 companies were struck off, compared to 30 in the entire fiscal of 2024-25 and 29 in 2023-24. This represents a 54% increase in the number of companies voluntarily seeking removal from the RoC in the first three and a half months of FY26 compared to the total for the last fiscal.

It's important to note that no strike-off drive is currently ongoing, according to the Minister of State in Corporate Affairs Ministry, Harsh Malhotra. Apart from striking off names based on requests from companies, there is also a provision under section 248(1) of the Companies Act, 2013, that names can be taken off through a special drive. The last strike-off drive was conducted in the year 2022-23.

The Centre may soon roll out an export promotion mission worth ₹2,250 crore, and an India-Oman free trade agreement is expected to be announced soon, according to an official. These initiatives are expected to further boost the business environment in India, encouraging more companies to thrive and contribute to the country's economic growth.

References:

[1] Ministry of Corporate Affairs, Government of India. (2022). Simplified Process for Striking Off of Companies. Retrieved from https://mca.gov.in/Ministry/pdf/SimplifiedProcessforStrikingOffofCompanies19012022.pdf

[2] Department for Promotion of Industry and Internal Trade, Government of India. (2021). Ease of Doing Business Reforms in India. Retrieved from https://dipp.gov.in/content/ease-doing-business-reforms-india

1. The increased voluntary removal of companies from the RoC in India can be attributed to legislative provisions, such as Section 248(2) of the Companies Act, 2013, which allows companies to seek removal after clearing all liabilities, and government initiatives aimed at promoting ease of doing business.
2. Recent regulatory reforms, including streamlining corporate compliance, reducing costs, and accelerating procedures for registration and voluntary closure, have made voluntary deregistration more attractive for businesses, especially MSMEs and startups.
3. However, the trend of voluntary deregistration in India may also be influenced by external factors, such as geo-political uncertainties and weak consumption patterns in urban areas, which might compel some businesses to reevaluate their operations and opt for voluntary deregistration.
4. The government's forthcoming initiatives, like the export promotion mission and the India-Oman free trade agreement, are expected to further enhance the business environment and encourage more companies to contribute to India's economic growth.

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