Around a quarter million companies in India are expected to get dissolved. Here’s why

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A look at the data in regional offices of Registrar of Companies (RoC) will throw light on the number of companies that are not carrying out any business in last two financial years.
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There are nearly 2.5 lakh companies that are on the verge of getting dissolved for not carrying out any business and have not applied for 'dormant' status.

Under the Companies Act, 2013, companies have to apply for ‘dormant’ status if they are not functioning for two financial years.

The regional RoCs stated there are 71,000 such companies in Mumbai, 53,000 in Delhi, 40,000 in Hyderabad and 22,000 in Bengaluru.

These companies will be struck off and dissolved in the absence of any objection. ET reported RoC Chennai names only 4,000 companies in the notice, while those in Kanpur, Jaipur and Chandigarh naming 7,000, 6,000 and 4,600 companies, respectively.

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The rules also state that the Registrar of Companies shall, 'simultaneously intimate the concerned regulatory authorities regulating the company, viz, the income-tax authorities, central excise authorities and service-tax authorities ' to seek any objections before deregistering the companies.

Section 455 of the Act provides for an inactive company to apply for 'dormant' status in cases where a company is formed and registered 'for a future project or to hold an assor intellectual property and has no significant accounting transaction'. Data with respect to number of companies that have acted upon being identified in these notices is still unavailable.

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