36% Registered Companies Closed Down As On May, 2019

According to a data released by the Ministry of Corporate Affairs, out of the total 18,94,146 registered companies, 6,83,317 have closed down as on May 2019. The total number amounts to 36%. The number even includes 10,681 organisations, which were declared defunct by the government and eventually removed under Section 248, (Power of Registrar to remove name of company from register of companies). Further, 23,096 companies were also merged with other organisations; 11,275 companies were converted to Limited Liability Partnership (LLP) and 4,794 were converted to LLP and then dissolved. 

Section 248 states that the registrar has the power to remove such companies where a company has failed to commence its business within one year of its incorporation.    

Further the company can also be removed if they failed to carry on any business or operation for a period of two immediately preceding financial years, thereby also have failed to not make any application within such period to obtain a status of a dormant company. It is interesting to note that, out of the 1,167,064 active companies, in terms of economic-activity wise, the maximum number of companies belonged to the following segments

- Business services: 381,789 

- Manufacturing: 229,094

- Trading: 149,535

- Construction: 100,679

Business Services include Information Technology (IT), Research & Development (R&D) and other business activities such as law, audit & accounts and consultancy.  

Within state-wise distribution of active companies, Maharashtra topped in the maximum number of active companies (225,330), followed by Delhi (204,517) and West Bengal (129,244) as on  May, 31 2019. 

That said, in last two years, registration of new companies during May 2017 to May 2019 indicated that monthly registration of companies has increased after hitting lowest of 7,556 Companies in October 2017. A total of 11,281 companies were registered in May, 2019 as compared to 10,767 in May 2018, an increase of 5%.