RoCs in India increase penalties for company law breaches

Registrars of Companies (RoCs) in India are increasing their efforts to enforce compliance with company laws. In fiscal year 2025 (FY25), over 1,160 penalty orders were issued, marking the highest number in five years. These orders mainly focus on basic requirements, such as maintaining a registered office and timely filing of financial statements. Most companies facing penalties are small businesses, highlighting a lack of awareness about regulatory obligations. Nearly half of the companies involved are private limited entities, which have fewer disclosure requirements compared to public companies. Common breaches include failing to report changes in registered offices, not filing financial statements, and missing deadlines for annual returns. Experts emphasize that having a full-time company secretary can greatly improve compliance. Companies that invest in governance are less likely to face penalties. The current increase in penalty orders suggests that RoCs are serious about enforcing transparency in the corporate sector. Changes to the ministry's filing portal, MCA21, have allowed for better tracking and identification of violations. This means that more companies are receiving notices, especially those that struggle to update their records. New regulations, particularly regarding beneficial ownership, have also created confusion among smaller firms. Adhering to compliance is becoming increasingly important for businesses. The higher number of orders signals a shift toward stricter enforcement, encouraging companies to adopt proactive compliance measures. While companies can appeal against penalty orders, having a clear strategy for compliance is crucial. Training and support will be vital to help firms navigate the updated system and reduce future violations.