ICSI Urges MCA to Formally Recognise ‘Deemed Government Companies’ Under Companies Act, 2013:

The Institute of Company Secretaries of India (ICSI) has urged the Ministry of Corporate Affairs to formally recognise the concept of ‘Deemed Government Companies’ under the Companies Act, 2013.

In a representation dated August 28, 2026, ICSI President Pawan G. Chandak said that the earlier Companies Act, 1956 had recognised such companies. Under Section 619B of the old Act, companies controlled or owned by two or more government companies, government corporations or other government-controlled entities could be treated as Government Companies for the purpose of audit by the Comptroller and Auditor General of India (C&AG).

The Companies Act, 2013 does not specifically define or recognise the concept of ‘Deemed Government Companies’. However, the Ministry of Corporate Affairs, through a circular issued on July 31, 2014, clarified that such companies would continue to be audited by the C&AG.

According to ICSI, several companies, including 100% joint ventures of government companies and other government-controlled entities, are still audited by the C&AG. These companies are effectively owned and controlled by the government and often perform functions similar to those of Government Companies.

However, ICSI pointed out that these entities are not formally treated as Government Companies under the Companies Act, 2013. As a result, they cannot avail themselves of certain statutory exemptions, procedural relaxations and other regulatory benefits available to Government Companies.

The institute said this has created a situation where companies with similar ownership, government control and audit arrangements are facing different compliance requirements.

ICSI has therefore requested the Ministry of Corporate Affairs to amend the Companies Act, 2013 or otherwise provide a suitable legal framework to formally recognise the concept of ‘Deemed Government Companies’.

The institute has also sought clarity on how government control and ownership should be considered while deciding whether a company falls within the provisions relating to C&AG audit under Sections 139(5) and 139(7) of the Companies Act, 2013.

The Ministry had earlier clarified that companies covered by C&AG audit must inform the C&AG about their incorporation, along with details such as their name, registered office and capital structure. The company is primarily responsible for sending this information to the C&AG immediately after incorporation. The concerned government is also required to share the relevant information with the C&AG.

ICSI said that formally recognising ‘Deemed Government Companies’ would help bring uniformity in compliance requirements and provide greater clarity to companies that are substantially owned or controlled by the government.