ICSI Writes to MCA Seeking Fresh Settlement Scheme for Defaulting Companies and LLPs:

ICSI Writes to MCA Seeking Fresh Settlement Scheme for Defaulting Companies and LLPs The Institute of Company Secretaries of India (ICSI) has written a letter to Ms. Deepti Gaur Mukerjee, who is the Secretary at the Ministry of Corporate Affairs (Government of India). In this letter, ICSI has requested the government to start a new "Company Law and LLP Law Settlement Scheme 2025". They also reminded her that they had already sent similar requests earlier on July 7, 2023, October 21, 2024, and June 6, 2025 and have attached copies of those letters for reference. ICSI also mentioned that many companies and LLPs haven’t been able to submit their annual forms and other required documents on time. This happened because of several reasons, such as ongoing technical problems on the government’s filing website, day-to-day operational difficulties, and financial struggles, especially for small and medium businesses.

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Because of these delays, many people are now facing more problems: they can’t file their next set of forms, close down inactive companies, or update their compliance records properly. ICSI also highlighted the rise in the number of companies failing to file their audited financial statements and annual returns.

Financial Year	Companies not filed Financial Statements	Companies not filed Annual Return
2018-19	1,79,697	1,75,034
2019-20	2,18,237	2,19,854
2020-21	2,61,785	2,58,961
2021-22	3,70,886	3,70,021
2022-23	5,30,076	5,14,343

Considering the above, ICSI requests the Ministry of Corporate Affairs to introduce a fresh settlement scheme for defaulting companies and LLPs. However, the Ministry has, in the past, taken admirable steps to address similar concerns through previously issued circulars to provide relief to stakeholders. These circulars have facilitated a new start through the Company Law Settlement Scheme 2014 (Circular No. 34/2014), the Companies Fresh Start Scheme 2020 (Circular No. 12/2020) and the LLP Settlement Scheme 2020 (Circular No. 13/2020).

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ICSI said that such special schemes in the past have worked well and they’ve helped companies follow the law, reduced legal cases, and made the overall corporate records system healthier. ICSI has requested the government to start a new scheme called the "Company Law and LLP Law Settlement Scheme, 2025". They suggested that this scheme should:

• Give a one-time chance for companies and LLPs that missed deadlines to file all their pending forms like annual returns, financial statements, or details of changes in directors or partners.
• Offer a waiver or limit on extra fees and immunity from penalties or legal action for delays during the scheme period.
• Allow an easy way to close or mark as dormant those companies and LLPs that have been inactive for a long time.

ICSI said "we are confident that such a scheme would be immensely beneficial to all stakeholders, defaulting entities, investors, the general public and the Ministry itself by facilitating compliance, reducing administrative burden and enhancing ease of doing business." ICSI said they would be thankful if the Ministry considered their request and took the necessary action to start the scheme. They also mentioned that they are ready to help by providing any additional information, feedback from stakeholders, or support in preparing the details of the scheme if needed.