MCA Newsletter December 2023

The Ministry of Corporate Affairs (MCA) has released the MCA Newsletter for the month of December 2023.

This Newsletter gives insight into major changes amendments and events that happened in past months in laws related to companies and businesses. Let’s have a look at it.

Winding Up under Companies Act, 2013

“Failure is just a resting place. It is an opportunity to begin again more intelligently”

– Henry Ford

Every beginning has an end and every end has a new beginning, is as relevant a saying in the case of a company as in other walks of life. A company which might have started with the aim of perpetual prosperity could end up winding up its operations because of a failure, setback or a strategic decision to focus on new opportunities. Winding up of a company is, therefore, as important as commencing a business. It refers to a procedure for dissolving a company in which the assets are disposed of, the liabilities are paid, and the surplus, if any, is distributed to the shareholders/members in proportion to their shareholding in the company, ensuring an orderly and fair distribution of assets and liabilities among stakeholders.

The winding-up process is designed to protect the interests of creditors. When a firm becomes insolvent, it is unable to satisfy its financial obligations. So, by starting the winding-up procedure, creditors can reclaim their debts. Furthermore, it enables the rapid resolution of shareholder and director conflicts. This process guarantees all parties involved have a say and achieve an agreement on asset distribution and unresolved matters. Additionally, it protects employees affected by the company’s closure by allowing them to recover overdue salaries and benefits, offering financial solace at this difficult time. Thus, winding up, being a key proceeding affecting the legal rights of various stakeholders, is supervised under laws in India.

Winding-up proceedings are governed by the provisions of the Companies Act, 2013 [CA-13] and the Insolvency and Bankruptcy Code, 2016 [IBC]. Section 271 of the CA-13 details the circumstances under which a business may be wound up by the Tribunal. If a firm wishes to cease operations, it may do so with the approval of its shareholders by a special resolution. A firm may be wound up if its actions violate “the sovereignty and integrity of India, the security of the State, friendly relations with foreign states, public order, decency, or morality.” A company may also be ordered to wind up if an application is submitted by the Registrar or any person authorised by the Central Government on the basis of fraudulent activity.

Further, if there has been a default in regulatory compliance i.e., if a company fails to file its financial statements or annual returns with the Registrar for the immediately preceding five consecutive financial years, it shall constitute a ground for winding up. Finally, the Tribunal has also been given the discretion to suo moto wind up a company, if it is of the opinion that is just and equitable.

To read more refer to Newsletter given below.

Review of Corporate Sector

i) As of December 31, 2023, the number of companies registered under the Companies Act was 26,14,242. Of these, 9,24,157 companies were closed, 10,505 companies were under liquidation, 24,834 companies are in the process of striking off from the register and 2,497 companies have so far obtained the “dormant” status according to Section 455 of the Companies Act, 2013.

(ii) A total of 14,806 companies, including 928 One Person Companies (OPCs), were registered during December 2023 with a Paid-Up capital of Rs. 4,667.34 Crore.

(iii) During the Month of December 2023, Maharashtra had the maximum number of company registrations (2,573) followed by Uttar Pradesh (1,671) and Delhi (1,338).

(iv) “Community, Personal & Social Services” topped the economic activity-wise classification (4,102) of newly registered companies, followed by Business Service (2,274) and Trading (2,232), and Manufacturing (2,082) during December 2023.

Major Events

i) The Hon’ble Union Minister of State (MoS), Ministry of Corporate Affairs (MCA) inaugurated the ‘National Conference on Responsible Business Conduct’ and Exhibition on ‘Embracing ESG in India’ organized by Indian Institute of Corporate Affairs (IICA) on December 14, 2023, in New Delhi. The inaugural session was attended by the Secretary, MCA, United Nations Resident Coordinator in India, DG & CEO, and IICA. During the inaugural address, the Hon’ble Minister emphasised the importance of responsible business conduct in India. He encouraged the corporate sector to prioritise environmental protection-related strategic CSR projects under Schedule VII of the Companies Act 2013.

ii) Additional Secretary along with Joint Secretary (JS), MCA, and Chairperson, NFRA chaired the 45th Board of Governors’ meeting on December 27, 2023, through video conferencing. In the meeting, various agenda items including academic activities, financial performance, creation of a new centre in SoBE, etc. were discussed.

iii) IICA moderated the session on the “Emerging Trends in Human Trafficking and Forced Labour and Best Practices to Combat It” at the International Conference on “Global Trends in Crime Against Women Rising Strong” held on December 11, 2023 in Chennai. The conference aimed to raise awareness about emerging trends in crimes against women and to facilitate the exchange of information, research findings, and best practices in responding effectively to these crimes. The discussion focused on empowering stakeholders to take proactive measures to address crimes against women and strengthen international collaboration among governmental bodies, law enforcement agencies, and civil society organisations to protect women’s rights.

To read more refer to Newsletter given below.

Some Major Indicators

Wholesale Price Index (WPI)

The annual rate of inflation, based on the monthly WPI, stood at 0.73% (Provisional) for the month of December 2023 (over December 2022).

Consumer Price Index (CPI)

The CPI (Combined) on Base 2012, all India Inflation rates (on a point-to-point basis i.e., December 2023 over December 2022) stood at 5.69%.

Index of Industrial Production (IIP)

The quick estimates of the Index of Industrial Production (IIP) with base 2011-12 for the month of November 2023 stand at 141.0 which is 2.4% higher compared to November 2022.

Index of Eight Core Industries

The combined Index of Eight Core Industries stood at 150.3 in November 2023, which increased by 7.8% (provisional) as compared to the Index of November 2022.

Performance of Listed Non-Government NonFinancial Companies – Sector – wise

Trends in the selected corporate performance indicators published by RBI of a sample of Listed Non-Government Non-Financial Companies – Sectorwise for the second quarter of FY 2023-24.

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