RoCs step up compliance drive; basic company law breaches common among small businesses

Subscribe to enjoy similar stories. New Delhi: Registrars of Companies (RoCs) across the country have stepped up their compliance enforcement drive, with the largest number of penalty orders in the last five years getting issued in fiscal year 2025 (FY25), according to official data available from the ministry of corporate affairs.

Most of the over 1,160 adjudication orders issued by RoCs in FY25 are on breaches of fundamental company law requirements such as maintaining a registered office, reporting any change in registered office to the authorities, filing financial statements and annual reports on time, appointment of key managerial persons, filing of board decisions with the RoCs as well as issues like reporting significant beneficial ownership—a new area of enforcement. Nearly half of these companies are private limited, which have a lower disclosure requirement than public limited companies under the Companies Act.

Also read | E-adjudication of company law breaches from 16 September Also, most of the companies against which penalty orders have been issued are small businesses, indicating that awareness of regulatory requirements and their compliance is lagging behind in this segment. The increasing number of adjudication orders indicate RoCs are on a drive to penalize companies which falter on fundamental requirements of transparency.

For example, over 140 breaches detected this financial year were of section 12 of the Companies Act dealing with the requirement of a registered office, and about 120 were of section 137 dealing with filing of financial statements. Non-filing of annual returns and significant beneficial ownership are also among the most common breaches.