The Eye of the Compliance Storm – The Companies Compliance Facilitation Scheme

Introduction

The foundation of governance, transparency, and stakeholder trust under Indian company law is corporate compliance. Sadly, most companies often live in a so called ‘storm of compliance’ requirements under various legislations where secretarial compliance under the Companies act, 2013 and the rules made thereunder contain several essential compliance requirements under Indian law.

In order to promote timely statutory filings and lessen the burden of accrued fines on businesses, the Ministry of Corporate Affairs (“MCA“) has implemented a number of amnesty and facilitation programs over the years. The MCA has released the Companies Compliance Facilitation Scheme, 2026 (“Scheme“) by General Circular No. 01/2026, issued 24^th February 2026. The Scheme provides defaulting companies with a chance to either choose dormancy, strike-off at reduced charges, or regularise long-pending submissions of annual returns and financial statements at significantly lower additional fees.

Objective

The MCA implemented the Scheme by exercising its authority under sections 403 and 460 of the Companies Act, 2013.

The Scheme seeks to:

• provide incentives to defaulting companies to finish outstanding annual reports and filings, in order to raise overall compliance levels;

• reduce the financial strain brought on by the unlimited additional fees (₹100 per day) that have been applied to late filings by companies since July 1, 2018;

• make corporate governance easier by allowing dormant or dissolved businesses to either strike off from the register or attain dormant status; and  

• bring all the defaulting companies back into the formal compliance framework of the MCA and ensure that the records in possession of the MCA are the updated and depicts the accurate records of the entities.

Applicability

The Scheme is generally applicable to all companies incorporated and validly existing under the Companies Act, 2013. However, companies which have already made an application for strike-off from the register, companies that obtained dormant status prior to the start of the Scheme, companies dissolved as a result of amalgamation, companies against which the Registrar of Companies has already taken final action for strike-off under Section 248 and vanishing companies are all excluded from the scope of applicability of the Scheme. The Scheme is primarily intended for companies which are defaulting but subsisting and which remain on the register of companies and wish to regularize their filings and enhance corporate status.

Scheme

Under this Scheme the eligible companies can:

• complete pending filings of prescribed e-forms, such as MGT-7/MGT-7A and AOC-4 variants, by paying normal filing fees plus only 10% of the additional fees otherwise payable for delay;

• apply for dormant status under section 455 by filing e-form MSC-1 after paying 50% of the applicable filing fee; or

• apply for strike-off through e-form STK-2 after paying 25% of the prescribed filing fee. However, existing adjudication orders already issued will remain unchanged, but files submitted before to notice or within 30 days of notice issuance are eligible for conditional immunity from penalties under sections 92 and 137.

In Sum

This Scheme is a strategic opportunity to comply with good governance principles, regularize compliance, and re-evaluate corporate status. Companies would be well advised to proactively assess their compliance and take advantage of the Scheme within the allotted window, given its brief duration and the likely repercussions of post-Scheme enforcement.

By significantly lowering uncapped additional fees, the Scheme provides substantial financial relief, making it possible to correct past non-compliances, enhances business integrity, and making it easier for inactive organisations to quit or go into dormancy in an orderly manner. Thus, it promotes ease of doing business and compliance.

In the larger regulatory context, the Scheme upholds the idea that, even if company law compliance is required, facilitative procedures can be extremely important for bolstering the corporate environment.

– Venkata Narayana Mukkara, Associate Trainee under the guidance of Archana Balasubramanian, Partner.