The Institute of Company Secretaries of India (ICSI) has urged the Ministry of Corporate Affairs (MCA) to introduce a new “Company Law and LLP Law Settlement Scheme, 2025” to provide relief to defaulting companies and Limited Liability Partnerships (LLPs) struggling with compliance requirements.
In a letter addressed to Ms. Deepti Gaur Mukerjee, Secretary, Ministry of Corporate Affairs, ICSI President CS Dhananjay Shukla highlighted the growing compliance challenges faced by companies due to financial constraints, technical issues on the filing portal, and operational hurdles, especially for startups and small enterprises.
The representation follows ICSI’s earlier letters dated 7th July 2023, 21st October 2024, and 6th June 2025, reiterating the need for a one-time settlement mechanism to help entities regularize their compliance status.
Rising Non-Compliance Concerns
ICSI noted a consistent and concerning increase in the number of companies failing to file their audited financial statements and annual returns in recent years.
According to data provided by ICSI:
| 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 |
The steady rise in defaults, ICSI said, reflects the growing challenge in maintaining compliance, ensuring integrity, and managing enforcement efforts within the corporate registry.
Proposed Scheme: CL & LLSS-2025
To address this issue, ICSI has proposed a “Company Law & LLP Law Settlement Scheme, 2025 (CL & LLSS-2025)”with the following key features:
- One-time compliance window: Allowing defaulting companies and LLPs to file all pending statutory forms, including annual returns, financial statements, and changes in directorship/partnership.
- Waiver or reduction of additional fees: Providing immunity from prosecution or adjudication for defaults covered under the scheme period.
- Provision for strike-off or dormant status: Enabling long-inactive companies and LLPs to opt for easy closure or dormancy.
Background and Precedents
The ICSI pointed out that the MCA had introduced similar relief measures in the past, which proved highly effective in improving compliance and reducing litigation.
These included:
- Company Law Settlement Scheme, 2014
- Companies Fresh Start Scheme, 2020 (CFSS-2020)
- LLP Settlement Scheme, 2020
According to ICSI, these initiatives significantly contributed to promoting corporate governance and ensuring the overall health of India’s corporate registry.
ICSI’s Appeal to the MCA
ICSI emphasized that the proposed scheme would benefit not only defaulting entities but also investors, the general public, and the MCA itself by simplifying compliance, reducing administrative burdens, and enhancing ease of doing business.
“We are confident that such a scheme would be immensely beneficial to all stakeholders,” said CS Dhananjay Shukla, President of ICSI. He further urged the Ministry to “kindly consider this request and initiate the necessary steps” to implement the proposed settlement scheme.
The institute has also offered its assistance to the Ministry in drafting the framework and gathering stakeholder feedback to ensure smooth implementation.
About ICSI
The Institute of Company Secretaries of India (ICSI) is a statutory professional body under an Act of Parliament, functioning under the jurisdiction of the Ministry of Corporate Affairs. It plays a key role in promoting corporate governance and facilitating compliance in the corporate sector.
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