MCA Flags Over 5,000 Dormant Section 8 Companies

In a sweeping regulatory exercise, the Ministry of Corporate Affairs (MCA) has flagged over 5,000 dormant Section 8 companies across India for prolonged non-compliance and inactivity. The flagged entities, identified through data analytics and audit trail reviews, have failed to file mandatory returns or show any financial or operational activity over multiple financial years, raising concerns about the misuse of their charitable status.

These companies, registered under the Companies Act, 2013, are now under review for possible action, including license cancellation, strike-off proceedings, and disqualification of directors. The move is part of the MCA’s broader effort to clean up the non-profit registry, ensure genuine social enterprises receive due recognition, and prevent inactive companies from being used as fronts for financial irregularities.

According to officials, the flagged companies have not submitted Form MGT-7 (Annual Return) or Form AOC-4 (Financial Statements) for at least two consecutive years. Many also failed to respond to MCA notices and reminders, prompting the ministry to initiate proceedings under Section 248 of the Companies Act, which allows for the removal of defunct companies from official records.

The MCA has urged these entities to take immediate corrective action by submitting overdue filings and providing proof of ongoing activities if they wish to retain their Section 8 status. Failure to do so will result in the revocation of their license and forfeiture of associated benefits, including tax exemptions and CSR eligibility.

Non-profit experts have welcomed the crackdown, stating that it will enhance trust in the sector and ensure that public and donor funds are directed toward active, compliant organizations. The action underscores the government’s commitment to strengthening oversight and maintaining the integrity of India’s expanding non-profit ecosystem.