New MCA Compliance Penalties You Must Know in 2025

In India, the Ministry of Corporate Affairs (MCA) plays a pivotal role in regulating companies, limited liability partnerships (LLPs), and other entities. Over the years, the MCA has introduced numerous compliance requirements to ensure the proper functioning and governance of companies. However, non-compliance or failure to adhere to these requirements can lead to significant penalties.

As of 2025, there have been several updates and amendments regarding MCA compliance penalties. These new provisions aim to streamline business operations, encourage compliance, and ensure that corporate governance standards are maintained across the country.

Let’s explore the major changes in MCA compliance penalties for 2025, along with essential regulations that companies need to be aware of.

Overview of MCA Compliance

The Ministry of Corporate Affairs regulates and oversees compliance related to:

• Companies Act, 2013 (for both private and public companies)

• Limited Liability Partnership (LLP) Act, 2008

• Registrar of Companies (ROC) filings

• Corporate governance norms

• Corporate social responsibility (CSR) compliance

Some of the key MCA compliance requirements include:

• Filing of annual returns

• Financial statement submissions

• Auditor appointments

• Director-related filings (like DIN, disqualifications)

• Changes in company structure (e.g., board changes, amendments)

• Maintenance of statutory registers and records

New MCA Compliance Penalties in 2025

With the revised rules for 2025, the MCA has introduced stricter penalties for non-compliance and laid down clear-cut actions for defaulters. These penalties are designed to hold businesses accountable, ensure transparency, and curb fraudulent practices.

• Delay in Filing Annual Return (Form AOC-4 and MGT-7)

One of the most common compliance failures in India is the delay in filing the Annual Return and Financial Statements with the ROC.

1. Penalty for Late Filing:

• For Private Companies: A penalty of ₹100 per day of delay, subject to a maximum of ₹5 lakhs.

• For Public Companies: A penalty of ₹200 per day of delay, subject to a maximum of ₹10 lakhs.

2. Additionally, after the expiration of the grace period (usually 30 days), companies may face further legal proceedings.

• Non-Appointment of Auditor

During the initial 30 days of the company's incorporation, each company is required to appoint an auditor as provided in Section 139 of the Companies Act. Any company that does not adhere to this condition will be open to paying huge fines.

1. Penalty due to Non-appointment of Auditor:

• Company: 1-5 lakh 1-5 lakh.

• Directors: A fine of between 25,000 and 1 lakh of money and/or 6 months of imprisonment.

2. The fact that a period is specified is truly significant as enterprises should ensure that an auditor is assigned to avoid being exposed to such fines.

• Non-Compliance with Director KYC Requirements (DIR-3 KYC)

In 2025, the MCA will become even stricter about Director KYC (Know Your Customer) filings. All directors of Indian companies must file their KYC details with the MCA using Form DIR-3 KYC.

1. Penalty for Non-Filing:

• If the director fails to file the KYC form before the due date, the director’s DIN (Director Identification Number) will be marked as “Deactivated.”

• After deactivation, a penalty of ₹5,000 per director will apply if the KYC is not filed within the extended deadline.

Failure to comply with director's KYC requirements can impact the director's ability to hold positions in other companies as well.

• Non-Appointment of Independent Directors

Certain public companies and large private companies are required to appoint Independent Directors as per the provisions of the Companies Act. Not fulfilling this requirement can result in severe consequences.

1. Penalty for Non-Appointment of Independent Directors:

• If a company fails to appoint independent directors within the prescribed timeframe, a penalty of ₹50,000 to ₹5 lakh will be imposed.

• In case of continued non-compliance, the penalty can increase, and additional penalties can be imposed on individual directors.

• Failure to File Annual Financial Statements

The companies have a period of 30 days starting after the date of the Annual General Meeting (AGM) to submit annual financial statements (Balance Sheet, Profit and loss account etc.).

1. Penalty for Non-Submission:

• For Delayed Filing: 100 per day of delay is charged, not beyond 5 lakhs.

• Directors of the company may also be fined between 50,000 and 1 lakh rupees, and in other instances, jail terms of up to 6 months.

When it comes to public companies, the amount of the penalty can also be greater in comparison with the case of private companies, as the effect of the non-compliance can be more widespread.

• Failure to Comply with Corporate Social Responsibility (CSR) Provisions

Under Section 135 of the Companies Act, certain companies are mandated to spend a portion of their profits on Corporate Social Responsibility (CSR) activities. Non-compliance with CSR provisions can lead to stringent penalties.

1. Penalty for Non-Compliance:

• If a company fails to comply with CSR norms, a penalty of twice the unspent amount or ₹1 crore, whichever is less, may be levied.

• In cases of repeated non-compliance, additional penalties could be imposed, and directors could face fines ranging from ₹50,000 to ₹2 lakh.

• Non-Compliance with Related Party Transaction (RPT) Rules

Related Party Transactions (RPTs) must be disclosed and approved as per the provisions of Section 188 of the Companies Act. Failure to adhere to RPT norms can attract penalties.

1. Penalty for Non-Compliance with RPT Rules:

• The company can be fined up to ₹5 lakh for the first instance of non-compliance, with further penalties imposed if the non-compliance continues.

• The individual director who approves the transaction without proper authorisation or disclosures may face a fine of ₹50,000 to ₹2 lakh and/or imprisonment for up to 6 months.

Penalties for Non-Compliance with LLP Provisions

LLPs are also subject to MCA regulations, and non-compliance with LLP-specific provisions can result in penalties.

• Failure to File Annual Return (Form 11) or Financial Statements (Form 8):

1. A fine of ₹100 per day of delay (subject to a maximum of ₹5 lakh) for non-filing of LLP annual return.
2. Penalties are doubled in case of continued non-compliance, and partners may be liable for fines or imprisonment in extreme cases.

• Failure to Update Changes in LLP Agreement:

1. A fine of ₹25,000 to ₹1 lakh can be levied on the LLP if the partnership agreement is not updated with the ROC in the event of a change in the partnership structure.

Penalties for Non-Compliance with Statutory Registers and Records

Companies are required to maintain various statutory registers and records, such as registers of members, directors, charges, etc.

• Penalty for Non-Maintenance of Statutory Registers:

1. A fine of ₹50,000 to ₹1 lakh will be levied if the company fails to maintain these records.
2. Additionally, every officer of the company who defaults may face a fine of ₹10,000 to ₹50,000.

How to Avoid MCA Compliance Penalties?

To avoid penalties and ensure compliance, businesses should take the following steps:

• Timely Filing: Always ensure that your annual returns, financial statements, and other MCA filings are submitted on time. Set reminders to avoid delays.

• Professional Assistance: Consider hiring a company secretary (CS) or a compliance professional who can keep track of deadlines and help with filings.

• Annual Audits and KYC: Ensure that your company’s directors and financial statements are audited annually and that director KYC requirements are met promptly.

• Review CSR Obligations: Regularly review your company’s CSR activities and ensure compliance with the provisions.

• Regular Internal Audits: Conduct internal audits to ensure all statutory records and registers are maintained in compliance with the law.

Conclusion

In 2025, the MCA has tightened the screws on compliance and penalties, ensuring that businesses operate transparently and responsibly. Non-compliance with MCA provisions can lead to significant financial penalties and, in some cases, imprisonment. Therefore, business owners, directors, and company secretaries need to stay updated with the latest regulations and ensure that their companies comply with all the statutory requirements.

By adhering to the MCA compliance framework, businesses not only avoid penalties but also contribute to a more transparent and responsible corporate environment in India.

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