In this post we will discuss about registration of companies in India under The Companies Act, 2013
Incorporation of new firms highest in 7 years
The registration of new companies in India rose to its highest level in more than seven years in July, with one of the clearest signs of revived investor interest and plans by entrepreneurs to set up new business projects.
Facts of the case
A total of 16,487 data from the Ministry of Corporate Affairs is incorporated in July. This is the highest since January 2013—the maximum historical data available — when 5,508 companies were registered. The figure for July is a sharp increase from the 3,209 companies formed in April, when Asia’s third-largest economy was under a tight lockdown to contain the coronavirus pandemic. In May, 4,835 were registered, rising to 10,954 in June.
To be sure, the establishment of a company demonstrates the intention to invest, but the prevailing economic conditions will play a major role before companies finalize their investment decisions. The total approved capital of all companies formed in July shall be Rs 2,294 crore.The data for new company registrations in July is more positive than some other high-frequency economic indicators, which indicated that the recovery of the Indian economy could be prolonged due to the extreme impact of the pandemic and the extended lock-down steps.
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The rise in the number of registered companies deserves a great deal of publicity, said Mahesh Vyas, Managing Director of the Indian Economic Monitoring Center (CMIE), a market information company and think tank. “However, it can only be known if it is indicative of investor interest after it has been investigated. Setting up a company is an act of commission and I would not ignore this information, “said Vyas.
The surge in new company registration suggests a shift in economic activity following a pandemic. The number of agricultural companies, an employment-generating sector that was hit by the coronavirus crisis, grew from 138 in April to 903 in July. From 4.3 per cent in April to 5.4 per cent in July, the share of farm and allied sector companies among all the companies set up in a month has increased. Farm operations were removed from the national lockout.
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The number of registered industrial firms, mainly manufacturing organizations, has also increased from 803 in April, i.e. 25 per cent of all companies founded in the month, to 5.041 in July, representing 30.5 per cent of all companies. Meanwhile, the number of service companies set up increased more than fourfold from 2,268 in April to 10,543 in July, from 70.6 per cent in April to 63.9 per cent in July.
This post was written by Kasha Doshi.
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