The number of new companies registered in the first quarter of FY27 remained high, but the pace of growth slowed sharply from the previous quarter. Data from the Ministry of Corporate Affairs (MCA) showed that 62,986 companies were registered during April-June 2026, up 3% from 61,139 in the same period a year earlier. However, registrations were 9.7% lower than the 69,772 companies registered in January-March 2026, the highest quarterly figure on record.
Despite the sequential decline, the latest quarter was the second-highest in the series. The slowdown was also pronounced compared with the previous quarter, when company registrations had risen 25.5% year-on-year (y-o-y).
Seasonal Factors
Experts said the sequential drop does not necessarily point to a weakening of business activity.
Vishwas Panjiar, managing partner at SVAS Business Advisors LLP, said the first-quarter dip was seasonal and “not alarming”, as promoters tend to rush to incorporate before the end of the financial year so that their entities are registered, funded and operationally ready at the start of the new financial year.
“Once that year-end window passes, incorporation activity naturally tapers,” Panjiar said.
He added that the timing also enables businesses to align statutory audits, bookkeeping and startup tax-holiday or Department for Promotion of Industry and Internal Trade (DPIIT) recognition timelines with a full 12-month financial cycle.
In the first quarter, limited liability partnerships (LLPs) formation grew much faster than company registrations.
MCA data showed that services continued to account for the largest share of new company registrations, led by community, personal and social services, followed by business services, trading and manufacturing.
The number of LLPs registered during the quarter rose to 27,573, up 19.8% from 23,013 a year earlier.
The trend comes as the government seeks to ease compliance requirements for LLPs. The Corporate Laws (Amendment) Bill, 2026, proposes to decriminalise certain procedural defaults and reduce compliance requirements for LLPs. It also seeks to simplify some reporting requirements for LLPs regulated by Sebi and the International Financial Services Centres Authority (IFSCA).
“The stronger growth in LLPs reflects the preference of founders, particularly in consulting and asset-light businesses, for a structure with lower compliance costs and no mandatory statutory audit below prescribed thresholds,” said a corporate law expert.
Meanwhile, the overall registered company base continues to expand. The number of registered companies stood at 3.16 million in June 2026, up 8.6% from 2.91 million a year earlier.
At the same time, companies classified as defunct or struck off crossed the 900,000-mark, compared with 884,000 a year earlier.
Panjiar said the removal of more than 900,000 defunct entities should be viewed as housekeeping rather than a sign of weakness. He compared the exercise to a bank writing off dormant accounts to present a cleaner picture of its active base. “Together, this points to an economy quietly formalising and not slowing down,” he said.