Registration of companies: Pace recovers smartly in June after hitting multi-year low in April

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Published: July 27, 2020 5:50 AM

The ministry of corporate affairs data, however, show that closure of companies too slowed in the April-June this year, to an average of less than 300 in a month, from 5,200 a month in 2019-20.

However, after hitting the low in April (3,209), company registration moderately picked up in May (4,835), and surged in June (10,954), exhibiting the resilience of the industry.However, after hitting the low in April (3,209), company registration moderately picked up in May (4,835), and surged in June (10,954), exhibiting the resilience of the industry. (Representative image)

Covid-19 has had a predictable adverse impact on registration of new firms. Around 19,000 companies were registered in the June quarter (Q1FY21), down 39% from the year-ago period.

Registration of limited liability partnerships (LLPs), the model preferred by professionals, consultants and traders, thanks to the twin benefit of the internal governance flexibility of partnership firms and the limited liability of companies, saw an even steeper decline of 62% year-on-year in the Covid-ravaged Q1, with registration of just 4,100 such firms.

However, after hitting the low in April (3,209), company registration moderately picked up in May (4,835), and surged in June (10,954), exhibiting the resilience of the industry. In the LLP segment, again, the pace was retrieved rather slowly in comparison, reflecting that the segment of smaller businesses has borne the brunt of Covid-19 induced disruption of economic activities.

“An analysis of registration of new companies during June 2018 to June 2020 indicates that monthly registration of companies has increased after hitting lowest of 3,209 companies in April 2020. A total of 10,954 companies were registered in June, 2020 as compared to 9,619 in June 2019. An increase (126.55%) in registration of companies has been witnessed in June 2020 over the previous month. A total of 2,273 LLPs were registered in June 2020 as compared to 2,979 LLPs in June 2019,” the ministry of corporate affairs said in a statement.

The ministry of corporate affairs data, however, show that closure of companies too slowed in the April-June this year, to an average of less than 300 in a month, from 5,200 a month in 2019-20. Clearly, the drop in the addition to/deletion from the registry has as much to do with the cessation of non-critical government activities due to Covid-19 spread and the lockdown, as the sluggishness in most business sectors.

The total number of companies registered in the country as on June 30, 2020 stood at 2,014,969. Of them 746,278 companies have ‘closed’ status.

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