Stay informed about MCA compliance penalties for 2025. Learn the key regulations and avoid costly fines with our essential guide.

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New MCA Compliance Penalties You Must Know
in 2025

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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

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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

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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.”

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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.

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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.

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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.

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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.

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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.