MCA launches AI system to hunt out defaulters

The Ministry of Corporate Affairs routinely brings about various kinds of provisions for enhancing compliance and transparency and boosting the overall ease of doing business among the companies. Recently the MCA was planning to introduce an artificial intelligence mechanism on the MCA 21 portal. The intent was to make compliance procedures such as company formation, or annual compliance simpler, and to ensure that regular implementation is being done on a daily basis.

And now the time has come! The artificial intelligence mechanism called the MCA Compliance Monitoring System (MCA-CMS) is now functional.

1. What is MCA-CMS?

Ministry of Corporate Affairs- Compliance Monitoring System (MCACMS) is the newly introduced online Compliance tracing mechanism that works on AI. Through this hi-tech CMS, the Ministry of Corporate Affairs will now be able to issue show-cause notices to the non-compliant companies/directors. Such defaulting submitting companies/directors will now be required to submit a reply to show-cause notices to the MCA on MCACMS.

2. What is the purpose behind setting up MCA-CMS?

The purpose behind the introduction of MCACMS was to avoid any sort of negligence of the provisions of the Companies Act 2013, in respect of company formation, or annual compliance of the private limited company. 

Henceforth, any non-compliance shall now annual result in a displaying of a Show Cause Notice to the defaulting director, to which he will have to submit a reply.

3. Why the MCA-CMS has been set up?

Right now, there are so many kinds of annual compliance of the private limited company. It had become very tough to comply with all the provisions of Companies Act, 2013 and the Rules made thereunder. There were numerous cases of non-compliance or delay in compliance by the companies.

Hence, it was a high time that a universal Compliance Professional of regular nature was present for the companies. To meet the urgency of this need, MCA established the AI-based Compliance Monitoring System, MCACMS, that would automatically detect non-compliance and would issue the Show Cause Notice to the defaulters after the compliance due date.

4. How will the show cause notice on MCACMS Portal look like?

Upon failure to timely fulfill any sort of compliance, the MCACMS Portal shall send a show-cause notice via email to the defaulting Company/Director or the Company Secretary. 

• This Show Cause Notice shall bear a CMS reference Number like the following:-

F.No. D/RC000/000/2019/00/11-11.

• The Show Cause Notice (SCN) will mention detail regarding non-compliance, including the section under which the notice has been issued. The notice will also mention the deadline for submitting the reply. 

5. Whether the company has to save a copy of Show Cause Notice?

Yes, the non-compliant company is supposed to save a copy of the Show Cause Notice and serve it to its directors or KMPs. Thereafter the notice shall be deemed to have been served upon each & every officer for the non-compliance of the provisions of the Companies Act 2013.

6. How much time will be given to submit a reply to Show Cause Notice?

The director of the non-compliant company to whom the showcase notice has been served has to submit a reply to Show Cause Notice within 15 days from the date the notice. Moreover, he has to refer his CMS Reference Number as given on the Show Cause Notice. 

7. What if no reply to Show Cause Notice not submitted?

In case the director of the non-compliant company fails to submit a reply to Show Cause Notice, it would be assumed that the company has nothing to say regarding the matter. 

As a result, the Registrar of Companies shall take penal actions on the company, for violation of the provisions of the Companies Act 2013.

8. How to file the reply to Show Cause Notice on MCACMS?

In case you have failed to fulfill any sort of compliance such as RoC filing, and have received a Show Cause Notice on MCACMS regarding the same, we will help you submit the reply to it on the MCACMS portal.

If you need any guidance on MCA-CMS or any compliance such as company incorporation or Annual Compliance of Private Limited Company or RoC filing, feel free to contact us at 8881-069-069.

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