Of the 1.9 million (19 lakh) companies registered with the Ministry of Corporate Affairs (MCA) more than 36 percent (6.8 lakh), a majority of which are located in Maharashtra and Delhi, have ‘closed’ in FY19, Finance Minister Nirmala Sitharaman told Parliament on July 29.

While the numbers saw a marginal increase since FY18, there is a big jump from the 20 percent shutdown recorded prior to that period, Business Standard reports.

Re-categorisation of non-compliant companies that failed to file financial statements or annual returns over a two-year period as ‘defunct’ under Section 248(1) of the Companies Act, 2013 could be a reason for the increased numbers, the report added.

While Maharashtra saw 142,425 shutdowns, Delhi was a close second with 125,937 cases. The two states along with Tamil Nadu and West Bengal account for more than half of the registered companies.

After the re-categorisation, shut downs in Maharashtra spiked to 38 percent from 15 percent and in Tamil Nadu from 24 percent to 44 percent (FY17 to May 19). West Bengal showed the least increase in non-compliance/shutdowns, it added.

Besides the re-categorisation, the MCA also removed 330,000 shell companies from its list, which could contribute to increased numbers. Of this, 220,000 were knocked off in FY18 and 110,000 in FY19. Dormant companies, companies under liquidation and those under strike-off made up less than three percent of the number.