Corporate Compliance has become one of the major topics of discussion these days. There are many companies that do not follow corporate requirements under the Companies Act 2013.

The government of India has taken many steps to ensure corporate compliance along with keeping technological advancement in mind. One such e-governance initiative was taken by Ministry of Corporate Affairs, Government of India is the introduction of the Compliance Monitoring System.

It is also known as MCA CMS (Ministry of Corporate Affairs Compliance Monitoring System). It is introduced to facilitate the monitoring of corporate compliances and to make compliance easier.

MCA CMS Portal     

MCA CMS portal, i.e., is the online portal developed by the MCA. It is an artificial intelligence system.

Features of MCA CMS portal

  • Artificial Intelligence– For the first time an artificial intelligence system for compliance monitoring and management has been developed by the MCA21.
  • Online Show Cause Notices– The main objective of the compliance monitoring system is to issue the show-cause notice to the companies who fail to do compliances under the Companies Act, 2013 via mail to the recipients electronically.
  • Details about Non-Compliances– The show-cause notice shall contain details about the violations made by the companies and the section number under the Companies Act, 2013 due to which the notice is being served to the companies.
  • Easier compliance– This system makes it easier for the companies to submit their reply or clarifications and also helps in the compliance management to them.

Show Cause Notice

A show-cause notice shall be generated for certain violations to the companies electronically on the registered e-mail address of the company, directors or company secretary.

The notice shall carry the following details:

  • A unique reference number is known as CMS Reference Number like F.No. D/RCXXX/XXX/2019/XX/YY-YY.
  • Date of issue of notice
  • The details of violations and the sections of Companies Act, 2013 under which the violation is made.
  • The time limit under which the reply or clarification is required to be submitted.

The companies are required to serve a copy of the said notice to the directors or KMPs and the notice will be treated as deemed to have been served upon every officer in default of the company in terms of the Companies Act. 2013.

The recipient of show cause notice has to submit a reply at the CMS portal referring to the CMS Reference Number within 15 days from the date the notice. If no reply is filed by the Company / Director, it will be presumed that the company has nothing to say in the matter and the Register of Companies shall initiate penal action for violation of sections referred to in the show-cause notice.

Reply to the Show Cause Notice

Logon to the MCA CMS portal and click ‘Reply for Show Cause Notice’.

Mention your CMS Reference Number in the required column.

An OTP will be sent to the email address at which the said notice was served. Enter the OTP and proceed.

You will be directed to the page where you have to submit your reply. But your reply should not be more than 500 words. If your reply or clarification is more than 500 words, then it is advisable to print it on the letterhead signed by the Director or Company Secretary of the company. You can also attach the supporting documents that may be relevant for further clarification.

Penal Action in case of No Reply

The limit of 15 days is allotted to the company or officers for submitting their reply. But in case the company or its officers fail to submit the reply or clarification, it shall be presumed that the company has nothing to say in the matter. After a lapse of the 15 days, the MCA shall take penal action for violation of the said section under the Companies Act, 2103. Then all the prescribed penalties and the fines under the Companies Act, 2013 shall be imposed on the company and its officers.