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E-Show cause Notice by MCA

January 3, 2020



The AI driven mechanism called MCA Compliance Monitoring System (MCA-CMS) is now functional.


The present Indian Government is highly determined to improve India’s ranking in the world bank list of ease of doing business. In order to improve corporate compliance, enhance transparency and disclosures by companies, the government is taking various initiatives one of which is the “Ministry of Corporate Affairs Compliance Monitoring System” (MCA CMS). This is an automated tracing mechanism that works on Artificial Intelligence to identify Companies which are non-compliant.

What is MCA-CMS?

MCA CMS has been designed for electronically issuing show-cause notices under Section 20 of the Companies Act, 2013 concerning non-compliance under Companies Act, 2013. This mechanism will identify non-compliance by any company automatically and send online show-cause notices to the non-compliant companies/directors. The mechanism also provides a system by which companies/directors can submit their responses with clarifications online without any personal interaction with MCA officials. Based on the replies/submissions, the Register of Companies, Ministry of Corporate Affairs shall initiate penal actions for violations referred to in the show cause notices, if deemed fit.

Objectives of MCA-CMS

MCA-CMS has been designed to meet the below objectives

  • Make compliance scrutiny, a system driven and automated process
  • Detect any non-compliance early and issue show-cause notices to defaulting companies/directors
  • Increase compliance level in the country and prevent shell companies.
  • Penalize the companies which are not complying with the statutory requirements.

Show cause notice from MCACMS Portal 

MCACMS Portal has started sending show cause notices for certain violations by email to the Company /Director / Company Secretary. As of now, it has sent notices for non-compliances under Section 96 (Conducting Annual General Meeting) and 204 (Secretarial Audit) of the Companies Act, 2013.

The Show Cause Notice contains the below details

  • CMS reference Number such as F.No. D/RCXXX/XXX/2019/XX/YY-YY.
  • Nature of non-compliance;
  • Section under which the notice has been issued;
  • The deadlinefor submitting the reply.

The Company is required to serve a copy of the said notice to the directors/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 showcase notice has to submit a reply at the portal referring to the CMS Reference Number within such time as mentioned in the notice. If no reply is filed by the Company / Director within the prescribed time, it will be presumed that the company has nothing to say in the matter and the Ministry of Corporate Affairs, Register of Companies shall initiate penal action for violation of sections referred to in the show-cause notice.

How to file a reply to MCACMS Show Cause Notice?

Step 1: Login online to MCACMS Portal-

Step 2: Click on Reply to Show Cause Notice


Step 3: Input CMS Reference number in the portal


Step 4: Generate OTP; (it will be sent on registered email address)


Step 5: Input OTP in MCACMS Portal


Step 6: Give a reply in 500 words. If reply in more than 500 words, it is advisable to print the same on Company letterhead and authenticated by a Director/Company Secretary & submit as an attachment


Step 7: Submit reply & Record acknowledgment.




MCA-21 was one of the first e-governance initiatives from the Government of India implemented way back in 2006. MCA21 has gone through various changes during the last 13



In May 2019, Government of India announced that the Ministry of Corporate Affairs is planning to implement a Version 3 for ease of doing the process. 


"Version 3 will ease the process of filing details as a single source of truth will ensure that common information will automatically get updated over various forms. Second, the entire e-adjudication process will go online. This will ensure that nobody is required to go to an RoC.


Everything will be on the front-end where entire e-adjudication and then online compliance monitoring would be done. Hence, if anyone is not complying with the law, e-notice will automatically get generated and reach him"


As a result of all these initiatives of the government, India’s current ranking in the ease of doing business has improved by 14 points and it stands at 63rd position from 77th position. This upward march will continue in the coming times.


The entire contents of this document have been developed based on relevant information. Though the authors have made utmost efforts to provide authentic information however, the authors expressly disclaim all and any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document.


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