The Corporate Affairs Ministry has said that it is "neither intended nor feasible" for the Registrar of Companies to check content of every filing made by the firms.
Noting that there are more than eight lakh companies registered with various Registrars of Companies (RoCs) in the country, the Ministry of Corporate Affairs has said that filings can only be checked on a random basis.
"It is neither intended nor feasible for the Registrars to scrutinise or verify the contents of filings except on a random basis.
"Companies and its directors and officials are liable to be penalised for any incorrect, false or misleading information that such filing disclose," the Ministry said in a circular on Tuesday.
The circular comes at a time when there are rising concerns about corporate governance issues.
Every company registered under the provisions of the Companies Act 1956, is required to file balance sheet annually with the office of Registrar of Companies.
According to the Ministry, at present, there are more than eight lakh companies registered with various offices of the RoCs located across the country.
"The underlying idea behind the filing of balance sheets and other documents which require similar filings is to publicly disclose information which reflects various aspects of the working of a company so that the company's public accountability is maintained," the circular said.
However, the Ministry said that RoCs scrutinise balance sheets of companies in many instances, including when there are complaints against those entities.
The filings are scrutinised when companies have raised money from the public through public issue of shares/ debentures, in cases where the auditors have qualified their reports and when there is default in payment of matured deposits and debentures.
Further, the Ministry said that balance sheets are checked when references received from other regulatory authorities regarding violations or irregularities that call for action under the Companies Act.
"After the scrutiny, suitable steps are initiated wherever necessary to obtain explanation and clarification and to institute inspections, investigations and prosecutions wherever warranted," it said.