Recently, Ministry of Corporate Affairs has notified Section 12 of Companies Act 2013 vide Companies (Amendment) Act, 2017 which requires a Company to establish its registered office capable of receiving and acknowledging all communications and notices as may be addressed to it, within 30 days of its incorporation and at all times thereafter.
The said provisions also mandate an intimation to Registrar of Companies by way of a notice for every change of the situation of the registered office within 30 days of such change.
The above time limits were revised from formerly 15 days since some concerns were raised that 15 days is too less to arrange documents like lease deeds/ rent agreements or other related documents which shall also be required to be submitted.
Presently, Section 248 of the Companies Act 2013, empowers Registrar of Companies to remove the name the name of the company if it fails to start any business within one year of incorporation or does not carry out any operations for three years.
It should be noted that ever since Section 248 was notified in December 2016, over 2.26 lakh companies have been struck off and another 2.25 lakh have been identified for being struck-off.
The government of India in July 2018, to review the existing framework dealing with offenses under the Companies Act, 2013 and related matters and make recommendations to promote better corporate compliance formed ‘Committee on the review of penal provisions of Company Act 2013’.
The Committee has recommended various provisions that would help in early detection and striking-off inactive Companies. Amongst them, the Committee recommended including non-maintenance of a registered office as one of the grounds for striking off the name of a company from the Registrar of Companies, under Section 248 of the Companies Act, 2013.
This move of the Government will ensure that the companies maintain there registered office and shall check the presence of paper companies.
In this regard, one must also be apprised of the fact that the Parliament Standing Committee on Finance has asked the Government of India to define ‘Shell Company’ in the Companies Act, 2013 and ensure the distinction between those guilty of frauds and those with irregularity. In this regard, the Government may consider the Organisation for Economic Co-operation and Development global policy for deciding the Standard Operating Procedure to identify the genuine and guilty companies. Under the OECD global policy, the companies with no physical presence at the given address shall trigger ‘shell company’. Hence, this nightmare of paperless companies being termed as shell companies is not a rare possibility.
The entire contents of this article are solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation by the Author. Compliance Calendar LLP and the Author of this Article do not constitute any sort of professional advice or a formal recommendation. The author has undertaken utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify and confirm the updates from the genuine sources before acting on any of the information’s provided hereinabove. Compliance Calendar LLP shall not be responsible for any loss or damage in any circumstances whatsoever.