This issue of LexCognito, which in Latin means 'awareness about law', seeks to provide you an insight into significant legal and regulatory developments that have taken place very recently in India.

Date: 22 February 2019
Another stringent move by Ministry of Corporate Affairs to clean the system
As part of continuous process of weeding out shell companies and inactive companies from the system and enforcing compliance amongst the companies and its directors, the Ministry of Corporate Affairs ("MCA") has taken stringent move by introducing another time bound compliance to be done by every Indian company on or before 25 April 2019.

In this regard, MCA has amended the Companies (Incorporation) Rules, 2014 ("Rules") by inserting a new Rule 25A vide Companies (Incorporation) Amendment Rules, 2019 dated 21 February 2019 which shall come into force w.e.f. 25 February 2019.

Active Company Tagging Identities and Verification e-form (Form INC–22A) is the newly prescribed form in which the companies incorporated under the Companies Act of India are required to file its particulars and registered office with the Registrar of Companies, MCA ("RoC") before the aforesaid due date.

Salient features of the amended Rules:

1. Applicability: Every Company which is incorporated on or before 31 December 2017 is required to file its particulars and registered office in e-form ACTIVE (INC-22A) on or before 25 April 2019. Therefore, the companies which have been incorporated after 31 December 2017 are presently not required to comply with this new compliance requirement. 

2. Exempted entities: The companies which have been struck off or are under process of striking off or under liquidation or have been amalgamated or dissolved, as recorded in the register are not required for file this new form.

3. Restricted entities: The companies which have not filed its due financial statements under Section 137 (AOC-4) or due annual returns under Section 92 (MGT-7) or both with RoC are restricted from filing this new form. However, if such companies are under management dispute and RoC has recorded the same on the register, they may file this new form. It is not clear as to when and in what circumstances, a company will be considered as under management dispute.

4. Consequences for non-compliance: If a company fails to file this e-form:
  • The status of the company shall be marked as ‘ACTIVE- non compliant’ on or after 26 April 2019. The company’s status shall be changed to ‘Active Compliant’ only after filing of the e-form ACTIVE and on payment of fee of INR 10,000/-.
  • The defaulting company will be restricted from filing e-forms with RoC for recording the events related to changes in Authorized Capital, Paid up Capital, Directors except cessation, Registered Office, Amalgamation or De-merger.
  • The defaulting company shall be liable for action under Section 12(9) of the Companies Act, wherein RoC is authorized to remove the name of the company from its records.
5. Particulars and information to be furnished: In e-form ACTIVE, the company is inter alia required to furnish the following information:
  • Address of the Registered Office along with photograph of registered office showing external building and inside office also showing therein at least one Director or key managerial personnel who has affixed his/her digital signature to the new form.
  • Details of the Directors as on the date of filing. The company is required to ensure that the Directors Identification Number (DIN) of all its directors are in ‘approved’ status and have not been deactivated due to non-filing of DIR-KYC or disqualification under Section 164(2) of the Companies Act.
  • Email id of the company which will be verified through the OTP (one time password).
  • Details of Statutory Auditor, Cost Auditor, if Applicable, etc.
  • Details of Managing Director, Chief Executive Officer, Chief Financial Officer, Manager, Whole Time Director, Company Secretary, etc.
  • Details of the financial statements filed under Section 137 (AOC-4) or annual returns filed under Section 92 (MGT-7) for the Financial Year 2017-2018.
The e-form ACTIVE is to be digitally signed by one (1) director and one (1) key managerial person or two (2) directors in case of other than one person company.
CRI Comment: 
The introduction of this new compliance is a welcome step as it seeks to verify the status of the company and its registered office and tag the defaulting companies. This compliance on the part of the company will also put pressure on the defaulting directors whose DIN have been deactivated due to non-filing of DIR-KYC or disqualification. It is one of the measures in which the MCA is trying to imbibe the culture of compliance amongst the companies and its directors, thereby bringing transparency in the system. This will also enhance good corporate governance and ease of doing business.
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Chambers of Rajan & Indraneel 
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N 103 Greater Kailash - I, New Delhi - 110048, India.
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Chambers of Rajan & Indraneel is a premier full service law firm headquartered at New Delhi, India. The Firm represents amalgamation of vast experiences and practices of two eminent lawyers. Indranil Ghosh is highly reputed as a disputes lawyer. He was a senior partner and head of litigation practice in one of the oldest Indian law firm Fox Mandal for several decades before setting up his own practice. Rajan D Gupta is a rank holder Chartered Accountant turned Corporate Lawyer. He is also a licensed Insolvency Resolution Professional. He has been associated with internationally renowned big law firms in past and has held senior level positions in firms like PwC, Fox Mandal, Khaitan & Co. and SRGR Law, etc. before starting the Firm.

We have a team of experienced Lawyers, Chartered Accountants, Company Secretaries and Insolvency Resolution Professionals with access to network of high quality experienced lawyers in all major commercial cities of India.

The Firm offers a wide range of expert legal services in the areas of corporate and commercial laws and specializes in representing major foreign and domestic corporations with diverse business interests in India. The Firm is professionally equipped to handle large sized and complex corporate transactions like Mergers & Acquisitions, Corporate Restructuring, Joint Ventures, Inbound & Outbound Investments, Private Equity and Venture Capital Investment Transactions, Real Estate Transactions, Infrastructure Projects, Project Finance, Power Projects, Non-Conventional Energy Projects, Highways & Road Projects and Corporate Taxation as well as GST, etc. The Firm also offers proven capabilities in litigation and dispute resolution practice areas, especially in handling international and domestic arbitrations as well as litigation in Supreme Court, various High Courts of India and various judicial and quasi-judicial tribunals/forums including at National Client Law Tribunal, Appellate Tribunals, Tax Tribunals, Competition Commission, Electricity Tribunal, Telecom Disputes Tribunal, Designated Authorities and other adjudicatory bodies.

We have set up a Japan Business Desk (JBD) in order to serve our Japanese clients in a better way. The endeavour of the JBD is to act as a bridge between our professionals and clients from Japan so as to ensure that there are no barriers as to linguistic and cultural differences. This will indeed facilitate Japanese corporates doing business in India. 
This newsletter contains general information available in public domain at the time of its preparation. It is intended as a general news update and is not intended to be comprehensive nor to provide specific business, financial, investment, legal, tax or other professional advice or opinion or services. This newsletter is not a substitute for such professional advice or services, and it should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Before making any decision or taking any action that may affect you or your business, you should consult a qualified professional adviser and refer to the source pronouncement/documents on which this business alert is based. It is also expressly clarified that this newsletter is neither a solicitation nor an invitation of any sort whatsoever or a source of advertising from our firm or any of its partners or lawyers or other professionals to create any adviser-client relationship. Whilst every effort has been made to ensure the accuracy of the information contained in this news alert, this cannot be guaranteed, and neither our firm nor any related person/entity shall have any liability to any person or entity that relies on the information contained in this publication. Any such reliance is solely at the user's risk.
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