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.
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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