Brace for an MCA Registrar Visit at your Registered Office
A nameplate is no more a luxury and namesake! The New clause under the new sub-section (9) in section 12 of the Companies Act amended by Ministry of Corporate Affairs would ensure that you are doing business ethically fulfilling all the requirements of business establishments, failing which may lead your business to be shut down permanently.
So, what is Section 12 of the Companies Act? A company shall within thirty days of its incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it.
According to the Ministry of Corporate Affairs, only 66% of registered companies in India are active. The corporate affairs ministry had in 2017-18 struck off names of 2.26 lakh companies from the registrar of companies for not carrying out business activities. More such “shell companies” are under the scanner and are likely to face regulatory action soon. However, there are many such companies who do not even bother to register their offices and carry their business unethically.
To give the registration process the much-deserved mandate, the MCA has introduced a new act wherein it gives power to the Registrar to visit any registered office of a company, where he believes that there is no business going on in the premises. If the Registrar has reasonable cause to believe that the company is not carrying on any business or operation, he may cause a physical verification of the registered office of the company in such manner as may be prescribed and if any default is found to be made in complying with the requirement, he may without prejudice, initiate action for the removal of the name of the company from the register of the company.
Therefore, compliance for companies to show that business or operations are taking place in their registered offices - nameplate of the company on the outside of the registered office, copy of certificate of incorporation and other statutory licenses to be displayed prominently on the walls of the R/O, keeping books of accounts, statutory registers, original documents, licences, share certificates, common seal, invoice books, bank documents (passbook, cheque book etc.) etc. to be kept at the R/O. All official documents like letterheads should carry the name, CIN, registered office address, GST no., telephone no., e-mail id, website (if any).
If any registered office does not carry any business or operations, then they are required to shift to a new registered office in the MCA records, where business or operations are taking place.
Doing business in India is becoming more transparent and laws, rules, and regulations are there to enhance the system. There are so many unregistered, out of order businesses which create a massive challenge to the ministry for proper functioning. This new clause under Section 12 of Companies Act is expected to receive the warm welcome by the industry for fair business practices and doing business ethically. Fingers Crossed!