Transparent Operations: Why Your Registered Office is More Than Just an Address – Addressing Section 12 of the Companies Act and consequences for violation thereupon
Importance of Registered Office under Section 12 of Companies Act and Form INC-22 Filing
Introduction: The registered office of a company isn’t merely a formal address; it plays a central role in legal processes and official communication. This article delves into the importance of a registered office as outlined in Section 12 of the Companies Act, 2013. From establishing legal identity to impacting jurisdiction and serving as a communication hub, the registered office is a cornerstone for businesses. Compliance with Section 12, including Form INC-22 filing, is not just a legal requirement but an essential practice for companies operating in India.
Overview
The registered office of a company holds paramount importance as it serves as the official address for communication and legal processes. Section 12 of the Companies Act, 2013, outlines the significance of a registered office, and compliance with this provision is mandatory for all registered companies in India.
Importance of Registered Office
1. Legal Identity: The registered office establishes the physical presence of the company and is crucial for official correspondences.
2. Jurisdiction Determination: It determines the jurisdiction under which the company falls, impacting legal compliances and jurisdiction of the regulatory authorities.
3. Communication Hub: The registered office is the primary address for receiving official communication from government agencies, creditors, shareholders, customers or clients and the public.
4. Business Transactions: It is the address where all the official documents, contracts, and business transactions are initiated and where all such records to be kept all the time.
5. Public Record: The registered office details are part of public records, which lead to enhancing transparency and accessibility by the authorities.
Form INC-22 Filing and Legal Requirement of Section 12
1. Timely Notification: Section 12 mandates companies to notify the Registrar of Companies (RoC) regarding situation of registered office of the company and any change in the registered office within 30 days of the change.
2. Form INC-22 Submission: Companies are required to file Form INC-22 with the RoC after incorporation or for any change in the registered office address.
3. Document Submission: Supporting documents such as utility bills, rental agreements, or ownership proof are submitted along with Form INC-22.
4. Outside Name or Sign Board: Companies are required to paint or affix their name and Company information on outside of the registered office where it is readily available and must be in the language of the region in which registered office are situated also details such as CIN, Name, Address, Contact Details of the Company shall also be printed on all the letterheads, business letters, notices, declaration, registers or other such communications as required to be maintained or keep as per companies act, 2013.
Penalties for Violation
1. Non-Compliance Penalty: Failure to comply with the requirements of Section 12 and filing Form INC-22 within the stipulated time may lead to penalties under Section 12(8) that the company shall be liable for penalty of Rs. 1,00,000 and every officer in default i.e. directors in this case, shall be liable to a penalty of Rs. 1,000 for every day during which default continues but maximum penalty that can be imposed is 1,00,000 on the director.
2. Adjudication by RoC: The RoC is authorized to adjudicate penalties for non-compliance after due inquiry.
3. Financial Consequences: Penalties may vary based on the severity of the violation and status of the company whether it is an OPC, Small Company, Startup Company, producer company, and the ROC has the discretion to impose financial consequences upon verification.
4. Adjudication of Penalties by the ROC
- Now the ROC is actively looking for the companies violating the provisions of Section 12 of the Companies Act, 2013 and are also taking immediate actions on receipt of complaint or information regarding non-availability of the registered office address or officers on that address.
- ROC has power to adjudicate the penalties under Section 454 for violating any provisions of the Companies Act, 2013. And ROC is taking actions by exercising the p0wers conferred under Section 454. Accordingly, the Companies and officers in default faces the legal consequences for non-maintenance of the registered office address.
5. Appeal against ROC adjudication order.
- Section 454 dealt with the appeal against the ROCs adjudication orders imposing penalties.
- The appeal can be filed with the Hon’ble Regional Director of the region within a period of sixty days (60 Days) from the receipt of the above adjudication orders in Form ADJ.
6. What if the penalty is not paid or appeal is not filed?
In case the Company or the officer in default failed to remit or pay the adjudicated penalty fees withing the 90 days of receipt of order, the ROC has power under Section 454 of the Companies Act, 2013 to impose the additional fine which shall not be less than Rs. 25,000 but which may extend to Rs. 5,00,000 on the Company and Officer in default shall be liable to imprisonment which may extend to 6 Months or with Fine which shall not be less than Rs. 25,000 but which may extend to Rs. 1,00,000 or with Both.
Conclusion: It is of imperative to understand the importance and the requirements of the registered office address of company as per the Companies Act, 2013 as the address is not only for showing on papers and for filing the Forms but over and above it is a statutory requirement for having an active registered office all the time due to the reasons mentioned above and for sake of the interest of stakeholders. It is observed many times that the companies are not really maintaining any address, or don’t have any name plate or boards at outside office premise, and not maintaining any documents, registers, minutes, or other such records on the registered office address available with the MCA. Therefore, they are not only violating Section 12 but clearly violating the other requirements of the Act and not following the intention of the law makers in a true spirit which may lead the companies or their officers to face a severe consequence. Hence, it is advisable to maintain the registered office as per the Companies Act to avoid any such legal consequence.
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Disclaimer:- The above information is purely and solely for informative purposes. This in no way should be construed to be any professional advice, as these are merely general information and our interpretations of the laws and the Act. Viewers are requested to consult us before taking any action based on our interpretations. Circulation of any information in our name without our permission is not allowed.
The author is a Practicing Company Secretary and GST practitioner and may be reached at: csmalkitsingh@gmail.com or +91-9711975109
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