Is it Really Worth to Worry By The Indian Companies After Inserting The New Rule 25B In Companies (Incorporation) Rules 2014: An Analysis

This write-up is based on the recent amendment made by the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013 by inserting a new Rule viz 25B in the Companies (Incorporation) Rules 2014 w.e.f 18-08-2022 relating to the physical verification of the Registered Office of the companies.

ANALYSIS: the Rule 25B covers the procedure to be followed by the Registrar of Companies (“ROC”) while doing the physical verification of the registered office of the company.

But do the ROCs verify the registered office of each and every Indian company?

No, the very purpose to insert the Rule 25B in the Incorporation Rules is to give effect to the provisions of Section 12(9) of the Companies Act, 2013 or in other words, in order to implement the Section 12(9), the MCA has prescribed a procedure for the Registrar to be followed by them for conducting physical verification of registered office.

What says Section 12(9) of the Companies Act, 2013?

Section 12(9) of the Companies Act, 2013 says:

1. If the Registrar has a reasonable cause to believe that the company is not carrying on any business or operations, he may cause a physical verification of the registered office of the company in such manner AS MAY BE PRESCRIBED

Here, the procedure to do the physical verification of the registered office of the company by the Registrar is being prescribed under Rule 25B

Therefore, while doing the conjunct reading of Section 12(9) with Rule 25B, it can be said that the Registrar will conduct the physical verification of registered office of a company when, (1) based upon the information or documents available on MCA 21, they have the reasonable cause to believe that (2) the company is not carrying on any business or operations and

If after conducting the physical verification of the registered office by the Registrar in the manner as prescribed under Rule 25B, the registered office of the company is found to be not capable of receiving and acknowledging all communications and notices, the Registrar shall send a notice to the company and all the directors of the company indicating of his intention to remove the name of the company from the register of companies and request them to send their representations along with copies of relevant documents, if any, within a period of thirty days from the date of the notice before taking further actions in accordance with the provisions of section 248 of the Act.

Rule 25B - Physical address verification by ROC - Do Companies needs to worry

Suggestions to the Companies in view of Rule 25B:

1. Having the updated documents required for verification of registered address at all times viz Deed (Lease/ Sale, as the case may be), NOC from the owner of the premise, if required and Utility Bills etc.

2. Paint or affix the name of the company and the address of its registered office, and keep the same
painted or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous position, in legible letters

3. Maintain the Records of the company at the registered office (like Minutes of General Meeting, Books of Accounts (if not maintaining at any other place as per Section 128 read with Rule 2A of Companies (Account) Rules), 2014 and other secretarial records which are required to be maintained at the registered office of the company

4. Complete the annual filing (Annual Return and Financial Statement) of the company of every financial year from time to time

5. Complete the other e-filings as and when required based on the other regular and event based transactions executed in the company

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