Active Company Tagging Identities and Verification

Active Company Tagging Identities and Verification

Ministry of Corporate Affairs ("MCA") vide its notification dated February 21, 2019 issued the Companies (Incorporation) Amendment Rules, 2019 ("Rules") further amending the Companies (Incorporation) Rules, 2014 ("Principal Rules"). A new rule 25A has been inserted in the Principal Rules pertaining to Active Company Tagging Identities and Verification (ACTIVE). Additionally, e-form ACTIVE (INC-22A) has been inserted in the Principal Rules after e-form INC -22.

The Rules came into effect from February 25, 2019. Every company incorporated on or before December 31, 2017 is required to file the particulars of the company and its registered office with the MCA in e-form ACTIVE on or before April 25, 2019.

Consequences of non-filing of e-form ACTIVE

If a company does not intimate the particulars to the MCA within the prescribed time period the following actions will be taken by the MCA:

  • the status of the company will be marked as "ACTIVE-non-compliant" by the MCA on or after April 26, 2019.

  • the concerned Registrar of Companies within whose jurisdiction the registered office of a company is situated will note take on record the following event based information/changes:

SH-07 (Change in Authorized Capital);

PAS-03 (Change in Paid-up Capital);

DIR-12 (Changes in Director except cessation);

INC-22 (Change in Registered Office);

INC-28 (Amalgamation, de-merger).

  • Registrar of Companies is empowered to cause physical verification of the registered office of such companies and even initiate action for removal of the name of such companies from the register of Registrar of Companies.

  • a fee of INR 10,000 to be paid by the company for filing e-form ACTIVE on or after April 26, 2019.

Exempted categories of companies

  • companies which have been struck off or are in the process of striking off.

  • under liquidation companies.

  • amalgamated companies.

  • dissolved companies.

Requirements

The e-form ACTIVE is majorly a pre-filled form where the details of a company as available with the MCA gets populated automatically based on the filings made by the company with the Registrar of Companies. Therefore, a company first needs to ensure that all its filings with the MCA are complete and proper only then the e-form ACTIVE can be duly submitted. In fact, any company which has not filed its financial statement or the annual return or both would not be able to file the e-form ACTIVE unless such company is under management dispute and the Registrar of Companies within whose jurisdiction the registered office of a company is situated has recorded the same on the register.

Along with the e-form ACTIVE the following photographs are required to be attached:

  • One photograph of the registered office showing external building; and

  • One photograph of the inside office showing therein at least one director or key managerial personnel sitting (whose digital signatures will be affixed to the form).

The objective of MCA is to geo-tag the registered office details of companies through the latitude and longitude details which means attaching data to the exact location of the office.

While it has just been a few days since the introduction of e-form ACTIVE, the stakeholders have come across some practical issues in trying to complete and submit the e-form such as:

  • the details of the annual filings made for the financial year ending March 31, 2018 are only being recognized by the system and if a company follows a different financial year other than March 31 which had been changed in accordance with the requirements of the Companies Act, 2013, the system does not tag the last filings made with the MCA for such companies.

  • The details of statutory auditors gets prefilled from the information in e-form ADT-1 filed by a company for the appointment of its auditors and does not take into account the filings made by the company intimating the appointment of statutory auditor in e-form GNL 2 during the transition period.

Basis the concerns raised by the users, MCA is looking into it and coming up with appropriate solutions to resolve these issues so that the filings can be done smoothly.

Conclusion

Since the financial year 2017-18, there has been a drive to crackdown the shell companies and the companies that are non-compliant. Initially, MCA struck off from the register of Registrar of Companies, those companies which defaulted in annual filing for a continuous period of two or more financial years. This was followed by the disqualification of directors of defaulting companies. Subsequently, the individuals who had been allotted director identification number in India, were required to provide details and complete their KYC with the MCA.

In a similar manner, the registered office of a company is meant to be the premises where its statutory records and registers are maintained as well as its recorded address where the government authorities or any other stakeholders can communicate. Whereas as per the trend noticed in past investigations into shell companies, either the exact address of the registered office of a company does not exist or there are too many companies registered on the same address. There is no doubt that e-form ACTIVE will help the MCA to locate the exact location of a registered office and to a great extent, it will help in depreciating the use of false addresses by shell companies. The expected outcome of these initiatives is to create a transparent and compliant India Inc. and to make it trustworthy for public as well as to the global market.

Views are personal only.

For any clarification or further information, please contact.

Neetika Ahuja
Associate Partner
E: neetika.ahuja@clasislaw.com

Sweta Sinha
Associate
E: sweta.sinha@clasislaw.com

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