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Powers and Functions of Registrar of Companies

May 04, 2018
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In this article, Nritika Sangwan, pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses the Powers and Functions of Registrar of Companies.

Introduction

The Registrar of Companies (ROC) as defined under Sub-Section 75 of Section 2 of the Companies Act, 2013, is an appointment of the Ministry of Corporate Affairs which is responsible for the regulation of Indian enterprises in Industrial and Services Sector. At present, there are 22 Registrars of Companies holding offices in the major states of India. Vested with a number of functions and equipped with a wide range of powers under the Companies Act of 1956 and Companies Act of 2013, the ROC is responsible for fostering business ethics in the current paradigm and plays a dominant role in facilitating business culture.

Meaning and Scope of Registrar of Companies

According to Section 2(75), the term ‘Registrar’ means a Registrar, an Additional Registrar, a Joint Registrar, a Deputy Registrar or an Assistant Registrar. ROCs as appointed under Section 396 of the Act primarily have the duty of registering companies incorporated in the respective States and the Union Territories. However, in addition to registration, there are the number of other responsibilities that the ROC is conferred with. The Central Government exercises administrative control over these offices through the respective Regional Directors (RD) who are in-charge of the respective regions, each region comprising a number of States and Union Territories.

Powers of the Registrar of Companies

Powers in Relation to Registration of Companies

Registration of a company formed under Section 3 of the Companies Act is obtained by filing an application with the ROC in whose jurisdiction the registered office of the company is situated under Section 7 of the Companies Act.

Section 7: Incorporation of Company and Certificate of Incorporation

The company is said to be born from the date mentioned in the certificate of incorporation and the date appearing on it is conclusive even if it is wrong. Not only does the certificate create the company, it also is “the conclusive evidence that all requirements of this act have been complied with in respect of registration and matters precedent and incidental thereto and that the association is a company authorized to be registered and duly registered under this act”.
In other words, the validity of the certificate cannot be disputed on any grounds whatsoever.
This is illustrated by the decision of the Judicial Committee of the Privy Council in Moosa Goolam Ariff v. Ebrahim Goolam Arif, in which Lord Macnaghten said:
Their Lordships will assume that conditions of registration prescribed by the Indian Companies Act were not duly complied with; that there were not seven subscribers to the memorandum and that the registrar ought not to have granted the certificate, but the certificate is conclusive for all purposes”.

Powers in Relation to Mortgage and Charges

Section 83: Power of Registrar to make entries of satisfaction and release without intimation from company

By virtue of Section 83, the Registrar is allowed to make entries of satisfaction, etc, after receiving evidence that,

The registrar may enter in the register, a memorandum of satisfaction in whole or in part of the property or undertaking from the charge or has ceased to form a part of the company’s property or undertaking even if no intimation to the effect has been received by him from the company. Within 30 days of making such entry, the registrar has to inform the affected parties.

Powers Related to Inspection, Inquiry, and Investigation

Section 206: Power to call for information, inspect books and conduct inquiries

As per the provisions of Section 206 of the Companies Act, 2013, the Registrar may require any company to furnish information or explanation or produce any document, if after scrutinizing any document or on receiving any information, he feels that such documents are necessary.
The Registrar may also inform the company of facts, seek its reply and order an inquiry if he has reason to believe that the business of the company is being carried out for a fraudulent purpose, or not in compliance with the Act, after giving the company a reasonable opportunity of being heard.

Section 209: Search and Seizure

The Registrar is empowered to obtain an order from the Special Court for the seizure of books and papers of the company if upon receiving information or otherwise, he has reason to believe that these books, papers of the company are likely to be altered, mutilated, falsified, secreted or destroyed. The Registrar or Inspector is further allowed to take copies and extracts of such documents.

Power of Registrar to Remove Name from Register of Companies

Section 248: Dissolved Companies

There may be a reasonable cause for the registrar to believe that:

In such a situation, the Registrar has to send a notice to the company and all its directors telling them that he has the intention to remove the name of the company from the register. They are accordingly called upon to send their representations along with copies of relevant documents within 30 days from the date of the notice.
Such removal can also be effected on the company’s own application. For this purpose, the company has first to extinguish all its liabilities. It then has to pass a special resolution or obtain the consent of 75% members in terms of the paid-up share capital. An application then has to be filed in a prescribed manner with the Registrars of Companies for removing the name of the Company on all or any of the grounds specified in sub-section (1).
After receiving such an application, the Registrar needs to issue a public notice in a prescribed manner and also in the Official Gazette for the knowledge of the general public. On the expiry of time mentioned in the notice, and if not cause to the contrary is shown by that time, the registrar has to strike off the name of the Company from the register. A notice of this fact needs to be published in the Official Gazette and on the date of such publication the company becomes dissolved.

Functions of the Registrar of Companies

Functions in Relation to Mortgage and Charges

The term ‘charge’ used in the instant section has been defined in Section 2(16) of the Companies Act, 2013. It refers to an interest or lien created on the property or assets of the company or on any of its undertaking or both as security and includes a mortgage. The Registrar of Companies is vested with certain functions in relation to the registration of such mortgage charges. These have been discussed section-wise as follows:

Section 77: Registration of Charges

According to Section 77, it is the duty of every company creating a charge to register the particulars of the charge with the Registrar of Companies. A charge on the property or assets of the company whether tangible or otherwise, situated in or outside India has to be registered. It is required that this instrument of charge be in the prescribed form and be filed with the prescribed fee within 30 days of its creation.
The Registrar can, however, permit for registration within the extended period of 300 days on the payment of the prescribed additional fee.
As per Section 77(2), the Registrar is required to issue a certificate of registration in the prescribed form and manner to the company as well as to the charge holder, as the case may be.

Section 78: Application for registration of charges

In case a company fails to register a charge, the charge-holder may apply to the Registrar of Companies for registration along with the instrument under which the charge is created. The Registrar is then required to give a notice to the company in order to enable it to inform whether the company has itself created a charge and if it has not, then inform about the reason for the same. Within 14 days, the Registrar is required to register the charge on payment of prescribed fee.

Section 81: Registrar to keep the register of charges in respect of every company

According to this Section, the Registrar has been required to keep a register in the prescribed manner, containing particulars of the charge registered under the Act, in respect of every company. This Register can be inspected by any person after the payment of a prescribed fee. The company is under a duty to forward to the registrar the necessary particulars in such form and on payment of such fee as may be prescribed. The Registrar’s register has to show the particulars relating to the charge such as the date of charge, the amount secured, the property covered and the persons entitled to the charge and if a property already under a charge has been purchased, the date of purchase. The same particulars have to be shown by the company’s register.

Functions in Relation to Compliance of Statutory Requirements Under the Companies Act

The ROC is entrusted with the duty to ensure that all statutory requirements under the Companies Act are complied with. These include the periodic filing of Annual Returns and Balance Sheets, Change of directorship of the company, registering companies incorporated in the respective states and the Union Territories, etc.

Section 93: Return to be filed with Registrar in case promoters’ stake changes

According to this Section, all listed companies are required to file a return in the prescribed form with the Registrar relating to change in the number of shares held by the promoters and top 10 shareholders of such company. This return needs to be filed within 15 days of the happening of such a change.

Section 137: Copy of Financial Statement to be filed with the Registrar

This section talks about the filing of accounts and penalty provisions. A financial statement in relation to companies comprises of the following:

Even where the requisite documents have not been adopted by the AGM, they have to be filed with the Registrar who is to record them as provisional till the duly adopted statements are filed with additional fees. In case of One Person Company, the statement adopted by its member has to be filed within 180 days from the closure of the financial year.
In case of one or more foreign subsidiaries which have not established a place of business in India, accounts of such companies also need to be attached to the financial statements. Where an AGM could not be held, the documents would have to be filed with the Registrar in the same manner as if the meeting was held but explaining the reasons why the meeting could not be held.

Section 157: Company to inform the Registrar of the Identification Number

Within 15 days of receipt of information from the director concerned of his Identification Number, the company has to furnish this information to the Registrar or any other officer or authority as may be specified by the Central Government.

Functions in Relation to Inspection, Inquiry, and Investigation

Section 208: Report on Inspection

On completion of inspection and inquiry under Section 206 and Section 207, the Registrar is required to submit a report in writing to the Central Government along with the necessary documents.

Conclusion

The office of the Registrar of Companies under the Ministry of Corporate Affairs has been vested with a large number of duties and is empowered to perform various functions by virtue of the provisions of the Companies Act, 2013.

Functions of the Registrar of Companies

  • Section 77(2) – Issue certificate of registration of charge without which the charge cannot be taken into account by liquidators or creditors
  • Section 78 – The Registrar gives a notice to the company in order to enable it to inform whether the company has itself created a charge and if it has not, then inform about the reason for the same
  • Section 81 – Registrar is required to keep the register of charges in respect of every company
  • Section 93 – Return is to be filed with Registrar in case promoters’ stake changes
  • Section 137 – Copy of Financial Statement to be filed with the Registrar
  • Section 157 – Company to inform the Registrar of the Identification Number
  • Section 208 – After inspection and inquiry, the Registrar is required to submit a report in writing to the Central Government

Powers of the Registrar of Companies

  • Section 7 – Registration of a company is obtained by filing an application with the ROC
  • Section 83 – Power to make entries of satisfaction and release without intimation from company
  • Section 206 – Power to call for information, inspect books and conduct inquiries
  • Section 209 – Power of search and seizure
  • Section 248 – Power to remove the name from the register of companies
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