Companies-Act

This article is written by Aadrika Malhotra from Guru Gobind Singh Indraprastha University. The article provides a detailed analysis of Section 12 of the Companies Act, 2013. While dealing with the registered offices of a company, there are some provisions and specifications that must be taken into consideration.  

This article has been published by Sneha Mahawar.​​ 

Introduction 

The Companies Act, 2013 (“the Act”) regulates the functionality of corporations in India. The Act was first passed in 1956 which was based on recommendations provided by the Bhaba Committee. After numerous amendments, this Act finally took its long-written form in 2013 with major changes and has since been amended several times. The requirements for the registration of an office of a company have been stated under Chapter II Section 12 of the Companies Act, 2013, which puts a mandate on every company to maintain a registered office that receives and also acknowledges all communications and proceedings notified to it.  The registered office of a company helps in deciding the domicile of that company as well. 

Download Now

Relevance of registered office in a company

Every company must have a registered office within 30 days from which it is incorporated under the Companies Act of 2013. The office needs to be registered at the MCA and each office shall provide for a specific address for the same. The registrar of the company shall depend on the place where it is registered which will require address proof from the company like lease deed, ownership papers, rent, or agreements. 

The government uses the registered office to send all official communications and legal documents for the company by post. There are certain documents that must be maintained by the company that will have weightage as legal receipts. There is a huge difference between a registered office and a corporate office, wherein the former is a physical space where legal documents are stored by post for further communications. The latter is where the executives of a company work. 

Importance of a registered office in a company 

As per Section 12 of the Companies Act, a company must have a registered office that should receive all legal documents of that company. The registered office is crucial to a company since this is the place where all legal and official communications of a company are sent. It determines the domicile of the company and gives the company a good corporate image if it is located in a prestigious area. This, in turn, would raise the business sales and build a good image for the company in front of the customers.        

Change in the registered office of the company  

One can change the registered office of a company at any stage with appropriate procedures. The notice of every change in the situations of the registered office after the company inauguration must be submitted to the registrar within thirty days of the change. In case of outside the local limits of a city, there shall be a special resolution passed by the company. In case of changing of jurisdictions, there shall be changes directed towards the Regional Director for the change of registrars. Every company must put the name and address of the registered office and put the same printed on the outside of every office in which the company operations are being handled.  

Need for a registered office for a company 

The registered office will determine the private company’s domicile or the state of incorporation by the Registrar of Companies (ROC) to whom the applications for registrations must be submitted which is also determined by the state in which the registered office is located. This office will enable the company to acknowledge any communications received and any change in this must be reported immediately. It will serve as a confirmation of the company’s proper mailing address apart from legal issues. The official contact for the deliveries of papers issued by the government will always be the registered office. 

Detailed Analysis of Section 12 of the Companies Act, 2013

Section 12 of the Companies Act, 2013 is divided into several sub-sections and clauses which will be explained below. 

Mandate for a registered office 

Section 12(1) of the Companies Act, 2013 states that a company shall have a registered office within thirty days of its incorporation which can receive and acknowledge all communications and notices. A specified IFSC public and private company must have its registered office at the IFSC (Indian Financial System Code) centre which is located in the Special Economic Zone as specified in the Special Economic Zones Act, 2005 and where it is licensed to carry on operations. 

Verification 

Section 12(2) of the Companies Act, 2013 states that the company must furnish all the verifications by the registrar within thirty days of its incorporation. In case of a specified IFSC public or private company, the company can notify the registrar within sixty days. Such documents can be a copy of the ownership agreement, name and CIN of the company, electricity bill, or bank statement. The INC-22 form needs to be filled along with other support documents for furnishing the proof of the registered office which the company can get from the respective registrar.  

Rule 25 of the Companies (Incorporation) Rules, 2014 gives for the verification of a registered office. The verification form in INC.22 shall be filed along with a fee and any of the documents including a registered office’s title in the name of the company, a notarized copy of the lease, a copy of the rent paid, authorisation of the owner with a proof of the ownership to use the place, and proof of utility services with the address on the document which is not older than two months. 

Procedure after assigning the name of the registered office 

Section 12(3) of the Companies Act, 2013 gives certain requirements for the establishment of a registered office that need to be fulfilled by every company. The requirements are listed below:

  1. Affix the name and the address of the registered office and also keep it painted on the outside of every office or place where the business is carried out in a conspicuous position in legible letters or languages understood by the people in the locality.  
  2. Have the name on the seal of the company. 
  3. Get the name and address of the registered office and CIN (Corporate Identity Number) with a telephone and fax number, email, website printed on all business letters, billheads, letter papers, and official publications. 
  4. Have the name printed on hundies, exchange bills, promissory notes and other documents.  

If it is a one-person company, the same shall be printed in brackets alongside the name of the registered office. A company will be penalised if the registered office address and CIN are not mentioned on the company letterhead. 

Section 12 (3)(c) of the Act, 2013 came into force on 1st April, 2014, so companies need not get their letterheads reprinted to incorporate changes. Though, changes must be made to the digital signatures wherever necessary. If any company changed its name in the preceding two years to the Act, the company should continue to use the former name. The company must reprint the new name after the expiration which marks the date from which the company does not have any mandates as per the Act. 

Provision for change in registered office 

Section 12(4) of the Companies Act, 2013 enlist requirements for the change in a registered office. Notice of every change in the registered office verified as prescribed after the date of incorporation shall be given within thirty days.  Failing these requirements, the company may have to pay an additional fee to the registrar to re-invoke the notice. 

Section 12(5) of the Companies Act, 2013 states that the registered office of a company must not change outside the local limits of a city, town, or village where it is located, except on the authority of a special resolution. The change cannot take place unless there is an application confirmed by the Regional Director filed in the Registrar’s office. 

Section 12(6) states that as mentioned in sub-section (5) must be communicated within thirty days from the date of receipt as notified by the Regional Director to the company after which it shall file a confirmation within sixty days with the registrar who must certify it within thirty days. 

Section 12(7) states that the certificate referred to in subsection (6) must be conclusive evidence that all the requirements mentioned for the change of the registered office with reference to sub-section (5) have been complied with and the change will commence after the date on the certificate. 

The process of change in a registered office is followed by certain regulations by the SEBI, a board resolution, and a special board resolution with a mandatory INC-22 form that has to be submitted to the registrar. The process of change in a registered office is mentioned later in the article. 

Provision for any default or penalty 

Sections 12(8) of the Companies Act, 2013 states that with respect to any default, the company and all the officers in the default shall pay a penalty of one thousand rupees for every day as the default continues, which shall not exceed an amount of one lakh rupees. The default can be anything from non-display of the registered office name in front of every building of the company or non-compliance to any requirements mentioned under the act. 

Non-Compliance 

Section 12(9) of the Companies Act, 2013 states that if the registrar believes that the company is not doing business due to evidence, the registrar may cause a physical verification of the registered office in such a manner as prescribed, which if leads to any default in compliance with subsection (1), the registrar may initiate action for removal for the company name.  

Applicable rules for the Act 

Rule 26 of the Companies (Incorporation) Rules, 2014 gives for the publication of the name of the company. Every online business company must disclose its name and address of the registered office with the CIN and telephone number under the name and address of the concerned persons. The Central government will notify the other documents on which the name shall be printed for further grievance redressal. 

Procedure of registration of an office

Approval of name 

The first step is the approval of the name which will be given by the Registrar of the Companies (ROC) of the respective state or union territory. The last words in the name of the private company must be PVT. LTD. and LIMITED for public companies. There must be four proposed names for the company and the company must ensure that the names are not already in use. The approval is passed by the registrar within a week from the submission date and the approval of the name is the sole decision of the registrar which after approval will be valid for six months. The Memorandum of Association and Articles of Association shall be filed after the name has been allotted, failing which the company shall send an application with additional fees for the renewal. 

Memorandum and Articles 

The Memorandum of Association and Articles of Association as mentioned above must be submitted to the ROC for incorporation of the registered office of a company. The Memorandum of Association enlists the constitution of the company with the objectives and scopes of the company and the relations of the people with the world. The Articles of Association have rules and regulations of the company that manage the internal affairs with the objectives and purposes of the company’s formation. 

The Roc will only give the certificate of registration after all the requirements have been met and the documents have been submitted with the required fees. A private company can only start the business after it receives the certificate of incorporation, but a public company can invite the public to subscribe to the share capital of the company.  

Tax registration 

Businesses that are liable for income tax must file for a tax identification card, a PAN, and a TAN number from the Revenue Department. These requirements must be printed on all returns and documents for the purchase and sale of immovable property that exceeds five lakhs, time deposit that exceeds five lakhs, sale and purchase of any vehicle liable, and sale or purchase of securities exceeding ten lakhs. 

Can a registered office be shifted

  • Within Local Limits: Section 12(3) and 12(4) of the Companies Act, 2013 in compliance with Rules 25 and 27 of the Companies (Incorporation) Rules, 2014. 
  • From One City to Another: Section 12(5) of the Companies Act, 2013 in compliance with Rules 27 and 28 of the Companies (Incorporation) Rules, 2014. 
  • From One ROC to Another in the Same State: Section 12(5) and 12(6) of the Companies Act, 2013 in compliance with Rules 27 and 28 of the Companies (Incorporation) Rules, 2014.  

Within local limits

If the company wants to change the registered office within the local limits of the city or town, shall follow a structured procedure as laid down below: 

  • Hold a board meeting with the board of directors of the company, wherein the decision shall be made to pass a resolution for the shifting of the registered office from where it is currently located.    
  • After thirty days of the passing of the board resolution, the company shall file the INC-22 form with the respective registrar with an attested copy of the board resolution. After this, the company secretary must visit the new registered office to verify the location of the company. He must certify that he personally visited the company and that the location is being used by the company. 
  • The INC-22 form must contain copies of the electricity bills, copy of order, proof that the location can be used by the company, proof of registered office, and the list of all companies with their CIN that use the registered office. 
  • If necessary, the company must issue a general notice in advertisements informing the change in the registered office and the address of the registered office must be put on all stationery, sign boards, diaries, or wherever it occurs for the business of the company. The stock exchanges for the securities of the company must also be informed about the change. 

From one city to another

If the company wants to change the registered office within the local limits of the city or town, shall follow a structured procedure as laid down below: 

  • Hold a board meeting with the board of directors of the company, wherein the decision shall be made to pass a resolution to shift the registered office from one city to another in the same state. The board meetings should also pass a resolution for fixing the date and time to hold a general meeting to pass a special resolution according to sub-section (5). A resolution should be passed in the board meeting to approve the notice of the general meeting with an explanatory statement that shall be affixed to the notice itself. The board meeting shall also pass a resolution to authorise the company secretary to issue a notice regarding the general meeting on behalf of the board. 
  • The company must issue a notice with an explanatory statement for the general meeting to every member of the company and it should intimate the stock exchange about the change in the registered office within twenty-four hours of the board meeting. A public notice shall be published as well if necessary, after which the general meeting will be held.   
  • A copy of the proceedings of the general meeting must be sent to the stock exchange within twenty-four hours. The special resolution thus passed in the general meeting shall be filed with the ROC within thirty days. Forms MGT-14 and INC-22 shall be attached with the filing along with a certified copy of the special resolution passed, an explanatory statement, notice of change, and filing fees. 
  • Further, the company must issue a public notice for the change of the registered office and intimate all persons with whom the business may interact with. The new address shall be printed on all stationary and official objects of the company wherever the business occurs. The new address must also be printed on all sign boards, nameplates, register of members, and at all the places of business of the company. 

From one ROC to another in the same state

If the company wants to change the registered office outside the local limits of the city or town, shall follow a structured procedure as laid down below: 

  • The company must publish a notice in the local newspaper a month before filing the application with the Regional Director. There shall be individual notices for each debenture holder, depositor, and creditor linked to the company.  
  • After the special resolution is passed, the company shall file to the Regional Director by form INC-23 with a copy of the board resolution, a special resolution b the members of the company, a declaration by the Key Managerial Personnel stating non-default of payments for the registered office by the company, a declaration not to seek change in the jurisdictional court that is currently holding prosecution cases, copy of the intimation of the change duly signed by the Chief Secretary of the state, copy of notice of the general meeting, copy of minutes of the general meeting, proof of service of application, any copy of objections made, or any other support documents. 
  • The Regional Director will communicate the confirmation for the change in the registered office within thirty days of the receipt of the application, after which the company shall file for further communication with the registrar within sixty days. 
  • The registrar will certify the change within thirty days from the date of filing subject to any prosecution cases on the company. 

Conclusion 

Section 12 of the Companies Act mandates every company to have a registered office in India, laying down the requirements for the same. A registered office of a company is the space where all communications and legal notices can be sent by the government. This must be mentioned in the MOA with the notice of every change reflected to the registrar within thirty days, failing which the company must pay penalties. The provision brings greater transparency in the functioning of the companies and every company must comply with the provision to avoid any legal hassles. 

Frequently Asked Questions(FAQs)

What is the penalty issued for non-compliance corresponding to the provisions in the Act?  

The company and every person associated with the non-compliance will be liable for a penalty of ten thousand rupees for every day the issue continues which shall not exceed one lakh rupees. 

What circumstance can occur by which a company can change its registered office? 

Companies must change their registered office when they are growing at a faster pace and the office does not complement the pace at which the company is. Such a situation may also arise if the land is on lease and the board wants to change the lease when another company is investing in it. 

What is the difference between a registered office and a head office? 

A registered office is a chief place where all communications of the company reside and take place. A head office is where all the partners are present and work to make decisions to make rules and regulations on company operations. 

Can a company change their registered office address from a commercial to a residential one? 

You can run a registered office in a residential area too.   

References

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

https://t.me/lawyerscommunity

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

RELATED ARTICLESMORE FROM AUTHOR

LEAVE A REPLY

Please enter your comment!
Please enter your name here