While the government is in overdrive to weed out ‘fictitious companies’, those who genuinely want to update their registered offices term the process nightmarish and seek a simplified scheme to effect change.
Verification of the registered issue has become a hot issue after notification of the Companies (Incorporation) Amendment Rules, 2019 on 21st Feb, 2019 which require ‘every company incorporated on or before 31st December, 2017 to file E-form INC – 22 A to verify their registered office’.
After receiving a number of representations from MSMEs, Federation of Indian Micro and Small & Medium Enterprises (FISME) has highlighted the issue before the Ministry of Corporate Affairs.
“For several decades, address of the registered office was taken rather casually, dictated even by factors such as ease of delivery of post. Now with greater scrutiny, a very large number of genuine companies also want their addresses changed. But changing the registered office is arduous, time consuming and costly. It is extremely difficult if change involved two different states,” mentioned Animesh Saxena, FISME President.
Based on the feed-back, FISME President said, “Changing the registered office is arduous and can scare even the bravest. It is particularly difficult if change involved two different states. It takes almost an year to complete the formalities and costs anywhere between fifty thousand to one lakh and a half”.
The list of formalities include, besides the board meetings and the EGMs and filings through a number of Forms MGT-14, INC.23 etc, publishing advertisement in the Form No. INC-26 (vernacular as well as English newspaper), seeking confirmation from the Regional Director, comply that no employee would be retrenched as a consequence of shifting of the registered office from one state to another state; notifying Chief secretary of the concerned State Government or the Union territory etc etc.
While lauding the initiative of the Government to clean up the system, FISME requested the Government to announce a simplified scheme at least for ‘unlisted companies’ (whether limited or private limited) for changing registered office.
‘In an era where the Registrar of Companies today has a number of authenticated identification proof like PAN, DIN, TIN and Aadhaar, prescribing the process used in 1970s cannot be termed either as smart or efficient’, says Saxena.