Companies, Prove You are Real!

Companies, Prove You are Real!

Continuing with its crackdown on "fly by night and dummy" entities through stringent KYC regulations, the government has made it mandatory for over 12 Lakh active registered companies in India to upload all their particulars including details of registered offices in an e-filing to the government.

The Ministry of Corporate Affairs has notified the Companies (Incorporation) Amendment Rules, 2019, under which all companies registered before December 31, 2017, are required to file e-Form ACTIVE (Active Company Tagging Identities and Verification)-INC22A on or before April 25, 2019.  Failure to file e-Form ACTIVE will lead to a penalty of Rs 10,000 with companies in default being declared ACTIVE non-compliant.

Once a company is marked as ACTIVE non-compliant, it would not be able to make changes to its capital structure or go ahead with merger or amalgamation deals. Such non-compliant companies would also not be able to rotate their directors or make changes in their registered office.

The rule makes it amply clear that companies have to e-file all their details so that a proper check is maintained on their operations and creation of shell companies is prevented.

Last year, the Ministry of Corporate Affairs had introduced new Know Your Customer (KYC) norms affecting about 33 Lakh directors of companies.  

According to the new notification for filing of Form INC22A or ACTIVE, a company must have filed its annual return for the FY 2017-18. However, if a company is struck off or is in process of being struck off or is under liquidation, Form ACTIVE need not be filed.

If ACTIVE is filed on or after April 25, it can only be done after paying a penalty of Rs 10,000. Only after this, will the company be declared ACTIVE-compliant.

The e-Form will get all details of a company - its directors, annual filings and a photo (internal and external) showing one of the directors in its registered office.

This tightening of the noose around companies comes after a major crackdown by the government post-demonetisation in FY 2017-18 in which it struck off 2.26 Lakh companies that had failed to file their financial statements or annual returns over two or more successive years.  Similarly, more than 3 Lakh directors were disqualified for non-filing of annual returns by their companies for three years.

To sum it up, consequences of not filing this ACTIVE form with the ROC shall be as follows:

1.     After 26th April, 2019, the Company shall be marked as “ACTIVE non-compliant” and action under Section 12(9) of the Companies Act, 2013.
2.     However, if filed after 26th April, 2019, the Company shall be marked as “ACTIVE compliant” on payment of Rs. 10,000/- (Rupees Ten Thousand)
3.     Deprived of filing
- SH-7 (Change in Authorised Capital)
- PAS-03 (Change in Paid-up Capital)
- DIR-12 (Changes in Director except Cessation)
- INC-22 (Change in Registrar Office)
- INC-28 (Amalgamation, Demerger)

So it will be important for every management of any Company to immediately look into these requirements and file the necessary form well in time before 25th April 2019.

For any queries on how to approach this compliance, feel free to write to us at info@gjmco.in

Thanks & Best regards,
Knowledge Base Team
GJM & Co.
Chartered Accountants
www.gjmco.in

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