Analysis of Companies (Incorporation) Third Amendment Rules, 2022

Ajay Kumar Maggidi | Last updated: 22 August 2022

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Quick Summary

The Companies (Incorporation) Third Amendment Rules, 2022, introduce stricter regulations for companies. ROC officers can now conduct physical verification of registered offices to ensure businesses are operational. If a company's registered office is found unsuitable for receiving communications, or if there's a belief the company isn't conducting business, the ROC can initiate proceedings to remove the company's name from the register. To avoid issues, companies must ensure their name board is visible, a proper rental agreement is in place, and all necessary documents are available at the registered office.

The Regulators are becoming more stringent day by day to bring the transparency and accountability in the system.

Now, ROC officer shall visits for physical verification and check if the company carrying on business or operations.

Brief Background

MCA has issued notification dated 18-Aug-2022.
New Rule 25B has been added to the e Companies (Incorporation) Rules, 2014,
Notified, Companies (Incorporation) Third Amendment Rules, 2022.

Company Registration Rules 2022: Physical Verification by ROC

Section 12 of Companies act deals with provisions relating to Registered office of the company.

Section 12(9) gives powers to ROC for removal of name of the company if any company violates the provisions of this section as follows:

If the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may cause a physical verification of the registered office of the company.
If any default is found to be made in complying with the requirements this section, he may initiate action for the removal of the name of the company from the register of companies.

Now, this amendment prescribed procedure and manner of conducting a physical verification and to take appropriate actions as follows:

If the ROC has a reason to believe that, the company is not carrying on business then they can cause a physical verification to be conducted.
The ROC officer shall visit the registered office of the company for physical verification and shall prepare Physical verification report in prescribed format.
If the registered office of the company is found to be not capable of receiving and acknowledging all communications and notices, the Registrar shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies

Keeping in view of Physical Verification by Registrar, below precautions are required to be undertaken:

Ensure Name board of the company is available at Registered office.
Ensure Availability of Proper Rental Agreement
Ensure Availability of all the required documents at Registered Office.

Also Read: MCA inserts Rule 25B for Physical Verification of Registered Office of Companies by ROC

FAQ :

These rules aim to increase transparency and accountability by allowing ROC officers to conduct physical verification of company registered offices to ensure they are carrying on business or operations.

ROC (Registrar of Companies) officers are empowered to conduct physical verification of a company's registered office.

An ROC officer can conduct a physical verification if they have reasonable cause to believe that the company is not carrying on any business or operations.

If the registered office is found incapable of receiving and acknowledging communications, the Registrar will send a notice to the company and its directors, indicating an intention to remove the company's name from the register.

Companies should ensure their name board is displayed at the registered office, a proper rental agreement is available, and all required documents are kept at the registered office.

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About the Author

Ajay Kumar Maggidi

Manager - Finance & Accounts

Ajay Kumar Maggidi is a seasoned finance professional with over 12 years of experience in accounting, taxation, payroll, and corporate compliance. After earning the trust of clients through his deep technical expertise and problem-solving approach, he has transitioned into Business Development for Finance Accounting s ... Read more

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