Tag Archives: Removal of Names of Companies from the Register of Companies

Failure in Physical Verification – Removal of Name


In the last post here, we discussed the Companies (Incorporation) Third Amendment Rules, 2022, which inserted Rule 25B with effect from 20 August 2022 (issued on 18 August 2022).

Failure in Physical Verification

In terms of Rule 25B sub-rule (5), based on the physical verification report, the Registrar shall form an opinion on whether the office is capable of receiving and acknowledging all communications and notices. If the Registrar finds the office incapable of receiving and acknowledging all communications and notices, it will send a notice to the company and all the directors:

  • of his intention to remove the name of the company from the register of companies; and
  • requesting them to send their representations along with copies of relevant documents, if any, within thirty days from the date of the notice.

The Registrar may take action under Section 248 of the Act based on the physical verification report and the representations made by the company and its directors.

Notice for Removal of Name

The Ministry of Corporate Affairs, on 26 August 2022, published the Companies (Removal of Names of Companies from the Register of Companies) Second Amendment Rules, 2022 by Notification GSR 658(E) dated 24 August 2022.

This amendment effectively amends the notice for Notice by Registrar for removal of the name of a company from the register of companies in Form STK – 1.

Additional ground for removal of the name of a company from the register of the companies maintained by the Registrar of Companies. Till the amendment following three grounds were there:

  • The company has failed to commence its business within one year of its incorporation;
  • The company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455; and
  • The subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company, and a declaration to this effect has not been filed within one hundred and eighty days of its incorporation under sub-section (1) of section 10A.

Now, a fourth ground is added to the list: “the company is not carrying on any business or operations, as revealed after the physical verification carried out under sub-section (9) of section 12”.

Public Notice of proposed removal of the name of the company from the register of companies under Section 248(1) and 248(2), namely Form STK – 5A and Form STK – 5 are also amended to similar effect.

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Physical verification of the Registered Office of a Company


“Inspector Raj”, in its whatsoever name and whichever form, is a necessary evil in India.

The Companies (Amendment) Ordinance, 2018, with its 2019 version and final avatar, the Companies (Amendment) Act, 2019, inserted Section 12(9) with effect from 2 November 2018, sown the seed of Physical verification of the Registered Office of a Company.

Despite the Legislative Powers, the Ministry of Corporate Affairs thankfully restrained itself for a long time and tried a self-certification mode. Ministry of Corporate Affairs (MCA) initially notified Rule 25A by way of the Company (Incorporation) Amendment Rules 2019 with effect from 25 February 2019. Surprisingly, this was a one-time exercise in Form INC-22A (Active). The Form Active captured two-dimensional data of the registered office with documents and a photo of one of the directors showing Latitude and Longitude. However, the form might not satisfy the intended purpose of the government. No day-to-day technology presently captures the third dimension of the office – the floor of the building or vertical location of the office from sea level.

While writing on Rule 25A and Form INC-22A (Active) here, I hoped and still wish Form INC-22A (Active) to be an annual exercise as it solves other issues like a failure on the part of management to update the Registered Office Address on Record.

“Fun Fact: Distance between two latitudes is about 111 KM. Distance between two Longitude at the equator is 111 KM while at Poles it is Zero.”

Now, the Ministry of Corporate Affairs, with effect from 20 August 2022 (issued on 18 August 2022) notified the Companies (Incorporation) Third Amendment Rules, 2022 and inserted Rule 25B. (Notification at the official site here)

Photo by Ahmet Polat on Pexels.com

For physical verification, under Section 12(9), the Registrar of Companies should have 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. The belief that the company is not carrying on any business or operation from the Registered office does not form a cause for physical verification. This belief should base upon the information or documents made available on MCA 21. His opinion shall not be based on any complaint, media report or other information.

The newly inserted Rule has a vital reference to Section 248, “Power of Registrar to Remove Name of Company from Register of Companies”. We expect notification of a supplementary rule in the Companies (Removal of Name of Companies from the Register of Companies) Rules, 2016. [Note: it is notified and published on 26 August 2022].

Process of Verification

  1. The Registrar shall form a reasoned opinion that the company is not carrying on any business or operations;
  2. The Registrar shall issue an authorisation letter for physical verification;
  3. The Registrar shall visit at the address of the registered office of the company;
  4. The Registrar shall ensure the presence of two witnesses of the locality in which the registered office is situated;
  5. If required, the Registrar may also seek the assistance of the local police for the verification;
  6. The Registrar shall carry the documents filed in support of the address of the registered office of the company;
  7. The Registrar shall collect supporting documents of the address duly authenticated from the occupant of the property (self-attested);
  8. The Registrar shall check the authenticity of the documents filed on MCA21 by cross verification with documents so collected;
  9. The Registrar shall take a photograph of the Registered office while causing the verification (it is not clear if he will collect geo-coordinates also);
  10. The Registrar shall note the date and time of the visit and collect self-attested identity proof of the person available at the property; and
  11. The Registrar shall prepare a physical verification report in the given format.

The consequence of the Physical Verification Report

On the basis of the report of the physical verification, the Registrar shall form an opinion on whether the office is capable of receiving and acknowledging all communications and notices. If the Registrar finds the office incapable of receiving and acknowledging all communications and notices, it will send a notice to the company and all the directors:

  • of his intention to remove the name of the company from the register of companies; and
  • requesting them to send their representations along with copies of relevant documents, if any, within thirty days from the date of the notice.

The Registrar may take action under Section 248 of the Act based on the physical verification report and the representations made by the company and its directors.

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Tax stains are good for Strike Off Companies


Daag Achchhe haiN (Stains are good)” This must be a tagline of a politician or may of a Strike-off company.  Congratulations to all strike-off companies with income tax proceedings. A circular issued by Central Board of Direct Taxes may bring back life to these strike-off companies. It is reported that on or before 4th January 2018, NCLT, vide its interim orders, directs 46 strike –off companies to be deemed to be restored to its original number and entitles petitioner, Income Tax Department to raise demand by serving notice in accordance with law.

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Application for removal of Name of Company


Application for removal of the name of the companies from the register of companies maintained by Company registrars has legal roots in Subsection (2) of Section 248 of the Companies Act, 2013 as discussed earlier here. Rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 deals with its procedural aspects. We will discuss Rule 4 in this post.

[Law stated in this post was valid from 26 December 2016 to 9 May 2019. For Law effective from 10 May 2019, visit here.

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Show Cause Notices for Suo-motu strike off of company


In earlier post here, we discussed law relating to suo-motu removal of name of company from the register of companies of the Registrar of companies. Recently, Registrar of Companies posted strike off notices in bulk of companies seems eligible for suo-motu strike off. When Government is claiming it a strike on shell companies, such notices received mixed reaction. Public notices are also published by almost all Registrar of Companies. One can access these public notices here.

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Suo-motu Removal of name of company


Suo-motu removal of name of the companies from the register of companies maintained by Company registrars is legal roots in Sub – section (1) of Section 248 of the Companies Act, 2013 as discussed earlier here in its original form and its amendment by the Companies (Amendment) Act, 2015 as discusses thereafter. Rule 3 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 deals with its procedural aspects. We will discuss Rule 3 in this post.

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