India: The Registrar of Companies to make a Visit and Physical Verification of the Registered Office of the Company

published on 22 September 2022 | reading time approx. 4 minutes

On August 18, 2022, the Ministry of Corporate Affairs (“MCA”) amended the Companies (Incorporation) Third Amendment Rules, 2022 according to which now the Registrar of Companies (“ROC”) of the concerned state/city has been vested with the power to visit the registered office of any company and may make cause a physical verification of the registered office in case the ROC has a reasonable cause to believe that the company is not carrying on any business or operations.

The ROC shall carry the supporting documents related to the registered office as supplied to them along with the e-form and check the authenticity of the same during the verification by way of collecting duly authenticated documents from the occupant or any official available at the registered office.

In case the registered office of the company is found incapable of receiving and acknowledging all the communication and notices then in such scenario the ROC may strike off the name of the company.

Closer look at the provisions:

Section applicability: The section applies only in case where the ROC has reasonable cause to believe that the company is not carrying on any business or operations.
The physical verification mode: The physical verification of the registered office may be made in presence of two independent witness of the locality in which the registered office is situated. The ROC may also seek assistance of the local police, if required. The ROC shall also take a photograph of the registered office of the company.
ROC to verify documents: During the course of physical verification, the ROC shall verify the documents which were supplied to them as supporting documents in respect of the address of the registered office such as rent/lease agreement, NOC to use premises, utility bills etc.
Repercussions of non-compliance: Where the ROC, as a result of the visit and physical verification, finds that the registered office of the company is not capable of receiving and acknowledging all communication and notices, in such case ROC will send a notice to the company and all the directors of his intention to remove the name of the company from the it’s records.

However, the company will be entitled to make a representation before the ROC along with necessary supporting documents, if any, within a period of 30 days from the date of the notice.

How to be ready for the visit:

The underlying reason to give such rights to the ROC is to identify all the shell companies and strike off their names from records of the ROC. This is one of the several steps that resonates the Ministry of Corporate Affairs’ drive to eliminate the shell companies from the system to save money laundering.

The ROC or a duly designated officer of ROC visiting the registered office should not be a point of concern if the company is fully compliant with all the provisions related to having a genuine registered office.

Here are the few points that we would advise you to keep in mind to encounter a peaceful and successful visit, if any, is being made by the ROC at your registered office:

Though the ROC will make a visit only when he has a reasonable cause to believe that the company is not carrying on any business or operations, however, it is pertinent to note that “reasonable cause” is not defined under the law. Hence, it would be discretion of the ROC that whether he is of a view that the company is carrying a business or not. Few instances which may be considered as “reasonable cause” could be non-filing of annual accounts, non-delivery of the correspondence sent by the regulatory authorities, no revenue in the company for continuous two or more years, etc.
Hence, it is advisable to keep the company fully compliant.
Ensure that there is always a person available at the registered office to receive the correspondences and also make him aware of the protocol in case someone from the office of ROC visits the premises of registered office.
As the ROC during the visit, shall verify the documents with the originals, hence, it is recommended to keep all the originals of the supporting documents at the registered office, such as rent agreement/lease agreement, utility bills, no objection letter from the owner, etc., that were supplied to the ROC with the e-form.
Also, ensure that all books of accounts and other concerned documents are available at the registered office.
In case books of accounts and other concerned documents are maintained at other premises than the registered office then ensure that proper compliance and e-filings in that respect are done and the ROC is informed.
Ensure that the name, registered office address etc. of the company is painted or affixed and be kept outside in a conspicuous position, in legible letters, both in English and in vernacular language.