Why this form is introduced:
This is one more step taken by the Government to identify and eliminate shell companies. The government has taken a number of measures to crackdown shell companies i.e., companies operating only on a paper and being vehicles of either round-tripping or money laundering or to obscure ownership. First, during the year 2018, Government struck off about 2 lakhs companies who failed to file their financial statements or annual returns for two or more successive years and secondly more than three lakh directors were disqualified for non-filing of annual returns by their companies for three or more years. Also to avoid ghost or dummy directors MCA announced DIR-3 e-KYC by giving details such as personal mobile number, email IDs along with OTP verification and ID & address proof and also Government has mandated video recording at the time of obtaining DSC.
Now the MCA has come out with a new notification requiring to file e-form INC-22A (ACTIVE – Active Company Tagging Identities and Verification) on or before 25th April 2019.
Who should file this form and due date for filing:
Every Company incorporated on or before 31st December 2017.
4 Types of circumstances where it is exempt :
- Struck Off Companies or under a process of Striking Off
- Companies under Amalgamation
- Companies under Liquidation
- Dissolved Companies
The due date for filing this form is on or before 25th April 2019.
5 Key Pre-requisites to file this form:
There are 5 pre-requisites to be complied with before filing this eActive Form, which are:
- Financial statements and Annual returns have been filed with the MCA up to the latest the financial year 2017-18.
- All directors of the company have filed DIR-3 e-KYC i.e. and the status of the directors should active or approved
- In public listed companies or companies with a Share Capital in excess of Rs 5 Crores, to ensure that they have appointed a full-time company secretary and in companies mandated to have a cost audit to do so.
- All Key Managerial Personnel are appointed and holding office as per the Companies Act 2013.
- To ensure that all minimum Directors are holding office as per the Companies Act 2013.
What information is required to be given in the form:
- About the Company Details:
- Name & Reg. Office
- Latitude & Longitude (RO)
- Mail ID & OTP verification
- Directors with DIN
- Statutory & Cost Auditor Details
- Name, PAN
- Membership, Firm Registration Number (FRN)
- Period of appointment
- Key Managerial Personnel (KMP) information.
- Details of Company Secretary
- Details of annual returns – SRN of e-form AOC-4 & MGT-7 for the recent financial year 2017-18
- Mandatory attachment of photographs – The attachment should be in PDF only
Mandatory Photograph attachment –
The photograph/s to be taken of the Registered Office and to include the following image:
- External Building facade which should include images of the following :
- Full name of the company
- Complete address of the registered office
- CIN of the company
- An image of the Director of the company should be present while taking a photograph.
- Name and address should also have in regional language i.e., say in Karnataka name should also be in Kannada
- GSTIN also to be mentioned on the name board
- Other requirements as per the state/labor laws
- A photograph of the Director inside the office.
The Director should be the same person who would be signing the Form as an authentication.
Since a photograph of the external building facade with the name board as also that of the Director inside the office is required, it is presumed that there need to be two attachments.
The other requirement of compliance with the State or Labour laws is generally the name board in the local vernacular is also expected.
Default in compliances – Its Consequences
- The company gets marked as non-compliant with the notation as “Active – Non-Compliant” in MCA Master Data.
- Late Filing Fee of 10,000/- from 26th April 2019.
- Filing of following e-forms will be barred for “Active – Non-Compliant Companies”:
- SH-7 – Alteration of share capital
- PAS-3 – Allotment of shares
- DIR-12 (except cessation) – Changes Board of Directors
- INC-22 – Change in the registered office
- INC-28 (for amalgamation /demerger) – Application for Amalgamation and demerger scheme
This is a welcome move from Government to crack down on shell and paper companies and brings in accountability in corporate ownership and control. We expect several practical difficulties in being compliant. Some of them are :
Companies in Co-Working spaces: With the recent popularity of co-working spaces especially in the start-up space where several companies are located in one facility, they may be left with two options. One, the co-working facility owner to permit listing out the many companies it houses with their name boards. Second, is the Director to have the Registered Office in their residential address and operate from a co-working space.
Residential Address of Directors: Many small companies who for business reasons have chosen the corporate form of a legal entity with hardly any employees may face a dilemma. For example, if the registered office address is in a house in a residential area by putting out a name board may invite objections from the local Residential Welfare Association, may be in violation of the local zoning laws of the municipality, can invite commercial tariff for utilities consumed which is much higher than for domestic consumption. While if the address is in a residential apartment complex, the Building Association may not permit the placement of a name board, in which case they may have to find an alternate building to make as their registered office address.
This initiative should not trigger a new business opportunity of leasing Registered Office addresses, and the Government to plug that then requires intimation of Principal place of business as an additional disclosure in addition to the Registered Office.
The introduction of this e-ACTIVE form will surely keep Chartered Accountants and Company Secretaries active and time would tell if this move does indeed uncover shell and dormant companies. Perhaps’ the Government may now be able to link cash deposits from companies during the demonitisation period to the companies who now are unable to be compliant.