Physical Verification of Registered Office - Article

[CS Mohankumar]

Dear All,

Please find attached a brief Article on the new Rule 25B of Companies Incorporation Rules 2014 (Verification of registered office of the Company).

Regards,

Mohankumar
Company Secretary

Flat F 1, Sudarsan Apartments
72, VGP Selva Nagar Second Main road
Velachery, Chennai 600 042.

(Near Velachery Railway Station & PVR Cinemas )

Mail    : needa...@gmail.com
Office: 98843 90406

Website: http://csmohan.in

[surabibio1]

This is a shocking rule and will have far reaching implications for small companies, startups and single person companies. Many functioning companies including ours are at risk.

Today the rights we enjoy are due to the sacrifices and struggles of our predecessors. As far as Companies Acts are concerned our predecessors were mum – I feel. Hence the pathetic situation where lacks of companies had to use the fresh start scheme to survive.

 

My basic question:

Why is a privately held non-listed company being required to display its balance sheet to the world? Anyone including my competitor has access to my AOC-4. Don’t I have a right to privacy of my balance sheet.

Indian culture discourages anyone from asking a man his salary and woman her age.

But this country is framing rules contrary to its cultures. If an answer for this basic question of “Right to Privacy of Financials” can be addressed, then all subsequent blanket rules including those related to forms INC-22A, ADT will go defunct and everyone will have the ease to open as many companies as one likes – which I feel is the basic right of the budding young entrepreneur-citizen of India.

Ravi Ganesh

[surabibio1]

Clarification: By "Right to Privacy of Financials" means disclosing the financials only to the concerned parties i.e the share holders and the income tax department (because its taxes me based on my income and I expect it to keep it confidential).

Is this Privacy to big to ask?

[CS V Kartik]

Majority of the companies are going to land in trouble with this stringent process. I have just alerted my clients & ask them to keep their fingers crossed. Can't help

Kartik

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[Praveen singh]

Sir documents are public that increase transparency.

Because of this many financials institutes who search for data in order to provide different services like loan, insurance and other support services get to know about the soundness of companies. 

Apart from that verification of registered office will only increase corruption because inspector will only pass such place once he gets something in return.

[surabibio1]

Sir, 

IMHO Transparency and disclosure is internal to the  concerting parties. 

As far as companies Act is concerned it is exposing me to the world, including my competitors.

For a specific case of Loan, I can sign a Non-disclosure with the Bank!, submit my audited financials and get a loan. It is between the concerting parties. 

What is the need to disclose my financial to the RoC here?

[Ajay R Kamath]

This kind of rules are made only because the Ministry is not observing consultations with Stake holders or with affected parties as a pre consultation policy.

As always there is no observance of Pre- Consultation Policy.. see the policy here 

https://legislative.gov.in/sites/default/files/plcp.pdf

Here what happens is one day there is one rule and tomorrow there is another. 

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[surabibio1]

These rules are made because the other pillars of democracy have failed us.

What is the Opposition – Rahul Gandhi and P Chidambaram doing?

What is the media doing?

 

When the form INC22A was proposed in 2017, it should have been opposed.

PC sir should have asked?

1. Where do I get the geolocation coordinates? (The answer is US satellites)

2. Which tool to use to pinpoint the co-ordinate (Google Maps)

PC sir should have gone on the offensive and cried: “Ministry of Corporate Affairs is a shameless, incompetent entity”

Incompetent because it does not have the tools to implement its rules.

Shameless because it advises use of third country tools like US satellites and Google Map to pinpoint the coordinates.

But PC sir and the Opposition were mum.

Adobe is another point to note.

Is Adobe Acrobat an open source application? No

Is Adobe Acrobat Indian? No

Then how do you base all your reports on a third country, closed source app? Shameless? Incompetent?

 

This is our problem and we have to fight for it. Need to go for the jugular. Transparency vs privacy.

The last pillar of democracy, the judiciary is the only resort. I am ready. Is any like thinking legal professional ready to partner with me? To open up a new question of Right to Financial Privacy.

[Law Firm]

Sure. The problem always has been backing out in the last minute by members of the Fraternity from signing the PiLs we draft so laboriously and in a meticulous manner. Incidentally,point raised by you pertains to issue being agitated by yours truly before apex court seeking NIA investigation into wanton misuse of so called telecom licences by political elements. In interest of national security and better cause of both businesses and KMPs we are prepared.

Senior members and a few others of our esteemed CS Group are aware of past endeavours.

Best regards,

PVR LAWS

@

SCI 

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[Rabi Narayan]

Dear ICSI Sisters and Brothers

The Government and its Agencies are key stakeholders of all business legislations as they contribute interalia to economic growth, promote entrepreneurship and provide employment.  Act is the intention of the legislature, hence subordinate legislations must not encroach beyond a point, when we talk MINIMUM GOVERNMENT - MAXIMUM GOVERNANCE. Unfortunately, the eco-system failed to respond the business need and brought back INSPECTORAAJ what like another slogan then "GARIBI HATAO"

JAI HIND

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[surabibio1]

In this India #1 CS Forum, it is heartening to see this sympathetic response. The problems of customers are not opportunity for CS. As customers get strike-off, market size will diminish, new customers will shy away from Company incorporation and it is a bolt the eco system.

 

A spirited response would have been from CM Mamtha Banerjee! Or CM Stalin

She/He should condemn this rule saying:

“I will not send my Police force to accompany the Registrar to barge in and click photographs of Private Companies”

[surabibio1]

Thankyou for your words of support.

 

One approach would be to go to court with a begging bowl. Here is a fictional begging story.

My Lord, twenty years ago as three starry eyed young software engineers we started Infosys Pvt Ltd. In those days Private Limited was the fashion thing. We began operations from our garage (in our ancestral home in Mandya) just like Steve Jobs of Apple did. After 20 years due to family reasons we - the three directors are scattered in different metros across the country. But our head office still remains in Mandya – for the basic reason none of our current landlords are ready to give NOC to shift the company address. My Nephew alone stays back in our ancestral home. He is a hardware engineer by education. But he drives Ola in the day and delivers Swiggy in the evenings. We tried to keep our company  name board, but elevated electricity, water and property charges did not make it financially feasible. Hence if the Registrar decided to visit our office, he would find it locked and most probably the name board would be missing.

If the registrar decides to strike off our company then it is sure financial death to us. Under these circumstances I beg you to not implement this rule.

 

Or the Nethaji Approach:

Why am I made to submit my financials twice – first to the Income Tax and then to the RoC. Recalling Annadurai famous words, it is like having two doors. The big door for the big dog and small door for the small dog. I say let the small dog (ie the RoC) use the big door too.

Imagine the relief, if AOC4 becomes obsolete.

The slur painted on Private Limited will vanish.

Incorporating Private Limited will once again become the fashion. The eco system will flourish.

[Pankaj Khandelwal]

Under the old Act, the P&L was not available to download if I remember, when I asked my trainer why this is so, he informed - that's why it is called PRIVATE limited. And so many provisions due to privacy was not applicable by mentioning this non-applicability expressly in some separate section. 

Open for more discussion on this debate and also curious to know how the things may move further!

Thanks & Regards

[surabibio1]

Surely, I would love to see more discussion; especially on a different plane. Most of the discussions in our forum are from young CS on how to comply with the laws.  Seldom discussions happen on “why this law?”

These laws are not laws of nature like Newtons Third laws of motion. These are framed by humans. Young CS in this forum today will frame future laws tomorrow.

Can someone confirm if it is possible to download the AOC4 with all its attachments like Auditors Report, FS, Directors Report of any Private Limited Company by any person anywhere in the world by paying 100 rupees?

[Ajay R Kamath]

In order to make a change, Professional needs to protest for their right and litigate wherever possible, rather than raising tickets.

Unfortunately, professional do not have such kind of a spark. Instead, they just obeying what the institutes and ministry says. 

The reason why professionals even after watching this thread don't reply is because of FEAR.

[Rabi Narayan]

Dear All

Where the mind is without fear and the head is held high

Om Gan Ganapatay Namo Namah! Shri Siddhivinayak Namo Namah! Asta Vinayak Namo Namah! Ganapati Bappa Moraiya!

Jai Hind

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[JAI PRAKASH Jagdev]

Dears,

This is not good for Law-compliant Entities, but certain there are many black sheeps who form entities, collect money or ways of business and vanish to where and they are unable to tracked if caught them by then inumberale poor savers must have died.

I am sorry for these remarks.

J P JAGDEV

CS

M.A., LL. B., M.B.A. FCS

22-A, KANSHI NAGAR

MODEL TOWN,

AMBALA CITY -134003

HR IN

99960 20660

94160 20660

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[surabibio1]

On this Auspicious day, I feel blessed to receive this many responses.

Ajay thoughts on the priorities of young CS is appreciable. CS Jagadev’s response on misuse by black sheep is understandable.

 

Young CS’s esteemed thoughts on Financial Privacy is eagerly sought. The government does give protection in terms of limited liability. But is Privacy the price for this? The encroachment by the laws in terms of micromanagement of auditor appointment, general body meetings etc and the hefty fines are so intimidating that Rabi Narayan’s quote from Gitanjali

Where the mind is without fear and the head is held high

takes immense importance.

 Your thoughts on  MINIMUM GOVERNMENT - MAXIMUM GOVERNANCE would be beneficial to the ecosystem.