It's no secret that shell companies can be used to evade taxes, launder money or conceal other illicit activities. In fact, the use of shell companies is so rampant that some have gone so far as to call it a "global epidemic."
Governments around the world are now taking steps to curb the use of shell companies, and one of the most recent examples is India's e-form 22A.
What is e-form 22A?
In a nutshell, it's a new rule that requires companies to revalidate their registration. This rule came into effect on February 25th, 2019, and applies to every company registered on or before December 31, 2017, under the Ministry of Corporate Affairs (MCA).
Under the new rule, companies will have to file an e-form (22A) with the Registrar of Companies (RoC). The KYC form is an important step in ensuring that companies are operating legally. The due date for filing this, the active company tagging identities and verification (ACTIVE) comes 25th April 2019.
Who needs to file Form 22?
Every company registered under the Companies Act 2013 before December 31st, 2017 is required to file the e-Form INC - 22A. For the validation, the address of the company and other particulars need to be submitted through the form to the Registrar.
However, there are some companies that are exempt from filing this form:
- Companies that are already struck off or under the process of strike off by the Registrar.
- Companies under liquidation, dissolution or amalgamation
- And of course, companies incorporated after 1st January 2018.
Information to Be Submitted in Form 22A
The following information is to be submitted while filing e-form INC – 22A:
- The registered address of the company with the location on the map defining latitude/longitude
- The current principal business activity of the company
- Company Identification Number (CIN)
- Particulars of directors, designated partners or Karta of LLP
- Particulars of other top-level management personnel
- Particulars of auditor, financial officer, company secretary if applicable.
Remember - The company is required to complete all compliances for FY 2017-18 with regard to the filing of Financial Statements (Section 137) and Annual Returns (Section 92) before submitting this form.
Benefits of e-Form INC-22A
The main purpose of this form is to have an up-to-date and accurate database of all the companies registered in India. This will help the government keep track of financial irregularities and other illegal activities that might be going on under the guise of a shell company.
In addition, the new rule will also help to improve transparency and reduce the chances of fraud.
E-form INC-22A is a part of the government's larger efforts to crack down on shell companies and improve the business environment in India. So far, the response from businesses has been positive, and it is hoped that this will lead to more compliance in the future.
Fees for Filing E-Form INC - 22A
There is no fee for filing e-form INC - 22A provided you do it within the due date.
Penalty for Non-Compliance
If a company fails to file e-form INC - 22A, it will be liable to pay a penalty of Rs 1,000 per day. In addition, the directors of the company may also be held liable for punishment under the Companies Act.
Consequences for non-filing of Form INC - 22A
The late fee is Rs.10,000/- , if the company files INC - 22A on or after 26th April, 2019.
If the company doesn’t file INC-22A within 25th April 2019, the company will be treated as “ACTIVE non-complaint” and the Registrar of Companies shall not record the following changes with respect to the company:
- SH – 07 (Changes in Authorised Capital)
- PAS – 03 (Changes in Paid-up Capital)
- DIR – 12 (Changes in Director except for cessation)
- INC – 22 (Change of the Registered Office)
- INC – 28 (Amalgamation, de-merger)
Author : Nivetha
Date : 29-Jun-2022