Study Notes: Powers and functions of Registrar of Companies

By Paridhi Tiwari 15 Minutes Read

Introduction

Incorporation of a company is an essential and lengthy process for a company to get its separate legal identity. Incorporation segregates the assets and incomes of a company from its owners and becomes independent. For this process certain documents are required such as Memorandum of Association (MoA), Articles of Association (AoA) and many more. Hence, the role of Registrar of Companies is crucial as the documents for incorporation are submitted to the registrar. Once the authentication of documents is finalized, the ROC issues the certificate of incorporation along with the certificate for commencement of business.

What is a Registrar of Companies?

As mentioned in the section 2(75) of Companies Act 2013, “Registrar” means a Registrar, an Additional Registrar, a Joint Registrar, a Deputy Registrar or an Assistant Registrar, having the duty of registering companies and discharging various functions under this Act.

Registrar is an important position in the process of incorporation as it receives all the important documents and makes the decision whether one will get an incorporation certificate or not.

The Registrar of Companies operates as a government agency under the Companies Act of 2013. Its offices are part of the Ministry of Corporate Affairs. According to Section 396 of the Companies Act, the Central Government is authorized to set up offices in locations it deems appropriate to handle the registration of companies and other related functions. Before section 396 of Companies Act 2013, section 609 of Companies Act 1956 dealt with the same. The Central Government can also appoint Registrars, as well as Additional, Joint, Deputy, and Assistant Registrars, as needed to manage company registrations and fulfill various responsibilities under the Act. The specific powers and duties of these officers are determined by regulations.

Objectives of the Registrar of Companies in India

The Registrar of Companies (RoC) is a crucial figure in the corporate world. He or she is responsible for deciding whether a company should be incorporated, a decision that demands careful consideration due to the numerous stakeholders involved. Beyond incorporation, the RoC must also ensure that companies comply with various regulatory requirements. The Registrar of Companies in India has several key objectives:

• Company Registration: To facilitate and oversee the registration of companies, ensuring compliance with the Companies Act.
• Regulatory Compliance: To ensure that companies comply with statutory requirements and file necessary documents in a timely manner.
• Corporate Governance: To promote good corporate governance practices by monitoring and enforcing adherence to legal and regulatory standards.
• Data Maintenance: To maintain an updated registry of all registered companies, providing accurate and reliable information to stakeholders.
• Investor Protection: To safeguard the interests of investors by ensuring transparency and accountability in corporate operations.
• Enforcement: To take appropriate action against companies that violate the provisions of the Companies Act.
• Facilitation of Business: To provide a streamlined and efficient registration process, thereby facilitating ease of doing business in India.
• Public Access: To provide public access to company information, enhancing transparency and enabling informed decision-making by stakeholders.
• Dissolution Oversight: Overseeing the dissolution and liquidation processes of companies.

Functions

The Registrar of Companies performs very crucial functions in maintaining and regulating a company. Some key functions carried out by the Registrar of Companies are as follows:

1. Duty to Register charges (Section 77):

Every company that creates a charge on its property or assets, whether in India or outside, must register the details of the charge with the Registrar within 30 days of its creation. This includes providing the necessary documents and paying the required fees.

2. Duty to issue certificate of registration of charge [Section 77(2)]:

If a charge is registered with the Registrar, a certificate of registration will be issued to the company and the person in whose favor the charge was created, in the prescribed form and manner.

3. Application for registration of charge (Section 78):

The Registrar is responsible for overseeing the registration of charges against a company. If a company fails to register a charge on time, the person benefiting from it can apply for registration with the necessary documents. The Registrar will notify the company and can register the charge if the company does not provide valid reasons against it. This process ensures transparency, compliance with company law, and protection of stakeholders’ interests by maintaining accurate records of financial liabilities.

4. Function to keep register of charges (Section 81):

The Registrar must maintain a register with details of charges registered for each company, according to the prescribed format. This register can be inspected by anyone upon payment of the required fee.

5. Return to be filed with Registrar in case promoters’ stake changes (Section 93):

All publicly traded companies are required to submit a specific form to the Registrar whenever there is a change in the number of shares owned by the company’s promoters and top ten shareholders. This must be done within 15 days of the change taking place.

6. Function to file a copy of financial statement (Section 137): 

Companies are required to submit their financial statements to the Registrar of Companies within a set deadline. This includes, if necessary, submitting a consolidated financial statement and required documents within 30 days of the annual general meeting. If the annual general meeting does not approve the financial statements, provisional statements must still be submitted within the same time frame, with final approval at a later meeting.

Non-compliance with these requirements leads to penalties. The company may be fined up to one lakh rupees per day, with a maximum of ten lakh rupees. Additionally, responsible officers, such as the managing director or CFO, may face imprisonment for up to six months, fines ranging from one to five lakh rupees, or both.

The Registrar of Companies manages the process, ensuring that filings are done on time and meet legal requirements. They also keep records and enforce penalties for non-compliance to promote transparency and accountability in corporations.

7. To submit the Director Identification Number (Section 157):

Every company must provide the Director Identification Number of all its directors to the Registrar within fifteen days of receiving notification under section 156.

8. Submitting inspection report (Section 208):

After inspecting the company’s financial records and conducting an inquiry, the Registrar or inspector will submit a written report to the Central Government. This report may recommend further investigation into the company’s affairs if deemed necessary, providing reasons for such a recommendation.

9. Filing of resolutions and agreements (Section 117):

The company must submit different resolutions and agreements to the Registrar of company within specific deadlines.

10. Public Disclosure (Section 399):

It requires the Registrar of company to keep an online registry and provide public access to information on its website.

Powers

The Registrar of Companies have been granted some significant powers to ensure smooth performance of their duties. Some of the powers possessed by the Registrar of Companies are as follows:

1. Power of Incorporation of companies (Section 7):

Under section 7 of the Companies Act 2013, ROC is responsible for the process incorporation. It acquires the documents such as Memorandum of Association and Articles of Association, approves them and facilitates the incorporation of companies.

2. Power to update records and mark loans as paid off, even without being notified by the company (Section 83):

The registrar has a right to enter a memorandum of satisfaction into the register or charges if:

• The debt that was protected by the registered charge has been completely or partially settled.
• Or a portion of the property or business that was initially subject to a charge has been removed from the charge or is no longer considered part of the company’s assets.

Registrar has the authority to record information in the register of charges without needing formal notification from the company. Once the entries are made, the Registrar must notify the parties involved within thirty days.

3. Power to levy penalties for failure to submit an annual return (Section 95(2)):

If a company does not submit its annual return on time and with the required additional fees, it will be fined between fifty thousand and five lakh rupees. Addition to this any officer of the company who is responsible for the failure to file may face imprisonment for up to six months, a fine of fifty thousand to five lakhs rupees, or both.

4. Power to provide an extension for scheduling the annual general meeting (Section 96):

The Registrar of Companies can grant permission to companies to postpone their Annual General Meetings (AGMs) beyond the usual deadline if there is a valid reason by a maximum number of three months.

5. Power to call for information, inspect books and conduct inquiries (Section 206):

The Registrar has the authority to request additional information or documents from a company if needed, and the company must comply within a specified timeframe. If the Registrar suspects wrongdoing or non-compliance, further investigations may be conducted, potentially resulting in penalties or inquiries by authorities. Non-compliance with these requests can lead to fines. These measures are crucial for ensuring that companies adhere to legal standards and are subject to rigorous regulatory oversight, thereby promoting transparency and accountability in corporate practices.

6. Power of search and seizure (Section 209):

The excerpt highlights the authority of the Registrar or an inspector to secure company documents that are at risk of destruction, alteration, or concealment. They have the power to obtain a court order to seize these documents and, with appropriate assistance, enter premises where the documents are located. Once seized, the documents must be returned to the company within a specified timeframe. Before returning them, copies are taken and marked for identification if necessary. This process ensures regulatory oversight and safeguards crucial records for investigations or audits, preventing potential tampering or loss of critical information.

7. Power of Registrar to remove name of company from register of companies (Section 248):

This provision outlines the process for deregistering a company in India under specific circumstances. If a company fails to commence business within a year of incorporation or remains inactive for two consecutive financial years, the Registrar of Companies can initiate removal proceedings.

This begins with the Registrar sending a notice to the company and its directors, who are given 30 days to respond. Alternatively, companies can voluntarily apply for removal after settling all debts, contingent upon receiving approval from at least 75% of members, with additional requirements under Special Acts possibly necessitating approval from regulatory bodies

If no valid reasons are provided in response to the notice, the Registrar has the authority to strike off the company’s name from the register, publishing a notice to this effect in the Official Gazette. Before taking this step, the Registrar ensures all company debts are settled. Importantly, even after dissolution, those responsible for the company remain liable for any outstanding obligations. The Tribunal retains the power to intervene and wind up the company, if necessary, thereby upholding accountability and ensuring compliance with legal obligations.

Conclusion

In conclusion the role of Registrar of Companies is vital not only for the incorporation process but for administration and regulation of the company as well. It makes sure that the company is being operated in accordance with the legal framework, with transparency and accountability.

Paridhi Tiwari