It has been more than a month since the Ministry of Corporate Affairs issued Companies (Incorporation) Amendment Rules, 2019 mandating all the Companies that are incorporated on or before December 31, 2017 to file ACTIVe Form.
While by now everyone knows what is ACTIVe form and what all information are required to be filed with form. Hardly any Company has completed the filing of form with MCA. We have tried to compile the current experience and issues faced by various companies in the article below:
1. Non Appointment of KMP when it is mandatory to appoint.
One of the major reasons why many companies are not able to file the form is because non-appointment of KMP mainly Company Secretary. While the law mandates compulsory appointment of Company Secretary in case Company’s paid-up capital exceeds Rs. 5 crores. So in cases, a Company which is compulsorily need to appoint Company Secretary and have not appointed CS on board, will not be able to file the form till the CS is appointed as per Company’s record.
Solution: No apparent solution is available other than appointment of relevant KMP. Unless MCA changes the form, the form will not be processed unless KMP is appointed and his/her details are linked on MCA Master data.
2. Form GNL-2 is filed for appointment of Auditor.
In 2014, many Companies had filed eForm GNL 2 after appointing Auditors for a period of 5 years as per Companies Act, 2013 and have not changed the Auditors since then. Now while doing pre-scrutiny of the form, the SRN of GNL-2 is not picked automatically in the form and since no ADT-1 is required the filed, such Companies are not able to file ACTIVe form as well.
Solution: The matter is already raised with MCA and MCA has assured that they are coming with revised version of form very soon addressing the issue. So all such companies can wait till the time revised version of form is issued.
3. Photograph:
a. Is section 12 Compliance mandatory?
One of the most discussed and debated requirements of eForm INC 22A or ACTIVe Form is “Photograph of the Photograph of Registered Office showing external building and inside office also showing therein at least one director/ KMP who has affixed his/her DSC to this form.”
While the simple interpretation of the requirement means that Company to attach the external building photograph and internal premise photograph with one of the Director/KMMP signing form in photo. Recently concluded webinar by ICSI has taken a stand that external building photo should also be clicked with KMP/Director and Company shall also ensure that its Section 12 Compliance are done.
Basically a Section 12 of the Companies Act, 2013 talks about registered office of the Company and it, inter alia, provides that Every company shall paint or affix its name, and the address of its registered office, and keep the same painted or affixed on the outside of every office or place in which its business is carried on, in a conspicuous position, in legible letters, and if the characters employed therefore are not those of the language or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages;
Now the question arises, if the Company does basic compliance of Section 12, what all Compliance will be attracted?
- Publication of Name, Address of the Registered Office in legible letters
- Name and other details in regional language
- Publication of GSTIN outside registered office
- Shops and Establishment compliance, if any applicable; and
- Other local law compliance.
However, the question arises is that, is it really mandatory to display the picture and attract and ensure all such compliance? In my opinion no it is not required. However, after the webinar by ICSI the industry position has changed and we are awaiting further clarification.
Solution: The photographs are still a mystery according me and we should wait for further clarification from MCA/ICSI. However, if no such clarification is issued with the next update, it is advisable to go ahead and do compliance of Section, GST and other local laws to avoid conflict later.
b. Is Longitude and Latitude necessary to be mentioned in Photograph?
No such requirement. A simple photograph will suffice the purpose. All other requirements circulating on Whatsapp and social media about Longitude and Latitude to be displayed on photo are mere rumors.
c. Is it necessary to click photographs from particular App?
Again no such requirement. The Company can click photograph even from default Mobile Camera or even through professional photographer. A simple photo will work without any particular specific app.
4. Disqualified Directors on Board?
The disqualified directors deemed to have vacated office on the day of disqualified under Section 164(3). Hence if the Company has not field relevant DIR-12 removing such disqualified Directors, such companies will not be able to file form ACTIVe
Solution: File DIR-12 for removal of disqualified directors ASAP. If after removal number of Directors falls below the minimum required number, appoint new directors on Board who are not disqualified.
5. Pending Annual Filing for FY 2017-18?
If the Company has not done its Annual Filing for FY 2017-18, such companies will not be able to file ACTIVe form till the time Annual Filing forms are filed and approved.
Disclaimer:
This material and the information contained herein are prepared by JMJA & Associates LLP, Practicing Company Secretaries (JMJA) is intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). None of JMJA, its associate firms, or its members/employees is, by means of this material, rendering professional advice or services. The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser. JMJA shall not be responsible for any loss whatsoever sustained by any person who relies on this material.
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