Challenges While Filling INC-22A ACTIVe form

The Ministry of Corporate Affairs has amended the Companies Amendment Act Rules, 2019, wherein the companies which have registered before December 31, 2019 are needed to file eForm ACTIVe (which is an acronym of Active Company Tagging Identities and Verification) on or before June 15, 2019. Failure to which may lead to a fine of Rs 10,000 for a company declared Non- Active.

Once the company is made Non- Active the company will not be able to make amendments in the capital structure or will not be able to go ahead with the merger deals. Such non-compliant companies will not be able to rotate the directors or make any resurrection changes in the registered offices. Though it is a very nascent step in this direction and it is criticized heavily by the opposition because the systems are not strong enough to fetch right information thus creating hassles for users.

Annual Filling Forms AOC-4/AOC-4XBRL and MGT for FY 2017-18

The compliance of this rule is not possible for the companies who follow different financial year as per the section 2(41) of the Companies Act 2013. The SRN of these forms are not pre-filed.

Number of Directors

Another problem with this form INC 22A is that it does not accept the SRN forms filed under the Old Companies Act, therefore if the companies have increased the number of directors more than 15 under the old Companies Act by the way of special resolution will not be able to proceed with this form because INC-22A only accepts the form passed under 2013 legislation.

Appointment of Statutory Auditor

During the initial period, the government released physical form ADT-1 for the period 01-04-2014 to 19-10-2014  which was used to be filed as an attachment with GNL-2. Later on, MCA released the e-form for the appointment of the auditor ADT-1.  Hence, the auditor appointment details went missing through the form GNL-2 as that time the e-form ADT-1 was not there.  Moreover, there are several cases where a form ADT-1 is not mandatory, especially in the case of casual vacancy.  But since information in this form is derived from ADT-1, even after the amendment of auditor, the INC 22A fetches wrong details that are no longer valid in such scenario.

Director status of non ACTIVe/KYC compliant companies

As per the rule mentioned in section 25A, if the company is not able to file the form, the company will be labeled as active non-compliant company and the director of such a company shall be known by the name of director of active non-compliant company and he will be liable for all the legal implications.

Though there is a lot of hassle involved in solving such dispute, but with constant revisions, things will fall in place.  This step of the government will definitely help the government to identify the shell companies and carry out substantive operations to nip the evil in the bud.