New Amendment: Startups need functional registered offices now

The Central Government vide its notification dated August 18, 2022 amended the Companies (Incorporation Rules), 2022 to insert a new rule 25B. It stipulates,

What is the change?

The RoC now has the power to cause a physical verification of the registered office of any company in the following manner:

By visiting the registered office address of the Company
By cross verifying the supporting documents of such registered office address of the company submitted during the filing. These will be collected during the physical verification and should be duly authenticated by the occupant of the property.
The physical verification of the registered office address may be done in the presence of 2 independent witnesses or through the local police.

How does it affect startups?

In the event, the physical verification is unsuccessful, the RoC shall send a show cause notice to the Company and its directors with an intention to remove the name of the Company from the Register of the Companies under Section 248 of the Companies Act, 2013. On failure to show cause for the reason why the company is not carrying on any business or operations from the registered office address, the company becomes eligible to be struck off the Register of Companies and hence shall shut down.

Checklist for ensuring compliance with the new amendment:

That the registered office is functional
That all documents submitted to RoC shall be kept in physical format at the registered office for verification
In the event that the above is not complied with, it is recommended that the Company report accurate details about the registered office to the RoC

Any change in the registered office address should be reported to the RoC. Notice of every change of the situation of the registered office, after the date of incorporation of the company, shall be given to the Registrar within thirty days of the change of registered address in form INC—22.