Authority Letter Could Not Be Delivered – Immediate Action Needed!

Authority Letter Could Not Be Delivered – Immediate Action Needed!. In this article we will take you through the mandatory provisions under Section 12 of the companies Act, 2013. It mandates that every company must establish its registered office within 30 days of incorporation and ensure that it remains capable of receiving communications and notices. Any change in the registered office must be reported to the Registrar of Companies (ROC) within 30 days. Failure to comply with these provisions attracts penalties under Section 12(8), which can be imposed on both the company and its officers in default.
Applicable Provision         
Section 12 of the Companies Act, 2013, mandates that every company must maintain a registered office within 30 days of its incorporation. This office must be capable of receiving and acknowledging all communications and notices. Additionally, companies are required to notify the Registrar of Companies (ROC) about any changes to the registered office within the prescribed time frame.
Failure to comply with these provisions attracts penalties under Section 12(8) of the Act, which includes monetary fines imposed on the company and its officers in default.
Facts of the Case with Respect to ROC and RD
Vidarbha Bidi Limited, a registered entity, was found to be in violation of Section 12 of the Companies Act, 2013. The company failed to maintain an operational registered office, and notices sent to the registered address were not acknowledged.
Upon non-compliance, the ROC initiated an inquiry and reported the matter to the Regional Director (RD), Mumbai. The RD, after reviewing the findings of the ROC, issued a show cause notice to the company and its officers, seeking an explanation for the violation.
ROC has imposed penalty of Rs. 1,00,000 on each of the addressees of the order (i.e. Company and 3 officers in default)
During the proceedings, with RD Vidarbha Bidi Limited contended that the company has its registered office in Akola till 30th August 2020 and a person is entrusted with receiving and acknowledging all communications at the office.
Notice sent by IEPF authority remain undelivered as the person responsible must have gone out for some official work, which coincides with the time of reaching IEPF notice. Company also contends that; they have received the SCN as well on the same address which is evident that registered office of the company is operational.
Penalty Imposed
As per Section 12(8), the ROC, imposed a penalty on both the company and its officers. The initial penalty prescribed under the law was as follows:

The company and all three officers in default: ?1,00,000

Any Reduction in Penalty
Vidarbha Bidi Limited, through legal representation, sought a reduction in the penalty citing financial hardships and operational difficulties. Upon reviewing the plea, the RD, Mumbai partially reduced the penalty, considering the company’s willingness to comply and its remedial steps post-notice. The revised penalties were as follows:

Company: - Rs 25,000

Director 1: - Rs 25,000

Director 2: Rs 25,000

Director 3: Rs 25,000

The reduction was granted based on the company’s assurance to maintain compliance in the future and rectify the default within the stipulated period.
Conclusion
The case of RD, Mumbai vs. Vidarbha Bidi Limited highlights the importance of maintaining a functional registered office as required under Section 12 of the Companies Act, 2013. The decision reaffirms that regulatory authorities are stringent in ensuring compliance but may exercise discretion in penalty reduction based on mitigating factors.
Companies must ensure adherence to statutory requirements to avoid penalties and legal consequences. This case serves as a reminder that corporate governance and compliance with ROC regulations are crucial to maintaining lawful business operations.
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In this article we will take you through the mandatory provisions under Section 12 of the companies Act, 2013. It mandates that every company must establish its registered office within 30 days of incorporation and ensure that it remains capable of receiving communications and notices. Any change in the registered office must be reported to the Registrar of Companies (ROC) within 30 days. Failure to comply with these provisions attracts penalties under Section 12(8), which can be imposed on both the company and its officers in default.

Applicable Provision

Section 12 of the Companies Act, 2013, mandates that every company must maintain a registered office within 30 days of its incorporation. This office must be capable of receiving and acknowledging all communications and notices. Additionally, companies are required to notify the Registrar of Companies (ROC) about any changes to the registered office within the prescribed time frame.

Failure to comply with these provisions attracts penalties under Section 12(8) of the Act, which includes monetary fines imposed on the company and its officers in default.

Facts of the Case with Respect to ROC and RD

Vidarbha Bidi Limited, a registered entity, was found to be in violation of Section 12 of the Companies Act, 2013. The company failed to maintain an operational registered office, and notices sent to the registered address were not acknowledged.

Upon non-compliance, the ROC initiated an inquiry and reported the matter to the Regional Director (RD), Mumbai. The RD, after reviewing the findings of the ROC, issued a show cause notice to the company and its officers, seeking an explanation for the violation.

ROC has imposed penalty of Rs. 1,00,000 on each of the addressees of the order (i.e. Company and 3 officers in default)

During the proceedings, with RD Vidarbha Bidi Limited contended that the company has its registered office in Akola till 30^th August 2020 and a person is entrusted with receiving and acknowledging all communications at the office.

Notice sent by IEPF authority remain undelivered as the person responsible must have gone out for some official work, which coincides with the time of reaching IEPF notice. Company also contends that; they have received the SCN as well on the same address which is evident that registered office of the company is operational.

Penalty Imposed

As per Section 12(8), the ROC, imposed a penalty on both the company and its officers. The initial penalty prescribed under the law was as follows:

The company and all three officers in default: ?1,00,000

Any Reduction in Penalty

Vidarbha Bidi Limited, through legal representation, sought a reduction in the penalty citing financial hardships and operational difficulties. Upon reviewing the plea, the RD, Mumbai partially reduced the penalty, considering the company’s willingness to comply and its remedial steps post-notice. The revised penalties were as follows:

Company: - Rs 25,000
Director 1: - Rs 25,000
Director 2: Rs 25,000
Director 3: Rs 25,000

The reduction was granted based on the company’s assurance to maintain compliance in the future and rectify the default within the stipulated period.

Conclusion

The case of RD, Mumbai vs. Vidarbha Bidi Limited highlights the importance of maintaining a functional registered office as required under Section 12 of the Companies Act, 2013. The decision reaffirms that regulatory authorities are stringent in ensuring compliance but may exercise discretion in penalty reduction based on mitigating factors.

Companies must ensure adherence to statutory requirements to avoid penalties and legal consequences. This case serves as a reminder that corporate governance and compliance with ROC regulations are crucial to maintaining lawful business operations.