Letterhead and Company Boards requirements Under Section 12 of the Companies Act 2013

Letterhead and Company Boards requirements Under Section 12 of the Companies Act 2013. It is well known that Company Registration in India is just the first step in starting a business. Numerous additional registrations and compliances are necessary to operate legally. Once incorporated, a company must comply with Section 12 of the Companies Act, 2013 specially., which outlines requirements in Post incorporation compliances for the Company, like displaying mandatory company information on letterheads, business documents, and company boards at office locations and failing to comply with these obligations can result in hefty penalties by MCA RD Adjudications. When a company initiates mandatory compliances such as:

Opening its first bank account

Applying for GST registration, MSME Registration, IEC Code, ESIC & EPFO Registration & Compliance

Filing INC-20A (Declaration for Commencement of Business)

INC-22 (Change of registered office or verification of address)

Startup India Registration

Appointment of 1st Auditors (ADT-1 Filing)

Holding a 1st Board meeting for the company

Or many more

For these above processes, a certified true copy (CTC) of board meetings is required on the company's letterhead, if in any cases, they are required to file a form with ROC/MCA. Specially for INC-22 and INC-20A, companies need to submit pictures of their registered office, showing both the inside and outside building pictures, including the company board in line with Section 12 of the Companies Act 2013. <Specimen Pictures>
Moreover, Every company, after Company Registration, must check the full compliance with Section 12 before initiating any further processes, including opening a bank account. Failing to comply may result in challenges such as:

The company PAN not being delivered if the company board is not properly displayed at the registered office.

Delays in obtaining mandatory licenses and registrations (like MSME, GST, IEC, etc.) due to the lack of proper documentation.

Hefty penalty under section 12(8)

What is the compliance under Section 12?

(3) Every company shall—

(a) 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 therefor 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;
(b) Have its name engraved in legible characters on its seal, if any ;
(c) Get its name, address of its registered office and the Corporate Identity Number along with telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business letters, billheads, letter papers and in all its notices and other official publications; and
(d) Have its name printed on hundies, promissory notes, bills of exchange and such other document  as may be prescribed:
Company Name and Registered Office Display:12(3)(a):

The company must affix its name and registered office address on the outside of its premises in a visible location.

The name must be visible and legible, both in the local language and in English.

Common Seal Applicability u/s 12(3)(b)
With the Companies (Amendment) Act, 2015 coming into force the common seal is no longer mandatory However, if a company chooses to use a seal, it must ensure that the company's name is clearly engraved on it. Before the amendment, the use of a common seal was mandatory, but now companies can choose to authorize documents either by affixing the seal (if they opt to have one) or by having them signed by the authorized officers of the company.
Letterhead and other Publication Requirements u/s 12(3)(c):

Every company must include the following details on Business letters, Billheads, Letter papers, Notices, and Other official publications:-

Current company name (along with any former name if changed in the past two years),

Corporate Identity Number (CIN),

Registered office address (which must match the information on MCA’s master data),

Email ID and Website (if any),

Telephone/fax number (if any)

Note for both section 12(3)(a&c):-

Proper usage of the term "Private Limited" (not "Pvt Ltd").

If the company has changed its name within the last two years, it must display both its current name and its former name(s) in accordance with Section 12(3)(a) and Section 12(3)(c).

Common Compliance Issues Leading to Adjudication Notices by MCA-RD
These days, Some of Companies are receiving adjudication notices from the Registrar of Companies (RoC)/ Regional Directors for non-compliance with Section 12 with reasons often include non compliance of:-

Old company name is missing on the letterhead after a name change.

CIN (Corporate Identity Number) is not included on business letters or other documents.

Contact number is absent on official documents.

Usage of "Pvt Ltd" instead of the correct format "Private Limited."

Email ID is missing on the letterhead.

The website is mentioned, but the company has failed to meet the annual compliance requirements under Section 92 (Annual Return).

The registered office address on the letterhead does not match the address listed in MCA's master data.

As per Section 12(2) of Companies Act. 2013. a Company shall furnish to the Registrar verification of its registered office in Form INC-22 within a period of thirty days of its incorporation in such manner as prescribed. However if any company has not filed the Form INC-22 within the stipulated time i.e 30 days from Incorporation.

A company should ensure that it replies to an Adjudication Notice properly to avoid penalty provisions. In case of non-compliance, if the company is found in default, it will be required to pay the penalty as prescribed under the law.
Section 12(8) – Penalty for Non-Compliance
If a company fails to comply with the provisions of Section 12, both the company and every officer in default shall be liable to a penalty of:

Rs.1,000 per day during which the default continues, subject to a maximum penalty of Rs.1 lakh.

However, under Section 446B of the Companies Act 2013, small companies, One Person Companies (OPCs), producer Companies and startups with DPIIT recognition are eligible for a 50% rebate on penalties. This clause allows such companies to reduce the financial burden of penalties by half, helping them avoid hefty fines.
Provision 446B of the Companies Act 2013:-
Notwithstanding anything contained in this Act, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be.
Explanation.—For the purposes of this section,—
(a) “Producer Company” means a company as defined in clause (l) ofsection 378A; 
(b) “start-up company” means a private company incorporated under this Act or under the Companies Act, 1956 and recognised as start-up in accordance with the notification issued by the Central Government in the Department for Promotion of Industry and Internal Trade.
In case of qualifying companies to take advantage of this 50% rebate to mitigate potential financial help when resolving adjudication Notice.
FAQ on Post Incorporation compliances u/s 12
Q1. What are the other Compliance so far applicable on any company under Companies Act 2013 , normally companies ignore to maintain ?
Ans.Specially Compliance of Statutory Register and Minutes Under Companies Act, 2013.
-Statutory Registers are official records that a company is legally required to maintain under the Companies Act, 2013. These registers contain important company-specific details related to:

Shareholders

Directors

Key Managerial Personnel (KMP)

Charges and loans, and

Other relevant information as per the Act.

-Minutes are the official records of the proceedings of a meeting, containing a summary of the discussions, resolutions, and decisions made during the meeting. Minutes serve as documentary evidence of what transpired during the meeting and are used to verify the actions and decisions of the company, ensuring accountability and compliance with legal requirements.
Download here Compliance action plan issued by ICSI:
https://www.icsi.edu/media/portals/70/action.pdf
Q2. Is it mandatory to have a common seal for my company?
Ans.No, as per the Companies Amendment Act, 2015, the use of a common seal is now optional. If your company decides to use a seal, it must have the company's name engraved on it. Otherwise, documents can be authorized with signatures from company officials.
Q3. What is the importance of Section 12 compliance?
Ans.Section 12 of the Companies Act outlines the requirements for displaying the company’s name and address at your business premises and on official documents. Failure to comply can result in fines and penalties, so it’s important to check that all details like the company name, CIN, email, and registered office address are up-to-date and correctly displayed.
Q4. How can my company avoid penalties?
Ans.To avoid penalties, make sure:

Your company details are correctly displayed on the outside of your office and on all official documents.

All contact details (CIN, email, phone number, website) are accurate and listed on business communications.

Q5. What if my company changes its registered office?
Ans.If you change your registered office, you must:

Notify the Registrar of Companies (RoC) within 15 days by filing the appropriate forms.

Ensure the new address is updated on your letterheads and in official records.

Q6.Do I need to update my documents if my company changes its name?
Ans.Yes, if your company changes its name, you must Display both the old and new names for the next two years on your company’s signage and official documents.
Q7. What are the common penalties for non-compliance under Section 12?
Ans.Penalties usually include fines on the company and its officers for late filings or incorrect submissions. Penalties may range up to Rs.1,00,000 depending on the duration of non-compliance.
Q8. What happens if Form INC-22 is not filed on time?
Ans.Failure to file INC-22 within 30 days can result in penalties, ranging from Rs.1,000 per day of default to a maximum of Rs.1,00,000.
Q9. How can a company reduce or appeal penalties?
Ans.A company can appeal to the Regional Director under Section 454(5) or request penalty reductions under Section 446(B), which may apply to small, startup and Producer Companies.
Q10. What are the consequences if penalties are not paid?
Ans.If penalties remain unpaid, further legal action can be taken against the company, including prosecution and additional fines, as outlined in Section 454(8) of the Companies Act.
Q11. Share some common MCA Adjudication Orders or cases under Section 12?
Ans.Here are a few examples of common RD adjudication orders under Section 12 of the Companies Act, 2013:
Section 12(1): Failure to Maintain Registered Office: Case: Natraj Traders Private Limited

Facts: The company’s registered office was found non-existent during physical verification. Mail sent to the office was returned with remarks indicating "no such firm."

Non-compliance: Failure to maintain a proper registered office.

Penalty: Rs.1,50,000 (for the company and its directors).

Action: Update registered office details and ensure physical existence at the provided address.

Section 12(3)(a): Displaying Name and Address: Case: Aquera Labs India Private Limited

Facts: The company failed to file Form INC-22 (verification of registered office) within the 30-day deadline, resulting in a delay of 399 days.

Non-compliance: Failure to display company name and address and file INC-22 in time.

Penalty: Rs.1,00,000 (for the company and each director).

Action: Ensure registered office details are filed on time, and display company information prominently.

Section 12(3)(c): Missing Details on Letterheads: Case: Ego Gear and Apparel Private Limited

Facts: The company’s business letters and documents lacked essential details, such as the Corporate Identity Number (CIN), email, and contact number, for a period of 475 days (from 30/08/2016 to 18/12/2017).

Non-compliance: Failure to include the company’s name, registered office, CIN, and other mandatory details on official documents.

Penalty: A fine of Rs.1,00,000 was imposed on the company and its Managing Director, totaling Rs.2,00,000.

Action: Update all letterheads and official documents to include required information as per Section 12.

Section 12(2): Failure to File Form INC-22: Case: Pavanveer Trade Services Private Limited

Facts: The company failed to submit Form INC-22 within 30 days of incorporation, resulting in a 123-day delay.

Non-compliance: Late submission of Form INC-22 for verification of registered office.

Penalty: Rs.1,00,000 (on the company and director).

Action: Submit INC-22 for registered office verification within the stipulated time frame to avoid future delays and penalties.

Compliance with Section 12 of the Companies Act, 2013 is a critical part of ensuring that businesses operate legally in India, requiring companies to display their name, registered address, Corporate Identity Number (CIN), and other essential details on letterheads, official communications, and office premises. In case of non-compliance, companies should be aware of the process for compounding and adjudication under the Companies Act 2013. To avoid penalties and safeguard valuable time, businesses can consult Compliance Calendar LLP for Company law advisory services from their team of CAs, CSs, and legal professionals.

It is well known that Company Registration in India is just the first step in starting a business. Numerous additional registrations and compliances are necessary to operate legally. Once incorporated, a company must comply with Section 12 of the Companies Act, 2013 specially., which outlines requirements in Post incorporation compliances for the Company, like displaying mandatory company information on letterheads, business documents, and company boards at office locations and failing to comply with these obligations can result in hefty penalties by MCA RD Adjudications. When a company initiates mandatory compliances such as:

Opening its first bank account
Applying for GST registration, MSME Registration, IEC Code, ESIC & EPFO Registration & Compliance
Filing INC-20A (Declaration for Commencement of Business)
INC-22 (Change of registered office or verification of address)
Startup India Registration
Appointment of 1st Auditors (ADT-1 Filing)
Holding a 1st Board meeting for the company
Or many more

Moreover, Every company, after Company Registration, must check the full compliance with Section 12 before initiating any further processes, including opening a bank account. Failing to comply may result in challenges such as:

The company PAN not being delivered if the company board is not properly displayed at the registered office.
Delays in obtaining mandatory licenses and registrations (like MSME, GST, IEC, etc.) due to the lack of proper documentation.
Hefty penalty under section 12(8)

What is the compliance under Section 12?

(3) Every company shall—

(b) Have its name engraved in legible characters on its seal, if any ;

(c) Get its name, address of its registered office and the Corporate Identity Number along with telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business letters, billheads, letter papers and in all its notices and other official publications; and

(d) Have its name printed on hundies, promissory notes, bills of exchange and such other document as may be prescribed:

Company Name and Registered Office Display:12(3)(a):

The company must affix its name and registered office address on the outside of its premises in a visible location.
The name must be visible and legible, both in the local language and in English.

Common Seal Applicability u/s 12(3)(b)

With the Companies (Amendment) Act, 2015 coming into force the common seal is no longer mandatory However, if a company chooses to use a seal, it must ensure that the company's name is clearly engraved on it. Before the amendment, the use of a common seal was mandatory, but now companies can choose to authorize documents either by affixing the seal (if they opt to have one) or by having them signed by the authorized officers of the company.

Letterhead and other Publication Requirements u/s 12(3)(c):

Every company must include the following details on Business letters, Billheads, Letter papers, Notices, and Other official publications:-
- Current company name (along with any former name if changed in the past two years),
- Corporate Identity Number (CIN),
- Registered office address (which must match the information on MCA’s master data),
- Email ID and Website (if any),
- Telephone/fax number (if any)

Note for both section 12(3)(a&c):-

Proper usage of the term "Private Limited" (not "Pvt Ltd").
If the company has changed its name within the last two years, it must display both its current name and its former name(s) in accordance with Section 12(3)(a) and Section 12(3)(c).

Common Compliance Issues Leading to Adjudication Notices by MCA-RD

These days, Some of Companies are receiving adjudication notices from the Registrar of Companies (RoC)/ Regional Directors for non-compliance with Section 12 with reasons often include non compliance of:-

Old company name is missing on the letterhead after a name change.
CIN (Corporate Identity Number) is not included on business letters or other documents.
Contact number is absent on official documents.
Usage of "Pvt Ltd" instead of the correct format "Private Limited."
Email ID is missing on the letterhead.
The website is mentioned, but the company has failed to meet the annual compliance requirements under Section 92 (Annual Return).
The registered office address on the letterhead does not match the address listed in MCA's master data.
As per Section 12(2) of Companies Act. 2013. a Company shall furnish to the Registrar verification of its registered office in Form INC-22 within a period of thirty days of its incorporation in such manner as prescribed. However if any company has not filed the Form INC-22 within the stipulated time i.e 30 days from Incorporation.

Section 12(8) – Penalty for Non-Compliance

If a company fails to comply with the provisions of Section 12, both the company and every officer in default shall be liable to a penalty of:

Rs.1,000 per day during which the default continues, subject to a maximum penalty of Rs.1 lakh.

Provision 446B of the Companies Act 2013:-

Notwithstanding anything contained in this Act, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be.

Explanation.—For the purposes of this section,—

(a) “Producer Company” means a company as defined in clause (l) ofsection 378A;

(b) “start-up company” means a private company incorporated under this Act or under the Companies Act, 1956 and recognised as start-up in accordance with the notification issued by the Central Government in the Department for Promotion of Industry and Internal Trade.

In case of qualifying companies to take advantage of this 50% rebate to mitigate potential financial help when resolving adjudication Notice.

FAQ on Post Incorporation compliances u/s 12

Q1. What are the other Compliance so far applicable on any company under Companies Act 2013 , normally companies ignore to maintain ?

Ans.Specially Compliance of Statutory Register and Minutes Under Companies Act, 2013.

-Statutory Registers are official records that a company is legally required to maintain under the Companies Act, 2013. These registers contain important company-specific details related to:

Shareholders
Directors
Key Managerial Personnel (KMP)
Charges and loans, and
Other relevant information as per the Act.

Download here Compliance action plan issued by ICSI:

https://www.icsi.edu/media/portals/70/action.pdf

Q2. Is it mandatory to have a common seal for my company?

Ans.No, as per the Companies Amendment Act, 2015, the use of a common seal is now optional. If your company decides to use a seal, it must have the company's name engraved on it. Otherwise, documents can be authorized with signatures from company officials.

Q3. What is the importance of Section 12 compliance?

Ans.Section 12 of the Companies Act outlines the requirements for displaying the company’s name and address at your business premises and on official documents. Failure to comply can result in fines and penalties, so it’s important to check that all details like the company name, CIN, email, and registered office address are up-to-date and correctly displayed.

Q4. How can my company avoid penalties?

Ans.To avoid penalties, make sure:

Your company details are correctly displayed on the outside of your office and on all official documents.
All contact details (CIN, email, phone number, website) are accurate and listed on business communications.

Q5. What if my company changes its registered office?

Ans.If you change your registered office, you must:

Notify the Registrar of Companies (RoC) within 15 days by filing the appropriate forms.
Ensure the new address is updated on your letterheads and in official records.

Q6.Do I need to update my documents if my company changes its name?

Ans.Yes, if your company changes its name, you must Display both the old and new names for the next two years on your company’s signage and official documents.

Q7. What are the common penalties for non-compliance under Section 12?

Ans.Penalties usually include fines on the company and its officers for late filings or incorrect submissions. Penalties may range up to Rs.1,00,000 depending on the duration of non-compliance.

Q8. What happens if Form INC-22 is not filed on time?

Ans.Failure to file INC-22 within 30 days can result in penalties, ranging from Rs.1,000 per day of default to a maximum of Rs.1,00,000.

Q9. How can a company reduce or appeal penalties?

Ans.A company can appeal to the Regional Director under Section 454(5) or request penalty reductions under Section 446(B), which may apply to small, startup and Producer Companies.

Q10. What are the consequences if penalties are not paid?

Ans.If penalties remain unpaid, further legal action can be taken against the company, including prosecution and additional fines, as outlined in Section 454(8) of the Companies Act.

Q11. Share some common MCA Adjudication Orders or cases under Section 12?

Ans.Here are a few examples of common RD adjudication orders under Section 12 of the Companies Act, 2013:

Section 12(1): Failure to Maintain Registered Office: Case: Natraj Traders Private Limited

Facts: The company’s registered office was found non-existent during physical verification. Mail sent to the office was returned with remarks indicating "no such firm."
Non-compliance: Failure to maintain a proper registered office.
Penalty: Rs.1,50,000 (for the company and its directors).
Action: Update registered office details and ensure physical existence at the provided address.

Section 12(3)(a): Displaying Name and Address: Case: Aquera Labs India Private Limited

Facts: The company failed to file Form INC-22 (verification of registered office) within the 30-day deadline, resulting in a delay of 399 days.
Non-compliance: Failure to display company name and address and file INC-22 in time.
Penalty: Rs.1,00,000 (for the company and each director).
Action: Ensure registered office details are filed on time, and display company information prominently.

Section 12(3)(c): Missing Details on Letterheads: Case: Ego Gear and Apparel Private Limited

Facts: The company’s business letters and documents lacked essential details, such as the Corporate Identity Number (CIN), email, and contact number, for a period of 475 days (from 30/08/2016 to 18/12/2017).
Non-compliance: Failure to include the company’s name, registered office, CIN, and other mandatory details on official documents.
Penalty: A fine of Rs.1,00,000 was imposed on the company and its Managing Director, totaling Rs.2,00,000.
Action: Update all letterheads and official documents to include required information as per Section 12.

Section 12(2): Failure to File Form INC-22: Case: Pavanveer Trade Services Private Limited

Facts: The company failed to submit Form INC-22 within 30 days of incorporation, resulting in a 123-day delay.
Non-compliance: Late submission of Form INC-22 for verification of registered office.
Penalty: Rs.1,00,000 (on the company and director).
Action: Submit INC-22 for registered office verification within the stipulated time frame to avoid future delays and penalties.