[Opinion] Co. & Directors End Up Paying Penalty for Not Having Proper Sign Board Outside the Office of Company at Registered Office
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- Last Updated on 18 December, 2023
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Prof R Balakrishnan – [2023] 157 taxmann.com 351 (Article)
1. Brief of this case
The registered office of a company is by and large the principal place of business activities conducted by a company. Promoters of the company decide the State in which the registered office shall be situated at the time of incorporation of the company. The registered office of a company is the main office of the company to which all communication relating to the company is sent by the governmental departments. The promoters of a company or Limited Liability Partnership (LLP) must declare the registered office of the company during in corporation and maintain certain documents at the registered office. A registered office is the official address of a company to which all official letters and reminders will be sent by any person, any government or non-government or regulatory body. The provisions of the Companies Act 2013 also require that every company is required to paint or affix its name and address of its registered office and keep the same painted or affixed on the outside of every office or place where the company’s business is carried on. The signboard of the company is to be in a conspicuous position in legible letters.
In this particular case, based on a compliant received by the Registrar of Companies, the Registrar had sent multiple letters to the company’s registered office with copies to the four directors of the company. All the letters written by the Registrar had come back undelivered to his office by the postal authorities stating that “No such persons, Returned to sender”. Thereafter the officials had visited the address of the registered office of the company and noticed that the office was locked and there was no sign board mentioning the details of the company. This triggered out the belief to the Registrar that the company had not been maintain its registered office as required under the provisions of the Companies Act 2013 and he followed the due procedure of adjudication on this matter and levied penalty upon the company and its directors to a tune of Rs. 5 lakh. Let us go through the case law in details with reference the provisions, facts of the case and the consequences of non-compliance under the Act.
2. Relevant provisions under the Companies Act 2013
Section 12 of the Companies Act 2013 is the relevant provision on this matter in the chapter number II – relating to Incorporation of company and matters incidental there to under the heading registered office of the company and the extracts of the section is as given below.
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Companies Act 2013
Chapter II – Incorporation of company and matters incidental thereto
Section 12 – Registered Office of the company
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Section
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Provisions
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Every company belonging to such class or classes of companies as may be prescribed shall have the following whole-time key managerial personnel,—
(i) Managing director, or Chief Executive Officer or Manager and in their absence, a Whole-time Director;
(ii) Company secretary; and
(iii) Chief Financial Officer
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Proviso
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Provided that an individual shall not be appointed or reappointed as the chairperson of the company, in pursuance of the articles of the company, as well as the managing director or Chief Executive Officer of the company at the same time after the date of commencement of this Act unless,—
(a) the articles of such a company provide otherwise; or
(b) the company does not carry multiple businesses.
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Proviso
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Provided further that nothing contained in the first proviso shall apply to such class of companies engaged in multiple businesses and which has appointed one or more Chief Executive Officers for each such business as may be notified by the Central Government.
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Every company shall—
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12 (3)(a)
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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;
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12 (3) (b)
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have its name engraved in legible characters on its seal, if any;
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12(3)(c)
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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 documents as may be prescribed:
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12 (3)(d)
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(d) have its name printed on hundies, promissory notes, bills of exchange and such other documents as may be prescribed:
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Proviso
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Provided that where a company has changed its name or names during the last two years, it shall paint or affix or print, as the case may be, along with its name, the former name or names so changed during the last two years as required under clauses (a) and (c):
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Proviso
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Provided further that the words ==One Person Company shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved.
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12 (4)
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Notice of every change of the situation of the registered office, verified in the manner prescribed, after the date of incorporation of the company, shall be given to the Registrar within fifteen days of the change, who shall record the same.
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12 (5)
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Except on the authority of a special resolution passed by a company, the registered office of the company shall not be changed,—
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12 (5)(a)
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in the case of an existing company, outside the local limits of any city, town or village where such office is situated at the commencement of this Act or where it may be situated later by virtue of a special resolution passed by the company; and
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12 (5)(b)
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in the case of any other company, outside the local limits of any city, town or village where such office is first situated or where it may be situated later by virtue of a special resolution passed by the company:
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Proviso
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Provided that no company shall change the place of its registered office from the jurisdiction of one Registrar to the jurisdiction of another Registrar within the same State unless such change is confirmed by the Regional Director on an application made in this behalf by the company in the prescribed manner
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12 (6)
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The confirmation referred to in sub-section (5) shall be communicated within a period of thirty days from the date of receipt of application by the Regional Director to the company and the company shall file the confirmation with the Registrar within a period of sixty days of the date of confirmation who shall register the same and certify the registration within a period of thirty days from the date of filing of such confirmation
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12 (7)
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The certificate referred to in sub-section (6) shall be conclusive evidence that all the requirements of this Act with respect to change of registered office in pursuance of subsection (5) have been complied with and the change shall take effect from the date of the certificate
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Penal provision for any default/violation
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12 (8)
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If any default is made in complying with the requirements of this section, the company and every officer who is in default shall be liable to a penalty of one thousand rupees for every day during which the default continues but not exceeding one lakh rupees.
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