The Government in the recent few months has been aggressively trying to plug escapes in the startup ecosystem to ensure that only genuine businesses get the perks of tax saving and angel investments. With digitisation and foreign investments strengthening our startup network, there are many more funding routes available now than what was accessible to startups in India years ago. With this boom, several creative ways came to be devised to clandestinely convert black money to a regular investment, under the garb of lending to startups.  

The most recent addition to the host of regulations that have come to be enforced on startups is the mandatory requirement to update details such as the pictures of the office from inside and outside, latitude, longitude etc. In this post, we highlight the requirements under Form 22A (Active Companies Tagging Identities and Verification), for active status verification of a company.

Applicability
Every company incorporated on or before the 31st December 2017 shall file the particulars of the company and its registered office, in e-Form ACTIVE (Active Company Tagging Identities and Verification) on or before 25th April 2019. It is free of cost to do so till this due date, after which the form can be filed only after paying a penalty of INR 10,000 to the Registrar of Companies.

What happens when the form is not filed?

If no request for recording the requisites is received, such companies are marked as “ACTIVE-non-compliant”. Such companies are barred from filing the following forms:

(i) SH-07 (Change in authorized capital);

(ii) PAS-03 (Change in paid-up capital);

(iii)DIR-12 (Changes in director except for cessation);

(iv) INC-22 (Change in registered office);

(v) INC-28 (amalgamation, de-merger)

Details required to be filed to retain the ‘Active’ status:

1. Name of the Company and CIN
2. Registered address of the company
3. Two photographs of the registered office of the company. Photograph of the Registered Office showing external building and inside office also showing in the picture, at least one director/KMP who has affixed his/her Digital Signature to the form.
4. Location of registered office on the map defining Latitude / Longitude
5. Email for OTP verification
6. Details of:

• Directors, DIN, and status of DIN
• Statutory Auditor (PAN, Firm number, the period of appointment, etc)
• Cost Auditor (if applicable)
• Company Secretary (if applicable)
• CEO or Managing Director
• CFO (if applicable)
• SRN Number of AOC 4 / MGT 7 For FY 17-18
  
  

While the issue of receipt of tax notices by angel investors and businesses is still not fully settled, this move is being seen as rather unnecessary by the start-up ecosystem. For a shell company that is ingenuine, it may not be hard to fake a picture and find the coordinates of an office address that it may have mentioned already in its other documents. For others, there exist several documents like tax returns, financial statements, ESI and other forms already filed with the RoC. Thus, the effectiveness of such a regulation in identifying proxy companies remains to be seen.

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