Comments
Shifting the registered office of a company from one State to another just got easier for cases involving successful resolutions under the Insolvency and Bankruptcy Code (IBC) 2016.
The Corporate Affairs Ministry (MCA) has amended the companies incorporation rules to explicitly provide that shifting of the registered office may be allowed where the management of the company has been taken over by new management under a resolution plan approved under IBC and no appeal is pending before any Court or Tribunal. Also no inquiry, inspection, investigation should be pending or initiated after the approval of the resolution plan, MCA has stipulated.
Ease of Doing Business
Under Rule 30 of Company Incorporation Rules 2014, shifting of registered office of company from one state to another required alteration of the memorandum of association which mandated Central Government’s approval.
Prior to the latest amendment, proviso to Rule 30(9) stipulated that Central Government will not allow the shifting of registered office if any inquiry, inspection or investigation has been initiated against the company or any prosecution is pending against the company under the Companies Act.
With the latest amendment, another proviso has been added to Rule 30(9).The amendment clarifies that where a new management has taken over the company under Corporate Insolvency Resolution Process (CIRP), the resolution plan has attained finality, and there is no inquiry pending/initiated after the approval of resolution plan, the Central Government may allow shifting of registered office.
Experts’ Take
Rohan Batra, Partner, Anagram Partners, a law firm, said that the amendment appears to facilitate shifting of registered office to another state/UT as part of the resolution process, once resolution plan is approved and no proceedings are pending under the Companies Act against the company.
Vipin Sharma, Partner, Luthra and Luthra Law Offices India said: “The clarification through this amended proviso by MCA is a welcome move as it further streamlines the process regarding change of registered office of a company acquired/ taken over through IBC process.
It supports the basic principle of IBC, that the acquisition of a company is on a clean slate basis once the resolution plan is approved by the adjudicating authority.”
Vinod PV, Senior Partner, IndiaLaw LLP* said: “Off late MCA has taken measures to ease procedure for change in registered office of the company from one state to another. The current amendment is also in the same direction specifically regarding change in registered office under resolution plans”.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.