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Companies (Authorized To Register) Amendment Rules, 2023

Companies (Authorized To Register) Amendment Rules, 2023

The Ministry of Corporate Affairs (MCA) recently introduced the Companies (Authorized to Register) Amendment Rules, 2023. These amendments aim to modify the existing Companies (Authorized to Register) Rules of 2014. With the authority granted by the Companies Act of 2013, particularly Section 164(1), Section 367, Section 374, Section 466(1), and Section 469(1) and (2), the MCA implemented these changes, which came into effect on 23 January 2023.

Synopsis of Companies (Authorized to Register) Amendment Rules of 2023

The Companies (Authorized to Register) Amendment Rules of 2023 bring significant changes to Rule 3(2) (a), (b), (c), and (d), as well as Form No. URC-1 of the Companies (Authorized to Register) Rules of 2014.

• These amendments aim to streamline and simplify the pre-registration and post-registration compliances that entities like LLPs, partnership firms, trusts, and societies must fulfill when applying for registration as a company with the Registrar of Companies.
• Companies (Authorized to Register) Amendment Rules of 2023 reduce the regulatory burden on entities seeking registration as companies.
• The intention is to make the registration process smoother and more efficient for LLPs, partnership firms, trusts, and societies while ensuring compliance with necessary legal requirements.

Companies Authorised to Register Amendment rules 2023_

Companies (Authorized to Register) Rules of 2014

The Companies (Authorized to Register) Rules of 2014 outline the requirements for entities such as companies, limited liability partnerships, trusts, and Section 8 companies seeking registration from the Registrar of Companies. These rules impose pre- and post-registration obligations on entities seeking registration, which are essential for every company to comply.

Amendments to Rule 3(2) – Registration Requirements for LLPs

Rule 3(2) section focuses on the registration requirements for limited liability partnerships (LLPs) intending to be registered as companies limited by shares. The amendments introduce changes to the information and documents that must be provided during registration, enhancing clarity and streamlining the procedure.

Key Amendments and Implications:

List of Partners

LLPs seeking registration must provide a detailed list of all partners involved in the entity. The list should include the following:

• Partners names
• Occupations
• Addresses
• Details of shares held
• Shares allotted for cash consideration and consideration other than cash specifying the source.
• If shares are numbered, they should be listed accordingly.

Proposed Directors

 A list of the proposed first directors of the company, along with their Director Identification Numbers (DIN), passport details, expiry dates, residential addresses, and interests in other corporate bodies or firms, should be submitted. Consent from the proposed directors to act as company directors is also required.

Partnership Firm

 In the case of a partnership firm seeking registration, the partnership deed or any regulating instrument should be provided. If the partnership deed has been revised, copies of the original and subsequent deeds, including the latest version, must be submitted. If the firm is registered with the Registrar of Firms, the certificate of registration issued by the registrar should also be provided.

Income Tax Return

 A copy of the firm’s recent income tax return or LLP must be submitted as part of the registration process.

No Objection Certificate (NOC)

Previously, written consent or a NOC from all secured creditors was required. However, following the amendment, only a NOC from secured creditors and charge holders is necessary. The amendment also removes the requirement for obtaining written consent from most members at a general meeting and the undertaking of directors’ compliance with the Indian Stamp Act of 1899.

Amendments to Rule 3(2)(b) – Registration Requirements  for partnership firm or LLP

Rule 3(2)(b) of the Companies (Authorised to Register) Rules, 2014 focuses on the requirements for registration when an application is made by a partnership firm or a limited liability partnership seeking to register as an unlimited company or a company limited by guarantee.

Key Amendments and Implications:

• List of Partners: The applicant must submit a comprehensive list of partners involved in the firm or limited liability partnership, including their names, occupations, addresses, and proof of ownership. This list should be provided six days before submitting the registration application.
• Proposed Directors: A list of the proposed first directors of the company, along with their Director Identification Numbers (DIN), passport details (including expiry dates), residential addresses, and interests in other corporate bodies or firms, should be submitted. Consent from the proposed directors to act as company directors is also required.
• Partnership Firm: If the applicant is a partnership firm, the deed of partnership or any other instrument regulating the firm should be submitted. If the partnership deed has been revised, copies of the original and subsequent deeds, including the latest version, must be provided. If the firm is registered with the Registrar of Firms, the certificate of registration issued by the registrar should also be submitted.
• Company Limited by Guarantee: In the case of registration as a company limited by guarantee, a copy of the resolution declaring the guarantee amount should be submitted.
• Income Tax Return: The applicant must provide a copy of the firm’s or limited liability partnership’s recent income tax return.
• Changes in Secured Creditors’ Consent: Before the 2023 amendment, written consent or a no-objection certificate from secured creditors was required. However, following the amendment, written consent is no longer accepted. Only a No Objection Certificate from secured creditors and charge holders must be submitted, along with Form MR-1.

Omitted Requirements

 The 2023 amendment has eliminated Rule 3(2)(b)(vi) and (vii). These requirements included submitting the written consent of the majority of members agreeing to the registration at a general meeting, whether attending in person or by proxy, and an undertaking that all proposed directors would comply with the applicable provisions of the Indian Stamp Act of 1899.

Amendments to Rule 3(2)(c) – Registration Requirements  for Society

Rule 3(2)(c) of the Companies (Authorised to Register) Rules, 2014 outlines the requirements for registration when a society applies to be registered as a company limited by guarantee under Section 8 of the Companies Act of 2013. Recent amendments have been made to this rule, modifying the information and documents needed for the registration process.

Key Amendments and Implications – Companies (Authorized To Register) Amendment Rules

• Alongside Form URC-1, the applicant must submit a list containing the partners’ particulars, including their names, occupations, addresses, and proof of ownership. These individuals should have been partners six days before submitting the registration application.
• The applicant must submit a list of all proposed first directors of the company, including their residential addresses, Director Identification Numbers (DIN), passport details (including expiry dates), and their interests in other bodies, corporate, or firms. Consent from the proposed directors to act as company directors is also necessary.
• A list containing details of the society’s governing body members, including their names and addresses, should be submitted.
• A certified copy of the society’s registration certificate must be provided.
• The applicant must submit a copy of the society’s most recent income tax return.

Amendments to Rule 3(2)(c):

 The Companies (Authorised to Register) Amendment Rules of 2023 have eliminated Rules 3(2)(c)(vi), (vii), and (viii). Rule 3(2)(c)(vi) mandated the submission of written consent from the majority of members agreeing to the registration at a general meeting, whether attending in person or by proxy, along with the resolution declaring the amount of guarantee. Rule 3(2)(c)(vii) required an undertaking from the proposed directors to comply with the applicable provisions of the Indian Stamp Act of 1899. Rule 3(2)(c)(ix) demanded details regarding the company’s objects and a declaration from all members stating compliance with the prohibitions and restrictions mentioned in Section 8(1)(b) and (c) of the Companies Act of 2013. The 2023 amendment has eliminated these requirements.

Changes in Secured Creditors’ Consent

Previously, written consent or a no-objection certificate from secured creditors was required. However, following the amendment, written consent is no longer accepted. Only a No Objection Certificate from secured creditors and charge holders must be submitted, along with Form MR-1.

Amendments to Rule 3(2)(d)  – Registration Requirements  for Trust

Rule 3(2)(d) of the Companies (Authorised to Register) Rules, 2014 specifies the registration requirements for a trust seeking to be registered as a company limited by guarantee under Section 8 of the Companies Act of 2013.

Key Amendments and Implications by Companies (Authorized To Register) Amendment Rules

List of Partners

The applicant must provide a list of all the partners who are such partners, including their names, occupations, addresses, and details of shares held by them. Separate information about shares allotted for cash consideration and consideration other than cash, along with the source of consideration, should also be included. If the shares are numbered, they should be listed by their respective numbers.

Proposed Directors

A list of all proposed first directors of the company must be submitted, including their Director Identification Numbers (DIN), passport details (including expiry dates), presidential addresses, and their interests in other corporate bodies or firms. Consent from the proposed directors to act as company directors is also required.

Trust Registration Certificate: A certified copy of the trust’s registration certificate and the trust deed must be submitted.

Objects and Declaration: Details should be provided regarding the objects for which the company has been formed. Additionally, a declaration from all members must be submitted, confirming compliance with the prohibitions and restrictions mentioned under Section 8(1)(b) and (c) of the Companies Act of 2013. Section 8(1)(b) requires Section 8 companies to utilize their profits or income solely for advancing the company’s objectives. Section 8(1)(c) prohibits Section 8 companies from distributing dividends to members from the company’s profits.

Amendments to Rule 3(2)(d):

Changes in Secured Creditors’ Consent: Previously, written consent or a no objection certificate from all secured creditors was required. However, only a No Objection Certificate from secured creditors is necessary after the amendment. Written consent is no longer accepted.

Omitted Requirements: The Companies (Authorised to Register) Amendment Rules of 2023 eliminated Rules 3(2)(d)(v), (vi), and (vii). Rule 3(2)(d)(v) mandated the submission of written consent from the majority of members agreeing to the registration at a general meeting, whether attending in person or by proxy, along with the resolution declaring the amount of guarantee. Rule 3(2)(d)(vi) required an undertaking from the proposed directors to comply with the applicable provisions of the Indian Stamp Act of 1899. Rule 3(2)(d)(vii) demanded a copy of the trust’s most recent income tax return. The 2023 amendment has eliminated these requirements.

Amendments to Form Number URC-1 of the Companies (Authorised to Register) Rules, 2014

Form Number URC-1 is an application form used for the registration of various business entities, such as limited liability partnerships, partnership firms, societies, cooperative societies, and other entities, as different types of companies under Section 366 of the Companies Act of 2013 and Rule 3(2) of the Companies (Authorised to Register) Rules of 2014. Recent amendments have been made to Form Number URC-1, specifying the details and attachments required for the registration process.