Registered Offices

The Ministry of Corporate Affairs (MCA) has made appropriate adjustments to Rule 30 of the Companies (Incorporation) Rules, 2014, which primarily deals with the moving of registered corporate offices, in its most recent notification. This came into effect from 21 October.

The rule has now been amended to include a new provision that states that if the company’s management has been taken over by new management under a resolution plan approved under Section 31 of the Insolvency Bankruptcy Code, 2016, and no appeal against the resolution plan is pending in any court or tribunal, and no inquiry, inspection, or investigation is pending or initiated after the approval of the said resolution plan, the registered office may be shifted.

According to data published by the bankruptcy and Bankruptcy Board of India (IBBI), 720 companies have been rescued under the bankruptcy law since its inception in late 2016. Until June 2023, creditors recovered 31.6 per cent of their accepted claims in such circumstances. According to the data, the realisation was as much as 83.9 per cent of the fair worth of the enterprises calculated before they were admitted for insolvency resolution.

According to regulation 30 of the Companies (Incorporation) Rules, 2014, an applicant must obtain prior clearance from the Central government before changing the memorandum to relocate the registered office from one state/Union territory to another. According to the Companies Act, the Centre may accept the change of location “on such terms and conditions, if any, as it thinks fit, and may include such order as to costs as it thinks proper.” The most recent MCA judgement attempts to remove the prerequisite from the rule—”and may include such order as to costs as it thinks proper”—and introduce the new proviso, providing freedom to ailing corporations seeking resolution under the IBC.