Role of the RoC in Public Company Registration
Corporate Identification Number or CIN is an exclusive identification number assigned by the Registrar of Companies (RoC). It functions in different states under the Ministry of Corporate Affairs (MCA), formed by Govt. of India. A corporate Identification Number (CIN) acts as a unique number that establishes a company’s identity. Thus, CIN is compulsory for all types of firms registered in India. No company is allowed to function without a CIN.
The number contains 21 digit alpha-numeric code given to:
- Private Limited Company (PTC),
- Public Limited Company (PLC),
- One Person Company (OPC),
- Nidhi Company,
- Section 8 Company,
- Producer Company,
- Central or State Governments owned entities and,
- Subsidiary of a Foreign Company (FTC).
This no. is given to above entities, when it acquires registration from RoC regional office’s located in states across the nation.
Corporate Identification Number
Corporate Identification Number has the following details:
- Industry Code
- Listing status
- Incorporation Year
- State Code
- Registration Number
- Ownership Status of Company
Corporate Identification Number is registered only for registered offices and its branches, other subsidiaries, and manufacturing units. This is used by all for any dealing or communication.
According to Section 12(3) (c) of the Companies Act every company should display CIN in the documents.
The several important documents where CIN should be shown are:
- Annual Reports
- All e-forms on the MCA portal
- Business letters
- Bill heads
Corporate Identification Number (CIN) is used to track all activities of the firm since its incorporation by the Registrar of Companies. As per RoC rules a firm is needed to give all the transaction details to the respective RoC regional office.
The CIN is of 21 digits and has its meaning, which has an easy interpretation and helps find its necessary information under MCA. This unique 21 digit can be used to track all the information which Roc and MCA holds. The CIN is also used during audits and presenting reports or any form submission under MCA.
Decoding Corporate Identification Number (CIN)
Every CIN has the same format for easy interpretation. Here is an example of the format of CIN.
‘U 12345 DL 2020 PLC 123456’
Here are the details of various digits on the Corporate Identification Number.
Listing StatusThe first character reveals whether a company is listed or unlisted in the stock market. For listed companies, the CIN begins with the letter ‘L’, and if the company is not listed, it begins with the letter’ U’. In the example above: U indicates the company is unlisted in the Indian stock market.
Industry CodeThe next five digits of CIN are the ROC's industry code. Every activity conducted by the firms has a 5-digit code assigned by the MCA. It is used to identify the type of company. The MCA has assigned such codes to all industries carrying out its economic activities in the country. A few examples are Private Hospitals- 85110, Real estate activities- 70200, etc.
State CodeThe next two letters represent the state code for the company's registered office address. In the example: DL refers to the state code of Delhi.
Incorporation YearThe next four digits indicate the year in which the company was registered. In the example: 2020 is the incorporation year of the company.
Ownership Status of CompanyThe next three letters of CIN indicate the classification or type of firm. Depending on the type of the company, the following abbreviations are used in the CIN:
- PTC: Private Limited Company
- PLC: Public Limited Company
- GOI: Government of India owned companies
- NPL: Not-for-Profit License Company
- ULL: PLC with Unlimited Liability
- SGC: State Government-owned Companies
- ULT: Private Company with Unlimited Liability.
In the example: PLC stands for Public Limited Company.
- Registration Number
The CIN’s last six numeric digits indicate the unique registration number assigned to the company by the concerned ROC. In the example: 123456 refers to the registration number.
Procedure to obtain Corporate Identification Number
According to section 7(3) of the Companies Act, 2013, RoC must allot a Corporate Identification Number to only a registered company. Thus, as soon as a company is incorporated and registered, the CIN is allotted to it. It is also mentioned that there is a penalty of Rs. 1000 per day, if the firm doesn’t meet requirements mentioned and the company and its officer’s continue the default. However, the maximum penalty is limited to Rs. 1, 00, 000.
Circumstances of CIN Updation
Although ROC issues the CIN in the company’s name during registration, there are situations when the CIN must be updated. Under the following circumstances, the CIN may be changed:
- In case the listing status of a firm is changed.
- For a change in the industry code.
- For a change in the state code.
- For a change in the ownership status of the firm.
- Change in the concerned Registrar of Companies.
Role of Registrar of Company (RoC)
According to Section 2(75) of the Companies Act the Registrar is defined as the person who is on the position of either an Additional Registrar, Deputy Registrar, Joint Registrar, or an Assistant Registrar. He carries the work of registering a company, and other functions as described in the Companies Act, 2013. The following sections describe the Role of the Registrar in Public Company Registration.
Registrar of Company (RoC) is a body established under the Ministry of Corporate Affairs (MCA), with its governing norms stated in section 396 of the Companies Act, 2013. The section states that the government can establish as many numbers of registration offices as it needs for Company Registration. The Act applies to all the States and Union Territories.
The objective of establishing the ROC is to carry out the Company Registration process and Limited Liability Partnership Registration. The ROC also carries out administrative work for efficient functioning of companies registered across India. There are 22 offices of RoC across Indian territories.
Functions of Registrar of Companies
The primary function of the RoC is to process company and LLP registration applications.
Verification of Incorporation Documents
ROC keeps all the important documents mandated for company incorporation such as details of shareholders, details of company directors, financial reports and other annual filing of documents. This helps in keeping records of the companies.
Granting Incorporation Certificate
The RoC after successful verification of documents grants Incorporation certificates to the applicant companies. No Indian/Foreign Company Registration can be processed without the prior consent and approval through Certificate of Incorporation from RoC. An incorporation certificate acts as an essential document to establish any company in India
Resolving Winding-up Petition
RoC can file the winding-up petition for any company in the Court by itself or on the orders approved by the Central Government.
Fostering Business Environment
ROC keeps an eye on the promotion of ethical work culture for the companies registered. This helps in fostering a healthy business environment in the market.
Checking of Accounts
RoC holds the authority to conduct random checking of the accounts and documents of any company with the prior approval of the Court.
If ROC detects any suspicious activities by the Company then it can demand additional documents from the particular Company.
Powers of Registrar of Companies
Company Incorporation or RegistrationThe RoC has the power to issue the Certificate of Incorporation during Company Registration process to an applicant. The Incorporation Certificate is a conclusive proof of the incorporation of the Company under the government's watch.
Keeping Records of Existing CompaniesRoC keeps all the records of financial details and the company’s assets with itself. If it comes to RoC's notice that any debt which has been satisfied or received in part or full by the company in return of a property that has been released in part or whole or has been ceased, the RoC shall enter the details of the transection in its memorandum of the Satisfaction.The Registrar gives intimation to the Company within 3o days of making the entries.
Power to Conduct Inspection and Investigation
If on the scrutiny of the documents submitted, the RoC finds some of them unfit, then the Registrar can call for copies, paper, or any information or explanation whichever is necessary.
Further, if the information received is inadequate, the Registrar will record the reasons in writing about the Company. It may give an opportunity to the company or to its director to explain the inadequacy in information. The Registrar can also impose a fine of up to 5 Lakh Rupees.
Investigation and Seizure
The Registrar with the information submitted to it has the right to believe that books or papers of the Company related to the key managerial personnel are destroyed, altered, or tempered with.
In such a scenario, the Registrar can conduct the investigation of the requisite documents of the firm and order their seizer. This investigation and seizure procedures are ordered after obtaining prior approval from the Special Court. The Registrar must return the books after the inspection is complete.
Removal of Name of the CompaniesWhen the Registrar observes reasonable defaults in the company, then he can order the removal of company name. Following are the grounds of removal of company names;
- If it doesn't commence its business within one year from the date of incorporation.
- The applicants of the memorandum have not paid the fee required for registration to the Registrar within one hundred and eighty-two days, from the date of incorporation.
- If the Company has failed to start business for two consecutive financial years and has obtained the status of dormant Company.
- The Registrar will send notice to the firm before taking off the name of that firm from the Register of RoC. The Registrar will ask the company to represent itself and submit all the documents within 30 days. The above provision will not apply to Section 8 Companies.
Registration of Public Limited Company
A public limited company (PLC) has its shares listed in a the public stock exchange. An individual willing to get the public limited company registration must understand the difference between the meaning of public limited company and a private limited company. For a PLC, the shares are released in the stock exchange to raise money. The offering of shares in the stock exchange for the first time by a firm is known as a primary offering. Public companies can also go for secondary offerings based on their requirements. However, these offerings are only given to a particular class of investors known as preference stockholders.
Under section 2(71) of the Companies Act, 2013, a public limited company is defined as an entity that is not classified in the class of private limited company. Additionally, the minimum paid-up share capital requirement for a public company is prescribed as per the Companies Act. A public company is also understood as an company which is not a subsidiary of any private limited company.
Usually, these forms of business entities are considered to have large infrastructural plans. Some examples of public companies include Biotechnology Companies, Infrastructure Companies, Information Technology Companies. These entities raise capital through primary and secondary issues of shares apart from securing profits.
Law Related to Public Limited Company Registration
Similar to their counterparts (private limited companies), public limited firms are regulated through Companies Act, 2013. The meaning of a public company is defined in the Companies Act. As per section 2(71) of the Act, this type of entity is not similar to the meaning of a private company. Apart from this, the share capital requirement the public company does not need to be a specific amount.
While releasing the primary issue, a prospectus is given to the public. Under section 2(70) of the Act, a prospectus is understood as a document or a notice or an invitation to the public to buy or subscribe to the shares of the entity.
Hence when the public company issues a prospectus to the public, it invites the investors from the public to subscribe to its shares. A minimum of three directors and seven shareholders are required to start a public limited company. As per the Companies (Amendment) Act of 2015, there is no requirement for a company to have a minimum share capital. When it comes to shares registration in a public stock exchange, compliance norms must be maintained. The norms are generally being laid down by the SEBI or regulatory body of the stock exchange.
So, that brings us to the end of this informative piece. We understood the underlying meaning of a Corporate Identification no. We also understood the procedure and compliance requirements of CIN. In the other sections we understood the importance of Registrar of Companies and the registration procedure of the Public Limited Companies. An applicant seeking public company registration must contact a reputed legal and financial consultancy firm. These firms will assist them in the compilation of all required documents and the final registration process.