MCA Penalizes Company and Directors for Not Maintaining Registered Office

The Ministry of Corporate Affairs (MCA), through the Registrar of Companies (RoC), Andhra Pradesh, has imposed penalties on Vanamali Urban Developers Private Limited and its directors for not maintaining an active registered office, as required under Section 12 of the Companies Act, 2013.

This action highlights the importance of statutory compliance for all companies incorporated in India. Maintaining a registered office is not just a formality—it is a legal obligation, and failing to adhere can result in financial penalties and reputational harm.

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What Does Section 12 of the Companies Act Require?

Section 12 of the Companies Act, 2013 mandates that:

1. Every company must have a registered office capable of receiving communications and notices from government authorities.
2. The registered office must be operational and accessible at all times for official correspondence.
3. Any change in the address of the registered office must be intimated to the RoC by filing Form INC-22 within 30 days.

Failure to comply with these conditions attracts penalties under Section 12(8) of the Act.

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Case Summary: Vanamali Urban Developers Pvt. Ltd.

• Non-Compliance: During verification, it was found that Vanamali Urban Developers Pvt. Ltd. failed to maintain an active registered office as per statutory requirements.
• RoC Action: The Registrar of Companies, Andhra Pradesh, issued a show cause notice to the company and its directors for violating Section 12(1) and 12(4) of the Act.
• Penalty Order: Since no satisfactory reply or evidence of compliance was submitted, the RoC imposed penalties under Section 454, which deals with adjudication of penalties.

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Penalties Imposed

As per the order, penalties were levied on:

• The Company: For failing to maintain an active registered office.
• Each Director: Personal penalties were imposed on the directors responsible for ensuring compliance.

The exact penalty amount depends on the period of default, but under Section 12(8):

• The company can be fined ₹1,000 per day during which the default continues, up to a maximum of ₹1 lakh.
• Every officer in default (directors) can be fined ₹1,000 per day, up to a maximum of ₹25,000.

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Why Maintaining a Registered Office is Crucial

1. Legal Compliance: The registered office is the official communication address for all legal and regulatory correspondence.
2. Public Record: The address is available in the public domain via the MCA database, enhancing transparency.
3. Government Communication: Notices from the MCA, tax authorities, or courts are sent to the registered office. If inactive, important legal notices may go unacknowledged.
4. Avoiding Penalties: Non-maintenance invites fines, adjudication proceedings, and even reputational harm.

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Steps Companies Must Take to Avoid Such Penalties

1. Ensure Active Operations: The registered office must be functional and staffed during working hours.
2. Display Company Name: The company’s name and registered office address should be clearly displayed outside the office.
3. Update MCA Records: Any change in address must be reported promptly to the RoC via Form INC-22.
4. Conduct Internal Compliance Checks: Companies should regularly review statutory compliance to avoid penalties.

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Section 454 – Adjudication of Penalties

Under Section 454 of the Companies Act, the MCA has the power to appoint adjudicating officers to impose penalties for non-compliance. This mechanism ensures quick resolution without resorting to lengthy court proceedings.

In this case, the RoC, Andhra Pradesh, used this mechanism to hold the company and its directors accountable.

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Key Takeaways

• Compliance with Section 12 is mandatory for all companies, irrespective of size or turnover.
• Penalties can be imposed on both the company and its directors.
• Proactive compliance with filing requirements and maintaining an active registered office is essential to avoid legal consequences.
• The MCA is increasingly using its adjudication powers to enforce corporate governance norms.

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FAQs

1. What is the importance of a registered office?

A registered office serves as the official address of a company for receiving all legal, regulatory, and communication notices.

2. How soon must a company establish a registered office?

A company must have its registered office in place within 30 days of incorporation.

3. What is the penalty for not maintaining a registered office?

The penalty can be ₹1,000 per day of default for the company (up to ₹1 lakh) and ₹1,000 per day for each director (up to ₹25,000).

4. Can a company change its registered office?

Yes, but any change must be notified to the RoC by filing Form INC-22 within 30 days.

5. What is Section 454 adjudication?

It is a process under the Companies Act, 2013 where adjudicating officers (like RoC) impose penalties for non-compliance without the need for court proceedings.

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Conclusion

The penalty imposed on Vanamali Urban Developers Pvt. Ltd. and its directors by the MCA serves as a reminder that statutory compliance under the Companies Act, 2013 cannot be overlooked. Maintaining an active registered office is a basic yet critical requirement, and failure to comply not only leads to monetary penalties but can also damage a company’s credibility.

To avoid such situations, businesses must ensure timely updates of their registered office details, stay compliant with Section 12, and keep accurate records with the MCA.

Published on: 21 July 2025
Author: CS Chhavi Goyal