In the recent ordinance, the MCA has ordered the Companies registered before 31/12/2017 to file the INC 22A eForm. We provide the INC 22A eForm filing services. However, you should know why such compliance has been made mandatory.
What is eForm INC-22A ACTIVE?
The Form INC 22A Active is a newest compliance set forth by the Ministry for corporate affairs. Companies that have successfully gone through incorporation before or on 31/12/2017 have to file this form. Its purpose is to prove to the MCA that the company is active. Therefore, there are some interesting documents required for the Applicability and filing of Form INC 22A. The most interesting of these documents are:
- Three photographs of company’s headquarters: These include:
- 1 external photograph: 1 photograph of the company building taken from the outside of the company.
- 1 Internal photograph: 1 photograph taken of the inside of the company premises showing all the equipment and other personnel.
- 1 Photograph along with the director of the company: 1 Photograph of the inside of the company premises that also show the director of the company.
As we have stated that the form’s purpose is to show that the company is currently active. However, why would the MCA need to know that? Well, the answer lies in detecting the shell companies.
What are shell companies?
A business entity without any active operations of significant asset, a shell company is most often used to describe illegal financial infrastructures. However, they aren’t illegal. The right reasons to use shell companies are:
- Startup Funding
- Hostile takeover
The first reason is used by the budding entrepreneurs to raise funds. As for the second reason, shell companies of this purpose are owned mostly by big conglomerates.
The positive reasons aside, the reasons that people consider shell companies to be illegal are following:
- Tax evasion: As business entities enjoy certain tax benefits, fraudulent individuals start shell companies to evade taxes at times.
- Money laundering: Unfortunately, it is the most common way to use shell companies. Using shell companies, illegally obtained money is concealed and become legitimate. For example, using money laundering, drug-money can appear to be a legally obtained profit.
To be perfectly candid with you, shell companies only exist on paper, and considering their misuse, the government found a way to track them. And it is called eForm INC 22A.
How INC 22A is going to track the shell companies?
Through ACTIVE compliance called Form INC 22A, the ministry of corporate affairs would be able to see which companies exist in more than just papers. The documents required for filing this latest compliance are going to attest to that. Through it, the companies that are active will be tagged in hopes of curbing down corruption.
However, if the system perfect? Not really! That being said, it can be counted as a step in the right direction.
Important Note:
Government has finally extended the due date of Filing INC 22A ACTIVE as officially confirmed which is 15th June 2019.
