Registered office is an integral part of a business, does change of registered office require shareholder approval? learn now

A company’s registered office is the location where all correspondence and notices are sent. Section 12 of the Companies Act 2013,  requires all companies to establish a registered office Shareholder Approval either at the time of incorporation or within 30 days. The state in which the company’s registered office is located is specified in the circumstance clause of the Memorandum of Association. However, the Registrar of Companies must receive a notification of the precise address in form INC-22. Any change in the registered office’s condition must be reported to the Registrar of Companies in e-Form INC- 22 within 30 days, together with the applicable costs.

Shareholders of a Company

Shareholder Approval get to elect the board of directors to help run the company and typically vote on this at the annual shareholder meeting. A company acts through two bodies of people – its shareholders and its board of directors. A shareholder, commonly referred to as a stockholder, is any individual, company, or institution that owns at least one share of a company’s stock. 

Shareholder’s Approval in Change of Registered Office Address of the Company

Although the companies act directly and expressly does not provide any provision that mandates shareholder’s approval in case of change of its registered business, there are indirect powers and rights enjoyed by the shareholders that lead to their approval being more or less significant in such situations. Shareholder agreement have the right to call a general meeting. They have a right to direct the director of a company to call extraordinary general meeting. 

A single shareholder holding a minimum of 10% of the company’s paid-up share capital can challenge a resolution adopted by a general meeting on the grounds of oppression or mismanagement. Such a challenge can be brought about by filing a petition before the National Company Law Tribunal. A single shareholder, irrespective of his shareholding in the company, can also bring a derivative suit challenging a resolution adopted by a general meeting, on behalf of the company, if that resolution was detrimental to the interest of the company. 

Most importantly, Shareholder Approval elects directors during annual general meetings; these directors constitute a board that is charged with the responsibility for the overall management of the company. They can also remove the directors of the company. 

Procedure for Shifting of Registered Office from Jurisdiction of One Registrar of Companies to Another Within the Same State

1. Convene a board meeting and decide on calling of Extraordinary General Meeting, and authorizing the Company Secretary or any director to move an application to the Regional Director in form INC-23 and other miscellaneous compliance required on this behalf.
2. Issue notice of EGM along with clear agenda of business, draft resolution for shifting of registered office
3. Hold the extraordinary general meeting on the appointed date and time and obtain approval of members by passing a special resolution for shifting of registered office
4. File form MGT – 14 within 30 days of passing of the special resolution along with notice of EGM, Certified True Copy of the special resolution with explanatory statement annexed thereto. Apply for seeking confirmation from the Regional Director in e-form INC-23 along with the prescribed fee [Section 12(5) R/w Rule 25 Chapter 2], similar to the procedures followed in Pvt Ltd company registration online.
5. Passing of the board and special resolutions.
6. A declaration to be given :

• i) by the Key Managerial Personnel or any two directors authorized by the Board, about the sound financial status of the company;
• ii) a declaration not to seek change in the jurisdiction of the court where cases for prosecution are pending

1. Acknowledged copy of intimation to the Chief Secretary of the state as to the proposed shifting and that the employee’s interest is not adversely affected consequent to proposed shifting.
2. Obtain a confirmation order from the regional director and file same with ROC in form INC-28 along with the prescribed fees within 60 days from the date of order 
3. Notify Registrar in e-form INC – 22 within 30 days from the receipt of confirmation order of Regional Director along with prescribed fees and accompanied by the following documents [Section 12(4)]:

• -the registered document of the title of the premises of the registered office
• -the notarized copy of the lease or rent agreement
• -the authorization from the owner or authorized occupant of the premises

1. Get the new address of the registered office printed on all the company’s business letters, bill heads, letter papers, notices, and other official publications (Section 12).

Procedure for Shifting of Registered Office from One State to Another

This process of shifting from one state to another is the same as above except in certain points where some extra compliance is required, such as those needed when you register a company in India.

1. The Company shall, not more than thirty days before the date of applying for Form No. INC.23 – 

• Publish an advertisement in Form No. INC-26 in the vernacular newspaper in the vernacular language in the district and in the English language in a famous English newspaper:
• serve, by registered post with acknowledgment due, individual notice on each debenture-holder and creditor of the company; 
• and serve, by registered post with acknowledgment due, a notice and copy of the application to the Registrar and to the SEBI, in the case of listed companies 

1. File an application for seeking confirmation from the Regional Director (under whose jurisdiction the existing registered office of the company is situated) in e-form INC-23 along with the prescribed fee, accompanied by, inter alia, a list of creditors and debenture holders, drawn up to the latest practicable date preceding the date of filing of application by not more than one month. If you have any queries reach out to our experts on Vakilsearch

Conclusion

Thus we can say that shareholder’s approval is quite significant to a company’s change of address as in any case, their approval will be obtained in the special resolutions, or if they are not happy with the board’s decision they can take certain steps to challenge it or even reconstitute the board. The board of directors and the Shareholder Approval of a company have to work together to make the company run effectively.

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