MCA tweaks rules; new promoters of bankrupt firms can easily shift registered offices

Insolvent firms that change hands after resolution can now shift their registered offices easily from one state to another according to the choice of the new promoters if there is no pending investigation, as the government has tweaked the relevant rules.. In its latest notification, the Ministry of Corporate Affairs (MCA) has made suitable changes to the rule 30 of the Companies (Incorporation) Rules, 2014, which essentially deals with the shifting of registered corporate offices...

It now adds a new proviso to the rule that says: where the management of the company 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, investigation is pending or initiated after the approval of the said resolution plan, the shifting of the registered office may be allowed..

Experts say the move comes as a relief for new promoters who want the registered offices of the insolvent firms shifted to another state or Union territory to achieve better operational synergy with their other businesses...

According to rule 30 of the Companies (Incorporation) Rules, 2014, an applicant has to seek prior approval of the Central government for the alteration of memorandum for shifting the registered office from one state/Union territory to another...

The latest MCA order seeks to omit the condition--and may include such order as to costs as it thinks proper"from the rule and insert the new proviso, giving flexibility to sick companies that see resolution under the IBC...

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