The ministry of corporate affairs (MCA) has given additional powers to the registrar of companies (RoCs) to adjudicate and impose penalties on companies and limited liability partnerships (LLPs) for statutory non-compliances. In a recent notification, the ministry said that it has revamped India’s corporate regulatory framework by designating RoCs as adjudicating officers under Section 454 of the Companies Act and under Section 76A of the LLP Act.
The empowerment of RoCs will likely result in them playing a bigger role — rather than just doing administrative work — to dispose of cases at a faster clip, reduce the burden on National Company Law Tribunal (NCLT), decriminalisation of offences and facilitate the ease of doing business.
Shift to Proportionality
Experts said that the RoCs will now act as primary adjudicating authorities to ensure first-level enforcement, and timely intervention for statutory non-compliances. “It is important to note that the adjudication regime is primarily penalty based which significantly promotes proportionality and decriminalisation of minor defaults. This reduces litigation burden for companies and LLPs while maintaining regulatory discipline,” said Vishwas Panjiar, founder of SVAS Business Advisors.
Decentralizing Oversight
Separately, the ministry has reconstituted and expanded the number regional directorates (RD) from seven to 10. The new RD offices include Ahmedabad, Bangalore, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata, Mumbai, Navi Mumbai and New Delhi. With more RD offices, appeals against orders of RoCs can now be distributed efficiently across difference regions. This change will come into effect from February 16, as per MCA notification.
“This will reinforce both tiers (RDs and RoCs) of the enforcement framework simultaneously that will create a more structured and efficient corporate dispute resolution mechanism,” said a corporate law expert.
“These dual reforms will increase institutional capacity for adjudication and appeals, reduce jurisdictional ambiguity, and promote faster disposal of penalty proceedings under both company and LLP law,” said Panjiar.