The Ministry of Corporate Affairs has taken a severe stance against experts who help firms incorporate by fraudulently claiming that they have visited the designated registration office.
As per the person who is known with the development, the ministry had shown its concerns about the fake certification of company premises to its field officers and the self-regulator of company secretaries, as a first sign of potentially stricter regulations controlling these experts, the Institute of Company Secretaries of India (ICSI) stated. Company secretaries, chartered accountants, cost accountants, and advocates can issue the same certification.
The formation of shell companies is associated with false physical premises, and the government wants field officers and regulators like ICSI, Institute of Chartered Accountants of India (ICAI), and Institute of Cost Accountants of India to get alert and familiarize the professionals for the need, as per the individual who stated on the anonymity condition.
A declaration of “personally visited the premises of the proposed registered office given in the form” should be done by the professionals and the office shall operate from there post incorporation as the portion of the documentation to start the organization. Under the law, any bogus statement would get punishable.
Another source that is somewhat linked with the government’s concerns said that in some cases, experts have clarified the presence of sites in distant states, putting confusion on the integrity of the certification.
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ICSI President Manish Gupta stated in Mint that there is “grave concern” about the issue of fake certification and that self-regulators have looked into the matter for disciplinary action if any discrepancies have been found.
Further Gupta added that ICSI has committed to provide education regularly to its members about their roles and responsibilities. He also mentioned instances of companies operating irresponsibly without consulting professionals, which brings down the reputation of the professions.
Gupta stated that “The latest issue of finding discrepancies between the address stated in documents and the actual address of the registered office of companies is indeed a matter of grave concern,” Despite the government’s increased support for governance and the establishment of guidelines for address certification by qualified experts, Gupta claimed that circumstances have arisen in which the problems still exist.
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According to Gupta, a professional’s certification that all legal requirements for registration have been satisfied goes beyond a simple checkbox exercise and involves a great lot of responsibility on their behalf.
Experts also think it’s implausible to assign experts the exclusive responsibility for carrying out this regulatory function. “The requirement of verifying the proposed premises of a company to be established is important from a regulatory standpoint, but it may not be viable or feasible to leave that responsibility solely on professionals such as company secretaries, cost accountants, and chartered accountants,” it recommended that another solution to the same tough criterion like posting a video authenticating the address would be investigated.
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Some of the companies that encounter illegal practices have been specified by the ICSI’s Gupta without the awareness of the specialists which furnishes a poor name to the profession. He mentioned that the shell companies who have been involved in criminal practices with no learning of the specialists ask doubts about the trustworthiness of the professionals likewise to those shown in the case of certifying the office premises.
An email sent on Friday asking for comments for the article to the Ministry of corporate affairs spokesman went unanswered as of the time of publishing.