Over the last few years, there has been a growing trend among businesses to opt for an MCA setup.In recent years, the number of businesses opting for MCA setups has been increasing.
Amongst most of the business owners in India, both the terms ROC and MCA are used almost interchangeably in compliance emails, filing portals and with chartered accountant. To assume that they are the same, is to assume nothing. They do not. It is not simply about whether the information is technically accurate that students have to understand the difference between the two. It influences the way a business fulfills its legal duties, to whom it reports, and how the business will prevent itself from receiving the consequences of complacence.
What is the MCA?
Ministry of Corporate Affairs is a ministry of the Government of India that handles corporate affairs. It is the policy making body responsible for administration of the Companies Act, 2013 and Limited Liability Partnership Act, 2008 and its related legislations.
The MCA drafts rules, circulars and notifications, prescribes compliance timelines and monitors the entire regulatory framework under which companies and LLPs function.
The MCA’s Role
In short, the MCA determines the standards for compliance. It informs filers of the forms they should be filing, the disclosures required, and the consequences of failure to meet the requirements.
It also operates the MCA21 portal, the online platform for electronic filing, approval of names and incorporation applications for companies.
What is the ROC?
The Registrar of Companies is the implementing authority of MCA.
ROC office is established in each state/union territory in India and all companies or LLP are registered with ROC having jurisdiction over the registered office of the company/LLP.
The entity where filings are made, which then reviews them, keeps statutory records and issues certificates like the Certificate of Incorporation is the ROC.
The ROC’s Role
If the rules are established by the MCA, then the rules are applied on the ground by the ROC.
Filling of the Annual Return, update of director information etc and the report of change of registered office is filed with the ROC.
The ROC also has the powers to remove companies that do not comply, penalties to be charged for delayed filings and to identify companies as inactive or dormant companies when they do not comply with the provisions of the Companies Act.
The Core Difference
The relationship could be summed up here:
The relationship between the MCA is that MCA is the regulator, and the ROC is the enforcement and administration body of the MCA.
The MCA has a national reach and is involved in the national policy, legislation and digital infrastructure that underpins corporate governance.
The ROC has jurisdiction over the day-to-day administration of individual company and LLP registered within its jurisdiction.
How Businesses Interact with MCA and ROC
Both are involved in every business deal in some way, but each in a unique manner.
The majority of the interaction a firm has with the MCA is via the rules they need to adhere to and the portal they have to use for filing.
It deals directly and specifically with the ROC because the office of the ROC where the companies records are maintained, where the company’s compliance history is stored, and where action is taken when something is not done.
Why This Distinction Is Important for Your Company
This distinction is significant to your company. That is why this distinction is important for your company.
This is no academic exercise to understand this difference. It does have real consequences for a business’s statutory responsibilities.
Clear Accountability
Firstly, it sets accountability clear.
If a company fails to file an application, this does not result in an abstract central government fine. The specific ROC in which the company is registered imposes it and it is cumulative as the delay goes on.
The awareness of such knowledge enables business owners to know where the risk lies and the reason why the act of promptness is very crucial.
Better Compliance Planning
Second, it impacts the way compliance calendars need to be developed.
MCA rules establish the framework including which forms are required and the regular due dates.
The ROC then subsequently applies these timelines for each company according to the date of incorporation, the accounting year and all events relating to the companies, including for instance a share capital change or a change of director.
A compliance calendar with the recognition and coverage of both layers is more likely to be reliable than a generic compliance calendar.
Supporting Business Growth
Thirdly, it is important for fast-growing businesses.
At this point, as a company grows, they will be faced with more ROC related events, such as a change in board, a capital restructuring, a change in registered office and so on.
All these activities have to be properly documented and filed on time.
Knowing exactly the part of the ROC will be in a better position to predict these needs than being caught off-guard after the deadline.
Strengthening Corporate Governance
Last, but not least, this separation is important for corporate reputation and governance.
Proper and timely ROC filings with accurate details, according to MCA guidelines, are an indicator of good corporate governance.
This establishes trust with the investors, lenders, and other stakeholders, which routinely check on compliance before taking any action.
Ensure That Your Compliance Is Right and Consistent
Compliance is not something that is done when a company is incorporated.
This never ends responsibility will be on-going throughout the life of a company or LLP and will include duties relating to the annual filings, event-driven disclosures as well as the keeping of statutory registers.
Failure – even inadvertent – to meet these obligations can result in increased penalties, disqualification of directors and harm to the company’s reputation.
How Badami & Kamath Can Help
At Badami & Kamath, we assist various companies and LLPs in Bangalore in handling this responsibility in a disciplined way.
We have a strong focus on documentation, regulatory timelines, and an organized compliance calendar to ensure all filings are completed on time.
We execute MCA application on your behalf, avoiding the hassle of understanding MCA rules and ROC requirements.
Get Professional Assistance
Contact Badami & Kamath and get one of our business experts to discuss your ROC and MCA compliance needs with you – our team will be able to take your business needs into account and ensure that it is done correctly and on-time.