Section 206 of the Companies Act, 2013 ("the Act") empowers the Registrar of Companies ("ROC") to call for information, inspect books and papers, and conduct inquiries. The power is exercised where, on a scrutiny of any document filed by a company or on any information received, the ROC is satisfied that the circumstances warrant it.
The Triggers
The ROC may exercise the power where the company has not filed the required documents, where the information filed appears inconsistent or suspicious, or where the ROC has received information suggesting that the company's affairs are being conducted in a manner that requires investigation. The ROC's satisfaction is the jurisdictional fact, and the company cannot refuse to comply on the ground that the ROC's reasons are inadequate.
The Company's Obligations
On receipt of a notice under Section 206(1), it is the duty of the company and its officers to furnish the information or explanation to the best of their knowledge and power and to produce the documents within the time specified or extended by the ROC. The obligation extends to the former officers of the company, who must also cooperate.
The ROC may, after the inspection, require the company to furnish further information, or it may order an inspection under Section 206(4). If the inspection reveals a violation, the ROC may initiate prosecution or refer the matter to the Central Government for investigation.
The Consequences
The failure to comply with a Section 206 notice is an offence, and the company and its officers are liable to penalty. The ROC's inspection can lead to a Section 210 inquiry, a Section 212 SFIO investigation, or a Section 248 strike-off. The company must treat the inspection as a serious compliance event and must respond fully and promptly.
Call to Action
Anuj Desai & Associates advises companies on ROC inspections—from the response to the Section 206 notice and the production of documents to the defence against prosecution and the follow-on inquiry. If your company has received an inspection notice, we can help you respond effectively.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
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