Home / Compliance Cues / Trade & Regulatory Compliance Updates / Ministry of Corporate Affairs notifies the Companies (Incorporation) Third Amendment Rules, 2022 introducing the Procedure for Physical Verification of Registered Office Addresses under Rule 25B .

Ministry of Corporate Affairs notifies the Companies (Incorporation) Third Amendment Rules, 2022 introducing the Procedure for Physical Verification of Registered Office Addresses under Rule 25B .

Ministry of Corporate Affairs notifies the Companies (Incorporation) Third Amendment Rules, 2022 introducing the Procedure for Physical Verification of Registered Office Addresses under Rule 25B .

The Ministry of Corporate Affairs recently notified the Companies (Incorporation) Third Amendment Rules, 2022 (“Amendment Rules”) on 18th August 2022. Under the Amendment Rules, the newly inserted Rule 25B stipulates the procedure for physical verification of a registered office (“RO”) of a company by the Registrar of Companies (“RoC”).

Pertinently, under the Companies Act, 2013 (“Companies Act”), the RoC is already empowered under Section 12(9) to carry out physical verification of a company’s RO in the event the RoC has reasonable cause to believe that the company in question is not conducting business in a proper manner. Rule 25B has been introduced under the Amendment Rules to crystallise the procedure to undertake such a physical verification and regulate the same.

The process for Physical Verification as provided under Rule 25B is detailed below –

  • Physical verification to be carried out in the presence of two independent witnesses: The RoC is required to undertake physical verification of the RO of a company only in the presence of two independent witnesses of the locality in which the RO is situated and may also seek assistance from local police for carrying out such verification.
  • Cross verification of documentation filed on MCA 21: For the purposes of physical verification and checking the authenticity of the documents filed by the company in support of the address of the RO with the MCA, the RoC has been empowered under Rule 25B(2) to cross verify such documents with the copies of supporting documents of such address collected during the said physical verification, duly authenticated from the occupant of the property where the RO is situated.
  • Photograph of RO: The RoC shall take a photograph of the RO of the company during the physical verification process.
  • Preparation of Report by RoC: The report of the physical verification shall be prepared in accordance with the format prescribed in Rule 25B. The relevant documents that will be recorded as a part of the report are as follows:
    • Copy of the agreement/ ownership/ rent agreement/ no objection certificate of the RO from the owner/ tenant/ lessor;
    • Photograph of the RO;
    • Self-attested ID-card of the person available; and
    • Any other documents.

Consequence for incapability to receive and acknowledge communication and notices at RO: Where the RO of the company is found not capable of receiving and acknowledging all communications and notices, the RoC is required to send a notice to the company and all the directors of the company communicating its intention to remove the name of the company from the register of companies and requesting the concerned persons to send their representations along with copies of relevant documents, if any, within a period of thirty days from the date of the notice before taking further actions in accordance with the provision of Section 248 of the Companies Act (which empowers the RoC to remove the name of a company from the Register of Companies).

Our Take

In July 2021, the Union Minister of State for Corporate Affairs, in a written response to a question in Rajya Sabha, had expressed the Government’s intention to look into the issue of ‘Shell Companies’ and had inter alia mentioned the Government’s efforts in identifying and striking off ‘Shell Companies’ through a Special Drive by setting up a Special Task Force. While ‘Shell Companies’ are not defined under the Companies Act, in answering parliamentary questions, Ministers have often borrowed the definition from the Organisation for Economic Cooperation and Development that defines these entities as companies that are “formally registered or otherwise legally organized in an economy but which do not conduct any operation in that economy other than in a pass through capacity”.

The introduction of Rule 25B through the Amendment Rules appears to be in furtherance of these identification and removal efforts of ‘Shell Companies’ from the Register of Companies. The introduction of Rule 25B provides teeth to pre-existing powers of the RoC under the Companies Act and, in that regard, standardises and clarifies the procedure for conducting physical verification of RO’s of companies.

Despite the much needed requirement to remove dormant companies, some of which may have been established for unlawful purposes, the introduction of this Rule is bound to have implications on the ease of doing business in India. This becomes pertinent especially in the case of start-ups and foreign entities that in their initial stages of setting up of operations or for simplification of operations may not wish to invest in a RO. In such a situation, such entities run the risk of having their names removed from the Register of Companies as the RoC may consider such entities to be non-compliant under Rule 25B (5).


Link to the Third Amendment Rules – https://egazette.nic.in/WriteReadData/2022/238217.pdf

Link to Press Release on Rajya Sabha question – https://www.pib.gov.in/PressReleasePage.aspx?PRID=1739583



As per the rules of the Bar Council of India, law firms are not permitted to solicit work and advertise. Please agree to accept that you are seeking information of your own accord and volition and that no form of solicitation has taken place by the Firm or its members. The information provided under this website is solely available at your request for information purposes only. It should not be interpreted as soliciting or advertisement.