Rules For Filing Roc Returns May Be Eased

The working group set up to recast the Companies Act, 1956 has recommended that companies file with the Registrar of Companies (RoCs) the names of just the top 500 holders of shares and debentures in their annual returns.

At present, a company has to file the names of the holders of shares and debentures along with such details as the names and addresses of the managing director, directors and indebtedness within 60 days of its annual general meeting (AGM).

The whole list has to be filed every five years and updates containing changes in the holding patterns of the shares and debentures have to be filed annually.

 

But, the development of the capital market and the phenomenal growth in the number of shareholders has rendered this cumbersome. For instance, companies like Reliance Industries Ltd (RIL), which now has a 2.6-million investor base, are forced to send in their returns in three truck loads annually. Unable to handle this bulk, the RoC ends up directing the company to offload the annual returns directly at its warehouse in Vashi.

No wonder then, that the move is being considered as being friendly to the companies, the government and the investor as well. While the move will save the companies from the effort involved in handling this deluge of information, the investor will be served better through easy access to the information filed with the RoC.

The issue of storing and retrieving the returns filed by the company on public demand has been a matter of major concern for the government in recent years as the law entitles the public to seek such information from the RoC.

Last year, the Department of Company Affairs (DCA) had sent teams to study the practices prevalent abroad. The teams reported back that in Singapore, the law requires the annual returns of companies to list the names of only the top 500 holders of shares and debentures.

Following this, the DCA proposed adopting the same norm by effecting changes in the Schedule V of the Companies Act.

However, the DCA was unable to proceed since the law ministry pointed out that an amendment to the Act was essential for the changes in the norm. Since the DCA was recodifying the Companies Bill at the time, it was decided to effect the change in the amendments to the Act.

The working group, constituted subsequently, has upheld the DCA view.