Sections 395 and 396 of Companies Act 2013: Annual Reports and Registration Offices

Sections 395 and 396 of the Companies Act, 2013 deal with two separate but important aspects of company law administration in India. Section 395 concerns annual reports of Government companies where one or more State Governments are members and the Central Government is not a member. Section 396 deals with the establishment of registration offices and appointment of Registrars and other registration officers.

Sections 395 and 396 at a Glance

  • Section 395: Annual reports where one or more State Governments are members of Government companies.
  • Section 396: Establishment of registration offices and appointment of Registrars, Additional Registrars, Joint Registrars, Deputy Registrars and Assistant Registrars.
  • Related provision: Section 394 governs annual reports on Government companies and is expressly referred to in Section 395.

Section 395 - Annual Reports Where One or More State Governments Are Members

Section 395 forms part of Chapter XXIII of the Companies Act, 2013, which deals with Government companies. It applies where the Central Government is not a member of the Government company but one or more State Governments are members.

Meaning and Scope of Section 395

The provision ensures legislative accountability for Government companies in which the ownership contemplated by the section lies with one or more State Governments rather than the Central Government.

Where the Central Government is not a member of a Government company, every State Government that is a member, or the State Government where only one State Government is a member, is required to cause an annual report on the working and affairs of the company to be prepared.

Section 395(1) - Main requirements

The annual report is required to be prepared within the period specified under Section 394(1).

After preparation, the report is to be laid before the House or both Houses of the State Legislature, as applicable, together with the audit report and the comments upon or supplement to the audit report referred to in Section 394(1).

Time for Preparation of the Annual Report

Section 395(1)(a) expressly links the time for preparing the annual report to Section 394(1) of the Companies Act, 2013. Section 394 provides for preparation of the annual report within three months of the annual general meeting before which the comments of the Comptroller and Auditor-General of India and the audit report are placed in accordance with the Act.

Report to Be Laid Before the State Legislature

Under Section 395(1)(b), after the annual report has been prepared, it must be laid before the House or both Houses of the relevant State Legislature as soon as may be. It is accompanied by the audit report and the applicable comments upon or supplement to that audit report.

Government Company in Liquidation

Section 395(2) provides that Section 395 and Section 394 shall, so far as may be, apply to a Government company in liquidation in the same manner as they apply to any other Government company.

Practical Effect of Section 395

The provision creates a reporting mechanism to the State Legislature for Government companies falling within its scope. It should therefore be read together with Section 394 and the statutory provisions governing audit of Government companies.

Section 396 - Registration Offices

Section 396 forms part of Chapter XXIV of the Companies Act, 2013, dealing with registration offices and fees. It provides the statutory framework for establishing registration offices and appointing officers responsible for company registration and other functions under the Act.

Section 396(1) - Establishment of Registration Offices

For exercising powers and performing functions conferred on the Central Government under the Companies Act, 2013 or the rules made under it, and for registration of companies, the Central Government may establish the required number of offices by notification.

The notification specifies the places where such offices are established and their respective jurisdiction.

Section 396(2) - Appointment of Registrars and Other Officers

The Central Government may appoint such Registrars, Additional Registrars, Joint Registrars, Deputy Registrars and Assistant Registrars as it considers necessary for registration of companies and discharge of functions under the Companies Act, 2013.

The powers and duties exercisable by these officers are governed by the Act and the applicable rules.

Section 396(3) - Terms and Conditions of Service

Section 396(3) provides that the terms and conditions of service, including salaries payable to persons appointed under Section 396(2), shall be as prescribed.

Section 396(4) - Authentication of Documents

The Central Government may direct that a seal or seals be prepared for authentication of documents required for, or connected with, registration of companies.

What Is a Registrar of Companies?

A Registrar of Companies, commonly referred to as an ROC, is an officer appointed under the statutory framework of Section 396 for registration of companies and performance of functions assigned under the Companies Act, 2013.

ROC offices form an important part of the administrative structure through which company registration, statutory filings and other regulatory functions under the Companies Act are carried out.

ROC jurisdictions and administrative arrangements can change through Central Government notifications. Users should therefore verify the current jurisdiction and office information through the Ministry of Corporate Affairs portal rather than relying on an old static list.

Difference Between Section 395 and Section 396

Section 395 concerns annual reporting and legislative accountability of specified Government companies where State Governments are members.

Section 396 concerns the administrative machinery for registration of companies, including establishment of registration offices and appointment of Registrars and related officers.

Related Companies Act Provisions

Readers examining Sections 395 and 396 may also refer to Sections 393 and 394 concerning Government companies and annual reports and Sections 397 and 398 concerning documents and electronic filing.

Official Legal Resources

For the current statutory text, amendments, notifications, rules and filing information, users should verify the applicable law through India Code and the Ministry of Corporate Affairs. Company law requirements can be affected by amendments, rules and notifications issued from time to time.