Companies Act 2013

Section 20: Service of documents.

Service of documents.

20. (1) A document may be served on a company or an officer thereof by sending it to the company or the officer at the registered office of the company by registered post or by speed post or by courier service or by leaving it at its registered office or by means of such electronic or other mode as may be prescribed:
Provided that where securities are held with a depository, the records of the beneficial ownership may be served by such depository on the company by means of electronic or other mode.
(2) Save as provided in this Act or the rules made thereunder for filing of documents with the Registrar in electronic mode, a document may be served on Registrar or any member by sending it to him by post or by registered post or by speed post or by courier or by delivering at his office or address, or by such electronic or other mode as may be prescribed:
Provided that a member may request for delivery of any document through a particular mode, for which he shall pay such fees as may be determined by the company in its annual general meeting.
Explanation.—For the purposes of this section, the term “courier” means a person or agency which delivers the document and provides proof of its delivery.

This provision is covered by Chapter II on INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO [Sections 3 to 20].

Section 20 is brought to force from April 01, 2014.

For this chapter, the Companies (Incorporation) Rules, 2014 (‘the Rules’) are notified with effect from April 01, 2014.
Rule 35 of the Rules is the relevant.

Corresponding provisions of the Companies Act, 1956:
Sections 51, 52 and 53.

Corresponding provisions of the English Companies Act, 2006:
Sections 1068 to 1071, 1139 to 1142, 1143, 1144, 1146, 1147, 1148, Schedules 4 and 5

Applicability:
This section is applicable to all companies.

Comments:
It provides where and how to serve a document to:
(i) a company or its officers,
(ii) Registrar of Companies; and
(iii) members of a company.

The term ‘document’ is defined under section 2(36) as follows:

“document” includes summons, notice, requisition, order, declaration, form and register, whether issued, sent or kept in pursuance of this Act or under any other law for the time being in force or otherwise, maintained on paper or in electronic form.

The term, ‘officer’ is defined under section 2(59) as follows:

“officer” includes any director, manager or key managerial personnel or any person in accordance with whose directions or instructions the Board of Directors or any one or more of the directors is or are accustomed to act.

The term ‘Registrar’ is defined under section 2(75) as follows:

“Registrar” means a Registrar, an Additional Registrar, a Joint Registrar, a Deputy Registrar or an Assistant Registrar, having the duty of registering companies and discharging various functions under this Act.

The term ‘member’ is defined under section 2(55) as follows:

“member”, in relation to a company, means—
(i) the subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company, and on its registration, shall be entered as member in its register of members;
(ii) every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company;
(iii) every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository.

Though the term ‘Courier’ is defined for the purpose of section 20, by way of an explanation to the section, rule 35(5) also says that ‘courier’ means a document sent through a courier which provides proof of delivery !

To serve a document on company or its officer:
It shall be sent to registered office of the company.
It shall be sent either by registered post or by courier service or by leaving it at its registered office or by prescribed electronic mode or by other prescribed mode.

Rule 35(1) when read with rule 35 (2), the electronic mode of delivery of document on a company or its officer is prescribed as delivery through ‘electronic transmission’. And ‘electronic transmission’ is explained as a communication –
(a) delivered by any of the following modes and in respect of which the company or the officer has put in place reasonable systems to verify that [highlight]the sender is the person purporting to send the transmission [/highlight]

(i) facsimile telecommunication or electronic mail when directed to the facsimile number or electronic mail address, respectively, which the company or the officer has provided from time to time for sending communications to the company or the officer, respectively ;
(ii) posting of an electronic message board or network that the company or the officer has designated for such communications, and which transmission shall be validly delivered upon the posting; or
(iii) other means of electronic communication,

AND
(b) that creates a record that is capable of retention, retrieval and review, and which may thereafter be rendered into clearly legible tangible form.

The rules requires that to send documents electronically (by fascimile, email, electronic message board or electronic network or other electronic communication) to a company or its officers, the company or its officers must have put in place a reasonable systems to verify that the sender is the person purporting to send the transmission. Thus, where such a system is not put in place by a company or its officers, documents cannot be legally served on the company or its officers.

And where a company or its officers have put in place a reasonable systems to verify that the sender is the person purporting to send the transmission, a communication must creates a record that is capable of retention, retrieval and review, and which may thereafter be rendered into clearly legible tangible form.
Where even though a reasonable systems to verify that the sender is the person purporting to send the transmission is put in place by a company or its officers, if the communication doses not creates a record that is capable of retention, retrieval and review then also documents cannot be legally served on the company or its officers.

[pullquote-right] In my view, the rule 35, as they are worded, renders sections 11, 12 and 13 of the Information Technology Act 2000 to nullity. It would lead to litigation and difficult to communicate legally using electronic mode with a company or its officers by any person, including investors and the Government (particularly serving legal notice).[/pullquote-right]

The above prescribed procedure for electronic communication does not apply to service of the records of beneficial ownership by a depository to the company – as proviso to section 20(1) specifies that such records may be served on the company ‘by electronic or other mode’ and it does not use words ‘such electronic or other mode as may be prescribed’.

To serve a document to a Registrar of Companies:
Document may be sent to a Registrar (except where electronic filing is prescribed) by sending it either by ordinary post or registered post or speed post or courier or delivering at his office or address or ‘by such electronic or other mode as may be prescribed’.

The effect of opening line of sub0section (2) of section 20 ‘Save as provided in this Act or the rules made thereunder for filing of documents with the Registrar in electronic mode,’ is that where any provision of the Companies Act 2013 or the rules framed thereunder provides for filing of documents with the Registrar of Companies in electronic mode, the the filing shall be done according to such other provision of the Act and Rules in electronic mode and filing in any other mode is not legally valid.

To serve a document to a member:
The legal mode of serving a document to a member of the company can be in the manner prescribed below.
Document may be sent to a member by sending it either by ordinary post or registered post or speed post or courier or delivering at his office or address or ‘by such electronic or other mode as may be prescribed’.

Where a member makes a request for delivery of any document through a particular mode, he he shall pay such fees as may be determined by the company in its annual general meeting for delivering by such mode.

Procedure for service document electronically on the Registrar or any member of a company:

Rule 35 (3) and (4), prescribes the electronic mode of delivery of document on the Registrar or any member of a company similar to serving of document on a company. It is prescribed as delivery through ‘electronic transmission’. And ‘electronic transmission’ is explained as a communication –
(a) delivered by any of the following modes and in respect of which the Registrar or the member of a company has put in place reasonable systems to verify that the sender is the person purporting to send the transmission–

(i) facsimile telecommunication or electronic mail when directed to the facsimile number or electronic mail address, respectively, which the Registrar or the member has provided from time to time for sending communications to the Registrar or the member respectively;
(ii) posting of an electronic message board or network that the Registrar or the member has designated for such communications, and which transmission shall be validly delivered upon the posting; or
(iii) other means of electronic communication,

AND
(b) that creates a record that is capable of retention, retrieval and review, and which may thereafter be rendered into clearly legible tangible form.

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