Information Utility Registration explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Under Section 3(21), an information utility is a person registered with the Board as an information utility under Section 210. It serves as a repository for financial information related to debtors, and Section 209 prohibits any person from functioning as an information utility without a certificate of registration.
The statutory scheme
| Section | Subject |
|---|---|
| 209 | No person to function as information utility without certificate of registration |
| 210 | Registration of information utility |
| 211 | Appeal to National Company Law Appellate Tribunal |
| 212 | Governing Board of information utility |
| 213 | Core services, etc., of information utilities |
| 214 | Obligations of information utility |
| 215 | Procedure for submission, etc., of financial information |
| 216 | Rights and obligations of persons submitting financial information |
Registration — Section 210
- Application to the Board in the specified form and manner with the specified fee.
- The Board acknowledges within seven days of receipt.
- On being satisfied the application conforms to all requirements, the Board grants a certificate of registration; otherwise it rejects by order.
- The Board may suspend or cancel for false statement, misrepresentation or unlawful means; failure to comply with Board regulations or the IU's bye-laws; contravention of the Act, rules or regulations; or any other specified ground.
- No such order without a reasonable opportunity of being heard, and no such order except by whole-time members of the Board.
Eligibility — Regulation 3
Information utility registration is confined to a narrow class of applicant, and each condition below must be met before information utility registration can be granted.
No person is eligible to be registered as an information utility unless it is a public company and:
- its sole object is to provide core services and other services under the Regulations;
- its shareholding and governance accord with Chapter III;
- its bye-laws accord with Chapter IV;
- it has a minimum net worth of fifty crore rupees; and
- the person itself, its promoters, directors, key managerial personnel and persons holding more than 5% of paid-up equity share capital or total voting power are fit and proper persons.
Application, rejection and conditions
The application route for information utility registration mirrors that for an insolvency professional agency.
- Application in Form A with a non-refundable fee of ten lakh rupees; renewal at least six months before expiry, also on a ten lakh rupee fee.
- Acknowledgement within seven days.
- The 45-15-30 rejection sequence applies: prima facie reasons within 45 days, applicant's explanation within 15 days, final decision within 30 days.
- On rejection of a renewal, the order must require discharge of pending obligations, continuation of functions until directed otherwise so users can transfer stored information elsewhere, and compliance with additional directions.
Conditions of registration — Regulation 6
- The certificate is valid for five years from issuance.
- A fee of one crore rupees within fifteen days of intimation of registration or renewal.
- An annual fee of ten per cent of turnover from services rendered in the preceding financial year, payable by 30 April each year.
- Simple interest at twelve per cent per annum on delayed payment.
- Prior Board approval for: acquisition of shares or voting power exceeding five per cent; changes in control, mergers, amalgamations or restructurings; sale or disposal of substantially all assets; and voluntary liquidation or dissolution.
- If a person holding more than five per cent ceases to hold that amount, the Board must be informed within fifteen days.
- Adequate steps for redressal of grievances.
In-principle approval under Regulation 7 is available on a non-refundable fee of five lakh rupees, valid for a period not exceeding one year, with no separate registration application fee during its validity.
Shareholding — Regulation 8
The general rule is that no person shall acquire or hold more than ten per cent of the paid-up equity share capital or total voting power of an information utility.
Six categories may hold up to twenty-five per cent: a government company, stock exchange, depository, bank, insurance company and public financial institution.
Two transitional exceptions permitted higher holdings up to three years from the date of registration — up to fifty-one per cent by any person, and up to one hundred per cent by an Indian company listed on a recognised stock exchange or in which no individual holds more than ten per cent — provided the utility was registered before 30 September 2018. There is no restriction on holding by the Central or a State Government.
The reason for the dispersion requirement is the utility's function: a repository of financial information relied on to establish default cannot be controlled by a party with an interest in what it records.
Governing Board — Regulation 9
- Comprises a managing director, independent directors and shareholder directors.
- More than half the directors must be citizens of India and residents in India.
- The managing director is neither independent nor a shareholder director; an employee appointed as a director is deemed a shareholder director.
- Independent directors must not be fewer than shareholder directors, and no meeting may be held without at least one independent director.
- An independent director may serve a maximum of two terms of three years each, or up to seventy-five years of age, whichever is earlier.
- An independent director must be a person of ability and integrity, with expertise in finance, law, management or insolvency, not a relative of Governing Board directors, and with no pecuniary relationship with the utility, its directors or its significant shareholders.
Why information utilities matter in practice
The IU is the repository through which proof of default is established. A Fast Track application under Section 55 must be filed with proof of default as evidenced by records available with an information utility or such other means as specified. The liquidator may also access information utilities to facilitate admission and proof of claims and to identify assets of the liquidation estate.
Compliance checklist
- Incorporate as a public company with a sole core-services object.
- Maintain fifty crore rupees net worth.
- Observe the ten and twenty-five per cent shareholding caps.
- Pay one crore within fifteen days and the annual ten per cent of turnover by 30 April.
- Seek prior approval for 5% acquisitions, control changes and asset disposals.
- Report a fall below five per cent within fifteen days.
- Keep independent directors at least equal to shareholder directors.
Common mistakes
- Registering as a private company.
- Missing the 30 April annual fee and incurring 12% interest.
- Allowing an institutional shareholder to exceed twenty-five per cent.
- Holding a Governing Board meeting with no independent director present.