Navigating PF Registration for a New Joint Venture: Do We Need a No Objection Letter?

Hi,

My company has branches all over India with the registered office located in a Northern State. The provident fund is registered centrally at the registered office for all branches.

Recently, we entered into a joint venture and launched a new company which has been registered under the Companies Act. The registered office of the new company is also in the same location. The board of directors remains the same, with the inclusion of one additional director. By virtue of the agreement, all business contracts have been transferred to the new company, while the branches and premises of the new company remain unchanged. All current employees have resigned from their positions in the old company and joined the new company with continuity of service. Although the registered office is elsewhere, all administrative activities, finance, and accounts are managed in Chennai.

We applied for PF registration for the new company in Chennai. However, the PF department rejected our application, stating that it cannot be considered a new company but rather a change in constitution and ownership. We explained that it is a new company, but they insisted we obtain a NO OBJECTION letter from the RPFC of the previous company. They also instructed us to treat the new company as a branch of the previous company and apply under Section 2A of the PF Act.

Could you please advise on whether it is necessary to obtain a NO OBJECTION letter and if the new company must be treated as a branch under Section 2A? How should I proceed to obtain registration in Chennai?

Regards,

erv

Issue with Provident Fund Registration for New Company

I am also going through the same issue. We have submitted a No Objection letter from the previous company. After that, we registered under PF. However, the problem now is that the PF Authorities are asking us to pay the PF for new company employees from the date of formation of the previous company.

This means that the employer has to pay the PF for those employees who shifted from the previous company to the new one from the date of formation of the previous company. Essentially, we are being asked to pay PF for the concerned member from backdates, which is causing significant trouble for us.

I am unsure about what to do in this situation. Can anybody clarify whether this is correct?

Understanding Section 2A of the PF Act

As per section 2A of the PF Act:

"Establishment to include all departments and branches. For the removal of doubts, it is hereby declared that where an establishment consists of different departments or has branches, whether situated in the same place or in different places, all such departments or branches shall be treated as parts of the same establishment."

If both companies are sister concerns and will be treated as part of the same establishment, why are we being asked to pay for them twice?

Your guidance is crucial at this time.

Thanks & regards,

Smita