India: From P To E: Smidgeons Of Digitization On Companies (Incorporation) Fourth Amendment Rules, 2016

Last Updated: 28 November 2016
Article by Lucy Rana and Sanchi Malhotra

The Ministry of corporate affairs in its courageous bearing notified on October 1, 2016 the Companies (Incorporation) Fourth Amendment Rules, 20161 amending the Companies (Incorporation) Rules, 2014 with effect from October 1, 2016. The amending rules introduced the Simplified Proforma for Incorporating a company Electronically (SPICe)2 as a part of the initiative in Government Process Re-engineering (GPR) on October 2, 2016. SPICe provides for a digital and a considerably simplified substitute of Form INC 293 newly packaged to incorporate a company in India with much ease. The notification declares Form INC 324 as the digital auxiliary of Form INC 29. Under the SPICe program a pre drafted Memorandum of Association and Articles of Association can be filed much economically and effectively with ease of doing business.

Key Highlights

  • Due to the introduced change the entire process of incorporation of Part I companies, producer company, Section 8 company, new companies (that includes public companies, private companies, and one person companies) is simplified into one single form that would take about 48 hours for approval.
  • Form INC 32 facilitates much more than INC 29 as it enables filing of Memorandum of Association electronically.
  • Form INC 32 can be filed even after filing INC 15 which is used for obtaining name of a company. This facility was not provided by INC 29, one can now also obtain the name of the proposed company by filing INC 32.
  • The memorandum of Association and the Articles of Association of the company to be incorporated can be filed electronically through forms INC 336 and INC 347 respectively under SPICe. Further, pre drafted clauses of AoA can be submitted and witnesses to the Memorandum and the Articles of Association can affix their Digital Signatures8 on the e- documents.
  • MCA has also provided a procedure for conversion of a company limited by guarantee into a company limited by shares.
  • The inclination to file for compliances and meeting regulatory requirements is being revamped and there is a paradigm shift from manual to digital media today, it does not come as surprise that INC 29 and INC 79 will eventually be phased out in future and any company including private limited company, public limited company, section 8 company, one person company will have to resort to incorporation compliances using SPICe. Furthermore, it is important to note that directors of the concern will have to apply for digital signature certificates and DIN.

Earlier the incorporation procedure was facilitated by the filing of forms such as INC 7, DIR 1210, and INC 2211 manually. The same was substituted by the melting pot Form INC 29. The only and probably the most significant difference in the digital process of filing for incorporation through Form INC 32 is the resultant efficiency in the process. However, it does not make any relaxation in terms of attachment of necessary documents. All the forms are required to be filed with requisite attachments such as Address proof, identity proof, affidavits and declarations by subscribers and directors, along with required NOCs and approval certificates as enumerated in the respective form. If found complete and correct, the forms are verified, the company gets incorporated and a Corporate Identification Number (CIN) is issued along with the DIN to the proposed directors.

Footnotes

1  G.S.R. 936(E)

https://www.mca.gov.in/Ministry/pdf/CompaniesIncorporationFourthAmendmentRules_01102016.pdf

2 http://www.mca.gov.in/Ministry/pdf/SPICEPress%20Release_03102016.pdf on October 2, 2016.

3 The INC 29 is a five in one form for company registration which combines the application for DIN allotment, name reservation, incorporation and even PAN and TAN.

4 Form INC 32 deals with a single form for the reservation of name, incorporation of a new company or for allotment of DIN. It is supported by documents such as details of directors and subscribers, MoA and AoA etc.

5 Form INC 1 is an application form for incorporating a new company or changing the name of an existing company.

6 eForm INC 33 is newly introduced under the rules notified under the Companies Act, 2013 pursuant to Schedule I (sections 4, and Section 5) to the Act.

7 Form INC-34 or SPICe AoA is an eAoA or Electronic Articles of Association that is newly introduced by the MCA to simplify Company Registration in India.

8 The date of signing the MoA and AoA will be the date of affixing the Digital Signature Certificate.

9 Form INC 7 is an application form for incorporation of a company other than a one person company.

10 Form DIR 12 calls for the particulars of appointment of directors and the key managerial personnel and the changes among them.

11 Form INC 22 calls for Notice of situation or change of address of the registered office of the company.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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