India: Notification Of Companies (Incorporation) Fifth Amendment Rules, 2016 (Corporate Laws: October 2016 - December 2016)

The Ministry of Corporate Affairs ("MCA") has notified the Companies (Incorporation) Fifth Amendment Rules, 2016 which come into force with effect from January 01, 2017. According to these Rules, now a company can be incorporated only using consolidated SPICe (Simplified Proforma for Incorporating a Company electronically) forms viz. SPICe (INC-32), soft copy of the Memorandum of Association ("e-MoA") and soft copy of Articles of Association ("e-AoA"). The e-MoA and e-AoA are required to be signed by the subscribers and witnesses by affixing their respective digital signatures.

The filing fee for form SPICe has also been reduced from INR 2,000 to INR 500 and number of resubmissions is also reduced from three to two.

Clarification on Conversion of a Company Limited by Guarantee into a Company Limited by Shares

MCA has specified that a company limited by guarantee [other than a company incorporated under Section 25 of the Companies Act, 1956 or Section 8 of the Companies Act, 2013 ("CA, 2013")] may convert itself into a company limited by shares subject to the following conditions:

  1. Share capital should be equivalent to the guarantee amount.
  2. A special resolution is passed by its members authorising such a conversion omitting the guarantee clause in its MoA and altering the AoA to provide for the articles as are applicable for a company limited by shares.
  3. Filing of special resolution in form MGT- 14 within thirty days of passing of resolution in the Board Meeting.
  4. Filing of form INC-27 within thirty days from date of the passing of the special resolution enclosing the altered MoA and AoA and a list of members with the number of shares held aggregating to a minimum paid up capital which is equivalent to the amount of guarantee.

Notification on Transfer of Pending Proceedings to National Company Law Tribunal

MCA has notified that with effect from December 15, 2016, following matters shall get transferred to National Company Law Tribunal ("NCLT"):

(i) Pending proceedings relating to cases other than Winding up:

All proceedings relating to arbitration, compromise, arrangements and reconstruction, other than winding up have been transferred to the Benches of the NCLT having territorial jurisdiction with effect from December 15, 2016. All such proceedings shall be instituted and conducted under the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

(ii) Pending proceeding relating to Voluntary Winding up:

All applications and petitions of voluntary winding up of companies pending before a High Court as on December 15, 2016 shall continue with the High Court having Jurisdiction.

(iii) Pending proceedings of Winding up on the ground of inability to pay debts:

All the winding up petitions on the ground of inability to pay its debts pending before a High Court, in which the petition has not been served on the respondent have been transferred to the Bench of the NCLT having territorial jurisdiction. All such petitioner shall be deemed to have been filed under The Insolvency and Bankruptcy Code, 2016.

(iv) Pending proceedings of Winding up matters on the grounds other than inability to pay debts:

All winding up petitions filed on the grounds other than inability to pay debts which are pending before a High Court and where the petition has not been served on the respondent have been transferred to the Bench of the NCLT having territorial jurisdiction. All such petitions shall be deemed to have been filed under the provisions of the CA, 2013

Notification of the NCLT (Procedure for reduction of share capital of Company) Rules, 2016

MCA has notified the NCLT (Procedure for reduction of share capital of Company) Rules, 2016 which come into force with effect from the December 15, 2016.

Pursuant to the above said Rules, now, a petition relating to reduction of share capital of a Company under Section 66 of the CA, 2013 shall be filed before NCLT and all the proceeding shall be instituted and conducted under the NCLT (Procedure for reduction of share capital of Company) Rules, 2016.

Notification of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016

MCA has notified the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 which come into effect from December 26, 2016.

Pursuant to the provisions of Section 248 to 252 of the CA, 2013 and above said Rules, following is the renewed procedure for removal of name of the Company from Registrar of Companies ("RoC") records:

(i) Removal of name of company RoC suo-motu basis

The RoC may remove the name of any company where RoC has reasonable cause to believe that—

  1. A company has failed to commence its operations within one year from the date of incorporation.
  2. The subscribers have not paid the subscription money within a period of one hundred and eighty days from the date of incorporation and a declaration to this effect has not been filed within one hundred and eighty days of its incorporation;
  3. A company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company.

Provided the RoC shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice.

(ii) Application by the Company for removal of its name from RoC records

A company may pass a special resolution after extinguishing all its liabilities and file an application in the prescribed form i.e. (Form STK-2) to RoC for removal of its name. The fee for filing of Form STK-2 is INR 5000.

The following documents are required to be filed along with Form STK-2:

  1. Indemnity bonds by every director
  2. Affidavit by every director
  3. Statement of account duly certified by Chartered Accountant not older than 30 days before the date of submission of form STK-2.
  4. Special Resolution certified by every director.
  5. Statement regarding pending litigation if any, involving the company.
  6. NoC from the appropriate regulatory authority, if applicable.

The RoC after being satisfied with the Form STK-2 and documents shall intimate the regulatory authorities having jurisdiction over the company inviting their objections for proposed action of striking off name of company, if no objection received within a period of 30 days, the RoC shall proceed with the striking off or removal of name of company from the RoC.

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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