INCORPORATION AND NAME RESERVATION - (NOW, BECOMES MORE SIMPLIFIED!!)
On the Occasion of this 69th Republic Day, Government of India has made a new start of Incorporating a Company through 2 Services:
A. RUN - Reserve Unique Name Service B. SPICE - Simplified Performa for Incorporating Company Electronically
This is a unique initiative towards ease of doing business in India by the Government as it makes the process of Incorporation of the Companies more easy and convenient. This will help our Nation to be counted in the top 50countries in the World’s Bank Report of the Business.
MCA vide its Notification dated 26thJanuary, 2018 makes following amendments in the Incorporation Rules which is now called as Companies (Incorporation) Rules, 2018:
In Rule 9 Substitution has been made
Earlier: An application for Reservation of Name was through INC-1 under which one Chance of Resubmission was available.
Amended: An Application for Reservation of Name is through a web service by using the RUN form i.e. Reservation of Unique Name under which no chances of Resubmission is allowed.
In Rule 10 omission has been made
Earlier: When the articles of the Company were being entrenched as per the Section 5(3) of the Companies Act, 2013, then at the time of Incorporation of the Company provision for entrenchment had to be filed through INC-7 or INC-32 (as the case may be).
Amended: Filing of the Incorporation Form i.e. INC-7 now has been departed.
In Rule 12 Substitution has been made
Earlier: An application for incorporation of the Company had to be filed, in case of more than 7 subscribers were filed in INC-7 and others in INC-32, with the Registrar within whose Jurisdiction the registered office was situated.
Amended: An application for incorporation of the Company has to be filed, in E-form INC-32, with the Registrar within whose Jurisdiction the registered office is situated even if the Subscribers are more than 7 in numbers.
Provided that if the objects of the Company requires any approval from Sectoral Authority, then approval from the concerned authority shall be obtained before carrying such objects and a declaration to be attached by all the subscribers at the time of incorporation.
In Rule 38 Insertions has been made:
As per Rule 38 of the Companies (Incorporation) Rules, 2014, In case of the Incorporation of Companies is to be filed through SPICE form along with E-MOA and E-AOA and all the provisions like DIN (Directors Identification Number) up to 3 directors, Name Reservation, Incorporation and Appointment of Directors is to filed through INC-32 namely SPICE Form along with INC-33 (E-MOA) and INC-34 (E-AOA)
Following are the Insertions Made to Rule 38:
In case, if the Company is:
Having more than 7 Subscribers OR
Place of Signing in MOA and AOA is outside India
Then, Physical Copies of MOA and AOA has to be filed as per Table A to J of Schedule I under the Companies Act, 2013.
In case the Companies are incorporated with effect from 26th, January, 2018: the Nominal or Authorized Capital of the Company having Share Capital is less than or
equal to Rs.10 lakh
Number of Members in AOA of the Company not having Share Capital does not exceed 20
Then, No fees on INC-32 are applicable.
MCA makes following changes in applying DIN dated 26-01-2018
In Case of Existing Company
1. A Person who is appointing as a Director of an Existing Company, shall make an application by filing form Namely DIR-3 (An application for allotment of Director Identification Number) (DIN).
Provided that, If a Director is not having DIN, then at the time of Incorporation particulars of maximum 3 directors to be mentioned in form INC-32 (SPICE) and DIN may be allotted.
2. Copy of Board Resolution for the appointment of director in an Existing Company, Photograph, Proof of Identity and Residence of the Proposed Director applying for DIN to be attached to Form DIR-3.
3. DIR-3 shall be verified by the following in which the applicant is being appointed as a director in EXISTING COMPANY:
Company Secretary in Whole Time Employment OR
Managing Director OR
Chief Executive Officer OR
Chief Financial Officer
In Case of New Company
1. A person appointing as a director in a new Company can make an application of DIN through INC-32 (SPICE) at the time of Incorporation but the particulars for maximum 3 directors can be mentioned in INC-32 for allotment of DIN.
2. If a Person is already having DIN and he or she is appointing as director in a company proposed to be incorporated, then particulars of Directors having DIN to be filled in column Namely, A PERSON HAVING DIN in E-form INC-32 (SPICE).
KEY HIGHLIGHTS OF RUN FORM
DSC and DIN are not required for filing of RUN (Reservation of Unique Name)
Validity period for approval of Name in following cases:
In case of Existing Companies:
Name shall be reserved for 60 days from approval date
In case of New Companies
a. Name shall be reserved for period of 20 days from the date of approval.
b. Applying 6 Names through RUN is not possible as Only 1 name can be applied through Run.
c. No chances of Resubmission is available.
d. Fees for filing of Name through RUN is Rs.1000/ and if Rejected, then fresh filing for application of Name through RUN after payment of fees is being initiated.
e. Details like Company’s Type, Name of the Proposed Company to be incorporated, and Comments i.e. Objects of the Company is to be mentioned but if there is the case of Change of Name of the Company CIN of the Company to be mentioned.
f. Single attachment is to be attached as the size of the Form is not to be increased more than 6 MB.
g. It is not mandatory to attach the documents as an attachment BUT where the objects of the company is related to Finance, Investment, and others related thereto in which approval of Sectoral Authority is required.
h. In case of NAME CHANGE board Resolution along with the objects of the Company needs to be attached.
i. Run form will be available after logging into MCA website and after login into the same Click on the RUN ICON and file application for the Reservation of Name.
PROS AND CONS OF INCORPORATION FORMS
Concept of Ease of doing Business is more Strengthened
Filing through SPICE is based on Concept of Zero fees
Filing procedures is now more easy and simplified
Name preferability has been reduced from SIX to ONE
If Name is not approved in SPICE, then documents and its stamp papers have to be revised accordingly.
No Resubmission Chances are there in RUN.
Instead of having AUTO-CHECK button while applying Name through RUN, all Provisions as per RULE 8 of the Companies (Incorporation) Rules, 2014 and all classes of Trademark as per the defined objects of the proposed Company must be kept in mind while applying Name.
Fees is Still Rs.1000/- for application of Name in RUN.
This New initiative by the Government to incorporate companies is now little bit easy, although the filing involves some pros and cons but Hope, this step will help our Nation to be counted in the top list countries of WORLD’S BANK BUSINESS REPORT.
Author CS Kanika Kumar
An Associate Member of Institute of Company Secretaries of India, having Knowledge of Company Law, GST and have Experience of Incorporation of Various Companies. She is good at drafting and has written articles on Company Law Matters, Indirect Taxation Matters and on other applicable laws along with their amendments and implications.
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