One Day Company Incorporation- Analysis
Introduction - One Day Company Incorporation
The procedure for company incorporation is provided under Section 7 of the Companies Act, 2013. Companies (Incorporation) Rules, 2014 which came into effect from 1st April 2014 was framed by the Central Government for the purpose of company incorporation. There are Rules prescribing various Forms that are to be used for the incorporation of a Company.
With the introduction of Companies Incorporation Fourth Amendment Rules 2016, with effect from 02/10/2016, Rule 38 was inserted. It introduced a simplified proforma for incorporating company electronically (SPICe). The Rule prescribes the following:
- Form No. INC – 32
- e Memorandum of Association in Form INC – 33
- e Articles of Association in Form No. INC- 34
The Ministry of Corporate Affairs made further amendments to the Incorporation Rules and notified Companies (Incorporation) Fifth Amendment Rules, 2016 which became effective from 01/07/2017. For the purpose of making Simplified Proforma for Incorporation of Companies Electronically (SPICe) more effective, the Amendment was introduced by the Ministry in October 2016. The second proviso to Rule 38(1) and Rule 38(2) was inserted. Amendments were made in Rule 9 and 12, to make incorporation easy under the SPICe method.
Major Highlights for Company Incorporation
- Rule 4 applies to One Person companies, where the subscriber to the memorandum of an OPC shall nominate a person. In events of subscriber’s demise or incapacity to contract, that particular person shall become a member of OPC. Such nomination shall be filed in Form INC – 32 along with nominee’s consent in Form INC- 3.
- Form INC- 32: Single form for the following-
- Reservation of name,
- Incorporation of a new company
- Allotment of DIN
It is supported by documents such as details of directors and subscribers, MoA and AoA etc.
- Form INC- 3 (non-e-form): Nominee consent form for a One Person Company.
2) Rule 10 stipulates that in case of Articles contain entrenchment provisions, it is mandatory for the company to notify the Registrar of any such entrenchment provisions at the time of incorporation of the company. Such notification is to be submitted in Form INC-7 or INC-32 (SPICe) along with the prescribed fee. It is important to note that rule regarding existing companies shall remain same, with filing to be done in Form MGT- 14, within 30 days of the date of entrenchment of articles.
- INC-7: Application form for incorporation of a company other than a one-person company.
3) Rule 12: States that an application is to be filed with the registrar in Form 7 (Part I company with more than seven subsidiaries) and Form INC 32.
4) Rule 38: This Rule was introduced by the Companies Incorporation Fourth Amendment Rules, 2016 unveiling the SPICe Rules. Further, the Fifth Amendment provided that in case of incorporation of Section 8 Company, Form INC-34 is to be filed, with Form INC-13 (MoA) and Form INC 31(AoA) as attachments.
- INC-13: MoA of Section 8 company registration has been prescribed in form INC-13 by the companies act 2013 followed by rule 19 sub-rule 2 of companies incorporation rule 2014.
- INC- 31: Introduced for the purpose of choosing a pre-drafted Article of Association.
5) For the purpose of going digital and paperless, the Fifth Amendment Rule prescribes that a promoter/applicant of the proposed company shall propose only one name in Form INC-32. Further, subscribers, witness or witnesses shall affix their Digital Signatures to the MoA and AoA.
6) Once a company adheres to such Rules for the incorporation, it shall furnish to the Registrar the verification details of its registered office within thirty days of its incorporation in the prescribed manner by filing Form INC-32. It is to be noted that if in case the proposed company maintains its registered office as the given corresponding address.
It is observed that in cases where all the documents are in the correct place and the details in the SPICe form gets approved, the company shall be registered within 3 to 4 hours of filing the Form. Since the documents required for the process are extensive and the filing is to be done through the Digital Signature Certificate, it is difficult to say that the process will take only one day. Since the Name Reservation involves a maximum chance of rejection, If the name you filed through the SPICe form gets rejected, all the incorporation documents are to be uploaded and submitted again for Company Registration.