Revelutionary November

Before RBI and our Hon’ble Prime Minister gave a discomfort of reforming the currency note fluctuations, the Ministry of Corporate Affairs gave us a little comfort in the procedure of incorporation by introducing SPICe method of incorporation. The pressure on conversion of old currency into the new currency and the restrictions on it might have made the whole India have busy November and make few important facts (like SPICe) unnoticeable. In this edition, we are going to discuss the new alternative in place of INC-29. Yes, the new paperless and speedy way of incorporation of a company through SPICe forms are detailed along with our usual Legal Term and updates from MCA, SEBI, RBI and IT Departments.

Saranya Deivasigamani,
CEO

SPICe

The Ministry of Corporate Affairs has taken another bold initiative in Government Process Re-engineering (GPR) and launched Simplified Proforma for Incorporating Company Electronically (SPICe) e-Form, on the occasion of Gandhi Jayanthi (October, 2nd 2016), with the specific objective of providing speedy incorporation related services within stipulated time frames which are in line with international best practices. An appreciable step is taken by Ministry of Corporate Affairs by introducing E-Form INC-32 under SPICe scheme notifying Companies (Incorporation) Fourth Amendment Rules, 2016. Existing INC-29 and INC-7 will be phased out, and SPICe will be the Sole, Simplified & Versatile form available for incorporation of a company in India. With the SPICe initiative and the introduction of INC-32, the approval time is much shorter. This is because the new system facilitates the filing of Memorandum and Article of Association electronically. Purpose of the e-Form Now w.e.f. 02.10.2016 MCA has introduced new e-form INC-32. This form is one step ahead of Form INC-29. This form is available on MCA w.e.f. 03.10.2016.

Incorporation of Seciton-8 Company and Producer Company permitted through this form.
Minimum authorized and subscribed share capital required for an OPC is Rupee one or a private company having share capital is Rupees two and in the case of a public company Rupees seven.
Total numbers of first subscribers are restricted to seven considering possibility of affixing maximum DSCs in form SPICe MOA (INC-33) and form SPICe AOA (INC-34).

Key Features

The integrated e-Form INC-32 is available with effect from 03.10.2016 for One Person Company, Private Company, Public Company, Section 8 Company and Producer Company.

INC-32 can be filed even if the name of the company through INC-1 have already been applied. This is a major difference between INC-29 and the new E-form.
As stated earlier, the major breakthrough is the fact that SPICe provides e-filing of MOA and AOA through forms INC-33 and INC-34. The MOA can be copy pasted from your file, and the AOA can be pre-drafted against the clauses given in the form INC-34. The whole process has been completely simplified.
Since MOA and AOA are to be filed digitally, the signatures of directors (digital signatures) can be affixed with INC-33 and INC-34.

First Major Change in INC-32

The e-Form INC-29 does away with the need for reserving a name for the company prior to applying for its incorporation. But there was a restriction in INC-29 i.e. if Company filed INC-1 for the the proposal of the name then it was not possible for the Company to file INC-29. Because INC-29 was not providing the way to file if the company already has got name approval by INC-1. But in INC-32 this feature has been changed. At point No. 5(a)(i) of INC-32 there is an option “Whether Name is already approved by Registrar of Companies” Company has to select Yes or No in this Option. In the case of Yes (Means Company has got name approval in INC-1) then mention the SRN of such INC-1. But in the case, the name is not approved by INC-1 then mention the name and significance as they were applying in INC-29.

Second Major Change in INC-32

MCA for the first time prescribed to file MOA & AOA in e-Form INC-33 and INC-34 in the electronic mode to be digitally signed and filed in link with e-Form INC-32.

E-Memorandum Of Association:
- Information Required to be Mentioned In Form INC-33:
  - The type of Companies have been divided into tables A (limited by shares), B (limited by guarantee without share capital),C (limited by guarantee with share capital), D (unlimited company without share capital), and E (unlimited company with share capital), Choosing the respective types, the respective columns will appear for filling.
  - SRN of INC-1, if filed. (This should be same as mentioned in the linked form INC-32)
  - Then Name and State will be prefilled from data given in INC-1.
  - Respective columns are provided for the object clause.
  - Mention the required information (furtherance of object, Share Capital, subscriber details, liability clause) in the form
  - If INC-1 not filed then fill the following information
    - Mention the Name of Company
    - State of Incorporation
    - Objects of Company
    - Furtherance of Object
    - Fill the subscriber sheet
    - Detail of Capital of the Company
  - Instead of Signature of Subscriber (handwritten subscription sheet) affix the DSC of subscribers.
  - By affixation of DSC of the subscriber on the INC-33 (e-MOA) date of signing will be filling automatically by the form.
  - Instead of Signature of witness affix the DSC of subscribers.
- Drawback INC-32
  - Maximum details of subscribers allowed through form SPICe (INC-32) is SEVEN. In the case of more subscribers, follow the normal incorporation procedure.
  - Maximum three Directors are allowed for using this integrated form for filing an application for allotment of DIN while incorporating a Company.
E-Article Of Association:
- Information Required to be Mention In Form INC-34:
  - The type of Companies has been divided into tables F, G, H, I and J (as against the types specified for A, B, C, D and E in MOA respectively). On the basis of selection, relevant ‘Articles’ clauses will appear Pursuant to Schedule I to the Companies Act, 2013).
  - There are 2 options for each clause; 1st check box is for ‘Not applicable’ against the respective article. And the 2nd check box is to entrench the article. Clicking on the 2nd check box the form will allow modifying the text of the clause.
  - Director name(s) should be entered mandatorily under “Board of directors”.
  - Articles in addition to the standard table shall be mentioned in last blank box ‘Others
  - Mention SRN of INC-1, if filed. If not filed then mention the proposed name.
  - Instead of Signature of Subscriber (handwritten subscription sheet) affix the DSC of subscribers.
  - By affixation of DSC of the subscriber on the INC-34 (e-AOA) date of signing will be filling automatically by the form.
  - Instead of Signature of witness affix the DSC of subscribers.
- Mandatory Attachments:
  - Affidavit and declaration by the first subscriber(s) and director(s);
  - Proof of Office address (Conveyance/ Lease deed/ Rent Agreement etc. along with rent receipts);
  - Copy of the utility bills (not older than two months).

Note:

The provisions of sub-rule (2) to sub- rule (13) of rule 36 of Company Incorporation Rules shall apply mutatis mutandis for incorporation of Company.
The e-Form will not be auto approved Straight Through Process (STP).
Companies have the option to go by route of e-form INC-32 or earlier route INC-1, INC-7, DIR-12 and INC-22.
Director has to give declaration at the end of the form that he has checked the name on MCA website and Trade Mark Website.
DSC of Director will be affixed on the form. {In case of director don’t have DIN then PAN No. of director to be mentioned at the place of affixing of DSC)
DSC of professional will also be affixed on the form.
List of main divisions of industrial activities is given as Annexure A in the instruction Kit of INC-32.
Only one name can be applied for approval in this e-form. Therefore, the applicant has to duly check the proposed name and follow name availability guidelines, existing trade marks to avoid rejection.
Only Three re-submissions are allowed.

Thus, through SPICe, the Ministry of corporate affairs has made a considerable effort to reduce the hassles and time frame taken for incorporation as well as the paperwork involved.

Legal Term

Transmogrify

Transform in a surprising or magical manner.

MCA Updates

Fees for allotment and surrender of DIN have been revised.
IEPF rules, 2016 has been approved by the Ministry.

SEBI Updates

Clarification on aspects related to day count convention for debt securities issued under the SEBI (Issue and Listing of Debt Securities) Regulations, 2008.
Disclosure of financial information in offer document/placement memorandum for InvITs
Enhanced Standards for Credit Rating Agencies (CRAs)

RBI Updates

Withdrawal of Legal Tender Character of existing ₹ 500/- and ₹ 1000/- Bank Notes – Revision in limits.
External Commercial Borrowings (ECB) – Clarifications on hedging.
Issue of Rupee Denominated Bonds overseas

Income Tax Updates

Deduction on enhanced profits.
Revision in depreciation on assets.
DTAA with Japan is been amended.
Prohibition on Binami Property Transaction Rules,2016 has been amended.
Special Provisions Relating to Tax on Distributed income of Domestic Company for Buy-Back of Shares shall come into force from 1st June 2016.

Month: November 2016

Simplified Proforma for Incorporating Company Electronically (SPICE)