“Change is the essence of life”
INTRODUCTION:
Companies Act, 2013 is the updated law which governs the creation, continuation, the winding up of Companies and also the relationships between the shareholders, the Company, the public and the Government. Coupled with other statutes dealing with corporate entities, this is an extremely important piece of legislation. Be it enacted by Parliament in the Sixty-fourth Year of the Republic of India. This Act received the assent of the President of India on August 29, 2013 and was effective from August 30, 2013 (Vide Notification No. 18, New Delhi, the 30th August, 2013/Bhadrapada 8, 1935 (Saka)).
WHEN TO CONSIDER REGISTERING A PRIVATE LIMITED COMPANY?
Firstly, understand that, it is NOT at all mandatory to register a Private Limited. Company for starting a business in India. There are many other ways to start a business. So, consider the below points before deciding to choose the Private Limited Company as your choice of entity to do business.
Opt for a Private Limited Company only:
• If you are planning to get investments or funding from Angel, Seed or Venture Capital Investors
• If you want to Limit your Liability
• If you have or are considering Expansion Plans for your business
• If you are considering for Employee Stock Options or ESOPs
• When you need a separate “Legal Identity” for your business
• Where you don’t want to use your personal assets as collateral
Note: Do not get carried away by several online low-cost offers for registration of a company. Private Limited Company form is not a one-time-affair. There is a significant recurring costs involved and several Legal Compliances need to be fulfilled regularly (regular Board Meetings, AGM, Compulsory Audit, RoC filing, etc). Failing / delay to meet the legal compliances will attract additional penalty.
Also, understand that all those Legal Compliances are a bit complex for common people and hence you would need the help of company registration consultant.
If you are unsure of choosing the right form of entity for your business, feel free to get in touch with me. I will guide you with the proper form of entity, suitable for your needs.
DEFINITION OF A COMPANY:
According to section 2(20) of the Companies Act, 2013 the Company means a Company incorporated under this Act or any previous law of a company.
FEATURES OF COMPANY:
Some of the features of a company are as follows:
1. Artificial Person Created by Law
Company is an artificial person created under law. This unique feature distinguishes Company from that of all the other business entities. Once the incorporation certificate is given by the Registrar of Companies (ROC) then it means that Company is brought into existence. A Company is different from its members which is another unique feature of the Company which is not the case in that of a sole proprietorship or partnership firm.
2. Limited Liability
This is one such reason which was responsible for the birth of a Company. Prior to formation a Company all the business entities were liable unlimitedly, which made the businessmen a bit of uneasiness. But this ultimate feature defined a new beginning the world of trade and commerce. But the general rule of limited liability has a limited scope.
PRIVATE COMPANY Section 2(68) Means a Company having a minimum paid-up share capital of one lakh rupees or such higher paid-up share capital as may be prescribed, and which by its articles:
• Restricts the right to transfer its shares;
• Except in case of One Person Company, limits the number of its members to two hundred:
Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:
Provided further that:
• Persons who are in the employment of the company; and
• Persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased, shall not be included in the number of members; and
• Prohibits any invitation to the public to subscribe for any securities of the company;
PUBLIC COMPANY Section 2(71) Means a Company which:
(a) Is not a Private Company;
(b) Has a minimum paid-up capital of five lakh rupees or such higher paid-up capital, as may be prescribed;
Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles;
ONE PERSON COMPANY Section 2(62) Means a Company which has only one person as a member.
FORMATION OF COMPANY Section 3(1) A Company may be formed for any lawful purpose by-
• Seven or more persons, where the company to be formed is to be a Public Company;
• Two or more persons, where the company be formed is to be a Private Company; or
• One person, where the company to be formed is to be One Person Company that is to say, a Private Company.
STEPS TO REGISTER A NEW COMPANY
STEP – I: Apply for Name Approval:
A. Login on MCA Website
As part of Government of India’s Ease of Doing Business (EODB) initiatives, the Ministry of Corporate Affairs have deployed a new Web Form christened ‘SPICe+’ (pronounced ‘SPICe Plus’) replacing the existing RUN and SPICe form with effect from 23rd February 2020.
Applicant have to login into their account on MCA Website. (Pro-existing users can use earlier account or new users have to create a new account.) After Login use can submit Form Spice Plus for name availability and pay MCA fees for Name approval.
Note* From 23rd February 2020 onwards, RUN service would be applicable only for ‘change
of name’ of an existing company Companies Act, 2013.
B. Details required to be mentioned in online form:
(i) Type of Company (Ref Annexure A)
(ii) Class of Company (Ref Annexure A)
(iii) Category of Company &
(iv) Sub-category of Company (Ref Annexure A)
(v) Main division of Industrial Activity of the Company (Ref Annexure B)
(vi) Provide description of the Main Division of the company (Main Objectives of the proposed company) click on the radio Button – Auto Check Facility.
(vii) Comment (Mention Objects of the proposed Company and any other relevant information Like Trade Mark etc.)
(viii) Choose File (Any attachment)
C. Choose File:
This option is available to upload the PDF documents. If applicant want to attach any file, can be upload at this option.
D. Submission of Form on MCA Website:
After completion of above steps user shall submit the Form with MCA website.
E. Payment of Fees:
There is no option of pay later challan in Spic+ (Part-A). Applicant has to pay fees immediately after submission of form. After payment challan shall be generated.
F. Validity of Reserved Name:
Reserved name shall be valid for 20 days from the date of approval of Name.
Quick Question – of Spic+ (Part-A)
1. Whether DIN or DSC required for filing of Spic+ (Part-A) form?
DSC & DIN not required for filing of Spic Pluse Part A online form for reservation of Name. Only account of MCA portal is mandatory.
2. How many resubmission options are allowed in Spic+?
One Resubmission option is available.
3. What shall be the validity of the Name after approval?
a. Reserved name shall be valid for 20 days in case of allotment of name for New Company.
b. Reserved name shall be valid for 60 days in case of allotment of name for existing Company (Change of Name).
4. How many name can be applied through this form?
Two Name can be mentioned in Spic+ form.
5. What shall be the government fees for Spic+?
As per Register Office Fees Rules, Fees shall be Rs. 1,000/-
6. Is it mandatory to attach documents while reserving name?
No.
It is mandatory to attach relevant documents and No Objection Certificates(NOCs) only when a name which requires the approval of a Sectoral Regulator or NOC etc. if applicable, as per the Companies(Incorporation) Rules, 2014, is being applied for.
Please note that only one file is allowed to be uploaded as an attachment and the size of the file should not exceed 6MB. In case of multiple attachments, please scan all documents into a single file not exceeding 6MB in size, and then upload the same.
7. Whether there is any requirement to mention details of Directors in the Spic+?
No, there is no need to mention the name or number of proposed Directors in RUN.
NOTE: *Approval of Name through “Spic+ part A” is an optional way. Users may either choose to submit Part-A for reserving a name first and thereafter submit Part B for incorporation & other services OR file Part A and B together at one go for incorporating a new company and availing the bouquet of services as above.
STEP – II: Preparation of Documents for Incorporation of Company:
After approval of name or for Incorporation of Company applicant have to prepare the following below mentioned Documents by filling form Part B;
• INC-9 – Declaration by first Subscriber(s) and Director(s) (on plain paper).
• DIR-2- Declaration from first Directors along with Copy of Proof of Identity and residential address. (on plain paper)
• NOC from the owner of the property. (on plain paper)
• Proof of Office address (Conveyance/ Lease deed/ Rent Agreement etc. along with rent receipts);
• Copy of the utility bills (not older than two months)
• In case of subscribers/ Director does not have a DIN, it is mandatory to attach: Proof of identity and residential address of the subscribers
• All the Subscribers should have Digital Signature.
**No need of any stamp paper for Incorporation of Company.
STEP – III: Fill the Information in Form Spice+ Part B:
Once all the above mentioned documents/ information are available. Applicant has to fill the information in the web Form “Spice + Part B”.
Features of SPICe+ Part B form:
• Maximum details of subscribers are SEVEN (7). In case of more subscribers, physically signed MOA & AOA shall be attaching in the Form.
• Maximum details of directors are TWENTY (20).
• Maximum THREE (3) directors are allowed for filing application of allotment of DIN while incorporating a Company.
• By affixation of DSC of the subscriber on the INC-33 (e-moa) date of signing will be appear automatically by the form.
• SPICe+ Part B offering a bouquet of services viz.
(i) Incorporation
(ii) DIN allotment
(iii) Mandatory issue of PAN
(iv) Mandatory issue of TAN
(v) Mandatory issue of EPFO registration
(vi) Mandatory issue of ESIC registration
(vii) Mandatory issue of Profession Tax registration(Maharashtra)
(viii) Mandatory Opening of Bank Account for the Company and
(ix) Allotment of GSTIN (if so applied for)
• In case of companies incorporated, with effect from the 26th day of January, 2018, with a nominal capital of less than or equal to rupees ten lakhs or in respect of companies not having a share capital whose number of members as stated in the articles of association does not exceed twenty, fee on INC-32 (SPICe) shall not be applicable
Single Window Form:
Earlier if a Person wants to incorporate Company then it has to apply for the DIN, Approval of the Name Avaibility, Separate form for first Director, Registered office address, PAN, TAN etc. But this form is a single window for Incorporation of Company.
This form can be used for the following purposes:
Application of DIN (upto 3 Directors)
Application for Avaibility of Name
No need to file separate form for first Director (DIR-12)
No need to file separate form for address of registered office (INC-22)
No need to file separate form for PAN & TAN
No need to file separately for GST, IEC.
No need to file separately for EPFO registration
No need to file separately for ESIC registration
No need to file separately for Profession Tax registration(Maharashtra) and
No need to file separately Bank Account for the Company
Quick Question – SPICE+ Part B
1. How to file the SPICE form in case of more than 7 subscribers in the Company?
In case of incorporation of a company having more than 7 subscribers, MOA & AOA shall be filled with INC 32 in the respective format as specified in Table A to J in Schedule I without filing form INC 33 and INC 34.
(Means Physical attachment of MOA & AOA in e-form INC 32)
2. Whether e-MOA & AOA can be file in case of MOA & AOA is signed by a person at a place outside of India?
In case of incorporation of a company where any of the subscribers of the MOA/AOA is signing at place outside India, MOA & AOA shall be filled with INC 32 in the respective format as specified in Table A to J in Schedule I without filing form INC 33 and INC 34.
(Means Physical attachment of MOA & AOA in e-form INC 32)
3. Whether Companies are required to make payment of Stamp Duty in case of incorporation of Company with authorized Capital of Rs. 10 Lakh or below?
Yes, Company has to pay the Stamp Duty. Because Stamp Duty is state matter. Companies Act, has given exemptions for the ROC fees not for the stamp duty.
4. How many DIN can be apply through SPICE Form?
Maximum 3 (Three) DIN can be apply through SPICE form.
If applicant want to incorporation Company with more than 3 Directors and more than 3 persons doesn’t have DIN. In such situation applicant have to incorporate Company with 3 Directors and have to appoint new directors later on after incorporation.
5. How many Name can be apply through SPICE+ Form?
Only one (1) Name can be apply through SPICE form.
In case after filing of e-form, due to Non-Avaibility of name form came for resubmission. In such case applicant have to propose new name and have to alter the name on all the attachment of the Form.
STEP – IV: Preparation of MOA & AOA (Electronic or Physical):
After proper filing of SPICE form applicant has to download the e-form INC-33 (MOA) and INC-34 (AOA) form the MCA site. After downloading of form fill all the information in the forms as per requirement of Table A to J of Schedule I.
After completely filing of the form affix DSC of all the subscribers and professional on subscriber sheet of the MOA & AOA.
(Make Sure Professional and Subscriber sign the form on same date)
STEP – V: Fill details of PAN & TAN:
It is mandatory to mention the details of PAN & TAN in the Incorporation Form INC-32. Link to find out of Area Code to file PAN & TAN are given in Help Kit of SPICE Form.
STEP – VI: Fill details of GST, IEC in AGILE:
If Company wants to apply for GST it has to select YES in the form and fill the information in the form.
If Company doesn’t want to apply for GST then it have to select no.
STEP – VII: Submission of INC-32, 33, 34, AGILE on MCA-:
Once all the 4 forms ready with the applicant, upload all four document’s Linked form on MCA website and make the payment of the same.
STEP – VIII: Certificate of Incorporation-:
Incorporation certificate shall be generating with CIN, PAN & TAN.
Quick Question – SPICE +
1. Whether there is need to file any separate form for PAN & TAN?
No need to file any separate form. Details in relation to Area Code and other details shall be mention in the form INC-32 itself and PAN & TAN shall be generate with Certificate of Incorporation.
2. Whether e-MOA & AOA can be file in case of MOA & AOA is signed by a person at a place outside of India?
No, in such situation applicant have to file the physically signed copy of MOA & AOA (Appostile) in their respective formats in Table A to J of Schedule I.
MOA & AOA and any other documents signed by the subscribers at any place outside India required to be appostile in that country.
Pre- Incorporation Requirements
1. There should be a minimum of TWO persons (promoters) in case of Private Limited Company and SEVEN in case of Public Limited Company, ONE person in case of One Person Company and a Nominee.
2. Minimum Authorized & Paid-up capital to be Any Amount in case of Private Limited Company & One Person Company and 5 Lakhs in case of Public Limited Company.
3. Promoters should be resident of Indians (in case there is a non-resident promoter the MOA & AOA signed by the non-promoter has to be attested by the Embassy of India in the contrary where the non-Indian promoter normally resides, a deceleration to be provided by the promoter, further approval from RBI needs to be obtained before making any investments in the Company by the non-resident promoter, also there should be at least one resident promoter).
4. Promoters to provide their self-certified scanned copies of ID and Address proofs.
5. 1 Passport Size Photographs of all promoters.
6. Income Tax Permanent Account Number (PAN No.) along with the self-attested copy of the Pan Card for all promoters.
7. Application for DSC.
8. Additional details of individual promoters as mentioned below are to be provided:
• Name of the Promoter (First Name, Middle Name & Last Name) as in PAN
• Fathers Name (First Name, Middle Name & Last Name) as in PAN
• Date of Birth of the Promoters
• Occupation of the Promoters
• Qualification of Promoters
• Present Address (as per address proof)
• Permanent Address (if the present address is different from the permanent Address)
• Email id of the promoters
• Mobile No. of the promoters
• No of Shares which the individual promoter would subscribe through the Memorandum of Association of the Company being incorporated {the minimum subscription including all the subscribers (promoter’s contribution) to be 1 Lakhs.}
• The proposed registered office of the Company. (with Address Proof and No Objection Letter from the owner of the premises, Copy of Sale/Leese Agreement)
• Engagement Letter engaging professional for incorporation of the company.
The process of Incorporation would take about a week for name approval from the date of filing form RUN, two different names to be provided (Please refer the common reasons for rejection of names enclosed to this document). Once the name is approved, it would take 5 days to obtain DSC for promoters and draft MOA and AOA, the draft incorporation documents including MOA & AOA will be circulated for approval. On approval of the draft incorporation documents including e-forms by the promoters the same will be immediately filed with ROC.
Main activities proposed to be pursued on incorporation to be provided by the promoters for drafting of MOA. Certification of Incorporation will be issued by the ROC within 10 days from the day of filing of the incorporation documents.
Attached: Rule 8 of the Companies (Incorporation) Rules, 2014 dated 10th May 2019.
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THANK YOU
Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Though utmost efforts have been made to provide authentic information, it is suggested that to have better understanding kindly cross-check the relevant sections, rules under the Companies Act, 2013, Income Tax Act, Rules, Regulations and all other Acts applicable to Companies. The observations of the author are personal view and this cannot be quoted before any authority without the written consent of the author.