The ministry of corporate affairs (MCA) through a notification dated 01/10/2016, put forth the Fourth Amendment rules, 2016 for the incorporation of companies has recently introduced an E-form under the SPICe (Simplified Proforma for Incorporating Company Electronically) which simplifies the incorporation of a company through an online application form – INC 32, in addition to the Memorandum of Association (in Form – INC – 33) and Article of Association, (in Form INC – 34).
Later on 29TH DECEMBER, 2016 MCA Notified Incorporation Rules namely, Companies (Incorporation) Fifth Amendment Rules and this article deals with the modifications made by the MCA.
HIGHLIGHTS OF THE AMENDMENT:
Analysis of Various Amendments that the Companies (Incorporation) Amendment fifth Rules proposes:
|Sl. No.||Existing Provisions as per: Companies Act, 2013 & Companies (Incorporation) Rules, 2014||Amended Provisions by the Companies (Incorporation) Fifth Amendment Rules, 2016.|
|1.||Section 3(1) (c) of the Companies Act, 2013 deals with formation of a one person company.
Rule 4 of the Companies (Incorporation) Rules, 2014, states about the nomination of a person in Form No. INC-2, along with his consent in Form INC-3, who shall in the event of the subscriber’s death or his in capacity to contract, become the member of that One Person Company.
|The Form for providing the name of the nominee has been changed from Form No. INC-2 to Form No. INC-32 (SPICe).|
|2.||Section 5(5) of the Act, 2013 read with Rule 10 of the Companies (Incorporation) Rules, 2014, states that where the Articles of Association of a company contains the provisions for entrenchment, the same has to be intimated by the Company to the ROC in Form No. INC-2 or Form No. INC-7 along with the prescribed fee.||MCA has replaced Form No. INC-2 or Form No. INC- 7 with Form INC-32 (SPICe). Now, it says that the intimation regarding the entrenchment clause can be done by the company to the ROC in Form INC-7 or INC-32 (SPICe).|
|3.||Section 5 of the Companies Act, 2013 read with Rule 12 of the Companies (Incorporation) Rules, 2014 states about the manner of application to the ROC for incorporation of companies. It states that an application shall be filed with the jurisdictional ROC where the registered office of the company is situated in Form INC No. INC-2 for (One Person Company) and Form No. INC-7 (other than One Person Company).||MCA has replaced the Form No. INC-2 and Form No. INC- 7 with Form INC-7 and Form INC-32 (SPICe). It states that now Form No. – INC 7 can be used only in the case of Part 1 companies and companies with more than seven subscribers and Form INC-32 (SPICe) can be filed for the other companies.|
|4.||Rule 36 of the Companies (Incorporation) Rules, 2014 prescribes the integrated process for incorporation of companies. Earlier, the entire process of incorporation was done through Form No. INC-29. The simplified process was very much effective as the entire process of incorporation was done through one form i.e Form No. INC-29.||MCA has entirely omitted the integrated process of incorporation through Form INC-29. Since, the process of incorporation has now been shifted to INC-32 (SPICe) w.e.f. 1 st October, 2016 vide Companies (Incorporation) Fourth Amendment Rules, 2016, the Form INC- 29 has already been withdrawn of the MCA w.e.f 1st November, 2016.|
SPICe was introduced by MCA w.e.f. 1st October, 2016 vide Companies (Incorporation) Fourth Amendment Rules, 2016 and subsequently the Integrated Incorporation Form INC – 29 was discontinued. By the fifth Amendment rules MCA has provided more clarification on SPICe and rules related thereto. The same are analysed as follows:
|Existing Provisions||New Provisions||Remarks|
|No provision||Proviso to sub- rule 1 of Rule 38 states that in case of incorporation of a Sec 8 company, the same will be done in Form No. INC-32 (SPICe) along with MoA and AOA.|
|For the purposes of sub rule (1), the application for allotment of Director Identification Number up to three Directors, reservation of a name, incorporation of company and appointment of Directors of the proposed company shall be filed in Integrated Form No. INC-29, for One Person Company, private company, public company and Producer Company, with the Registrar within whose jurisdiction the registered office of the company is proposed to be situated, along with the fee of rupees two thousand in addition to the registration fee as specified in Companies Registration of Offices and Fees) Rules, 2014||For the purposes of subrule (1), the application for allotment of Director Identification Number up to three Directors, reservation of a name, incorporation of company and appointment of Directors of the proposed for One Person Company, private company, public company and a company falling under section 8 of the Act, shall be filed in Form no. INC-32 (SPICe) with the Registrar within whose jurisdiction the registered office of the company is proposed to be situated, along with||MCA has removed the scope for producer company under SPICe instead has added section 8 company in it. Also, the fees have been reduced from Rs. 2000 to Rs. 500.|
|Earlier the subscriber’s sheet of the Memorandum of Association and Articles of Association were to be separately attached with the application Form INC-29, the same required physical signatures and photograph of the directors.||The same has been removed here as now the Memorandum of Association and Articles of Association has to be filed in e-MoA and e-AoA i.e. through Form No. INC-33 and Form No. INC-34 with Form No. INC-32 which requires digital signature of the directors. Also, it is stated by the MCA that only two chances of resubmission of the Form INC-32 will be provided rather than three which in short reduces the scope of mistakes by the applicant. Along with the above mentioned changes, MCA has also revised Form No. INC-7 and INC-27.|
Conclusion: 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.
Further Amendments will be discussed in Part 2 of this series.
Author: CS Rahul Harsh, is a company secretary in Employment and can be contacted at: firstname.lastname@example.org