Everything you should know about Incorporation of Company Form – SPICE
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).
In Coming few days SPICE will be the sole form available for Incorporating Companies in India. This means all the existing forms for Incorporating a Company in India will be Phased out by the MCA.
This article will give you a detailed Analysis of the new SPICE forms introduced.
What is different?
Prior to May, 2015, the incorporation of companies required one to fill up several documents, such as the DIR – 3 for acquiring the DIN (Director identification number), INC- 1 for obtaining a name, Filling of INC – 7 for registering the company along with the scan copy of Memorandum and Articles of Association plus various declarations by directors and professionals, an INC – 22 for details regarding registered office and finally, Form – DIR 12 for appointing directors.
However, with effect from 01/05/2015, the Ministry of Corporate affairs brought forward One form – INC – 29 for incorporation of companies. This form included all the details to be filled in the five forms as mentioned earlier. Also, the process of getting an approval (if all filing done correctly) was reduced to as low as 48 hours. It also provided ways to apply for PAN & TAN for the Proposed company being incorporated.
But the Ministry didn’t get the response it expected from the stakeholders and one of the reason was in INC 29 the applicants had option to provide for only ONE proposed name of the company. So, this was practically not favorable and most of the applicants chose to use the conventional method instead of trying to Incorporate the company by the Integrated form. Thus the very object of Ease of Doing Business in India could not be achieved. Therefore, after lots of discussions MCA came out with the SPICE initiative, and the introduced the form INC – 32, the similar facilities provided by INC – 29 will apply here too. However, what is ‘additional and much more progressive’ is the way the new system facilitates the filing of Memorandum and Article of Association, at the time of incorporation, and electronically. Filing of MOA and AOA online can save a lot of effort and time spent on their incorporation.
At a first glance, the new SPICE forms are almost exactly like the previous forms used for integrated submission of documents for the incorporation of a company, namely form 29. The key difference seems to be at the back end. The government has recently established a central Registration center (CRC) to provide “speedy incorporation services in line with global practices”. Given that, the CRC is an initiative of the Government Process Re-engineering wing it should not come as a surprise that the existing forms have also been re-engineered in order to provide process optimization. As a result, requirements for documentation seem to have declined with the N number of declarations that were required from the directors having been done away with.
The Highlights of SPICE (INC 32, 33, 34) are follows:
- This form can be file even after approval of INC-1. This facility was not provided in INC-29. So this means you can either apply with one single name for the proposed company by filing INC 32 or you can also apply INC 1 and get a name reserved and then incorporate a company by SPICE INC – 32. So, this gives you best of both the worlds.
- No need to reserve Companies Name prior to Incorporation. Even if companies have applied for name in INC-1, at point No. 5(a)(i) of INC-32 where it has been asked whether approval of name in form INC-1 has been taken, fill NO (this option was not available in INC-29). But it is advisable to file INC-1 first as only one name can be proposed in this form also (same as INC-29).
- An applicant can also apply for Permanent Account Number (PAN) and Tax Deduction Account Number (TAN) by form INC 32.
- Standardized E- Memorandum of Association has been provided in Electronic Mode INC-33. All the applicants need to do is to provide the details with respect to the Object to be pursued by the company on its incorporation and Matters which are necessary for furtherance of the objects specified, details of the Share capital and subscribers of the Proposed company. The subscribers will now have to sign the form Digitally and the witnessing professional will also need to affix is DSC to the form. In case there is a situation that the Subscribers are at different places while the Professional is witnessing the form the same will be done in the manner as if the subscribers are present before the professional.
- E- Article of Association has been provided in form INC-34. The articles are in standard format as provided in the Companies act 2013. But there is an option to alter / entrench the same by selection appropriate fields provided just beside each clauses in the Form.
So, as of now there are 2 ways to incorporate a company:
No. 1: INC-7, DIR-12 & INC-22
No. 2: INC-32 (Substituted the INC 29)
Purpose of the e-Form:
E-Form SPICe (INC-32) deals with the single application for reservation of name, incorporation of a new company and/or application for allotment of DIN. This eForm is accompanied by supporting documents including details of Directors & subscribers, MoA and AoA etc. Once the eForm is processed and found complete, company would be registered and CIN would be allocated. Also DINs gets issued to the proposed Directors who do not have a valid DIN. Maximum three Directors are allowed for using this integrated form for filing application of allotment of DIN while incorporating a company.
Types of Companies which can be formed through this form:
- Part I Company
- Producer Company (only if 2 agricultural corporations are promoters, if there are minimum 10 promoters as applicable for individuals, then normal incorporation process has to be followed).
- Section 8 Company (was not available in INC-29)
- New Company – Public or Private or OPC
Share Capital:
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 case of a public company Rupees seven. At least one kind of share capital (Equity/ Preference) should be greater than zero in number of shares as well as amount of shares.
Mandatory Attachments:
- Affidavit and declaration by 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)
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.
Author is an Associate Member of the ICSI from Kolkata and can be reached at csrahulharsh@gmail.com
