According to the latest World Bank report, India stands at the 142th position in terms of ease of doing business globally. No wonder, there have always been clamour and concern for bureaucratic hurdles which prevent the business to run efficiently and smoothly. One such hurdle was the bureaucratic procedure as to the incorporation of a new company.
However, welcome step has been taken by the Narendra Modi government to make the procedure more simple and user-friendly by introducing an integrated e-form INC-29 for incorporating a company in India. ‘EASE OF DOING BUSINESS’.
With the introduction of the INC-29, the Ministry of Corporate Affairs (MCA) has begun to make good on its promise to improve India’s ranking on the World Bank’s Ease of Starting a Business Index to include in top 50 from the current rank which is 158.
The new concept of FAST TRACK INCORPORATION was given effect by the MCA in the form of the new form INC 29. The form INC 29 facilitates the incorporation of the company in a single form i.e. INC 29 as soon as this form is filed with the ROC the company will come into existence legally. The concept behind this new form is just to encourage the new entrepreneurs to enter into marker without any hindrance and not to face any problem while incorporating the company legally with the ROC. The introduction of this form has reduced the complexity which was present in the previous method of incorporating a new company and further reduces the cost when compared to the previous method.
The Ministry Corporate Affairs have an integrated company incorporation form to make compliance and reporting easier and convenient for Corporate from 1st May, 2015.
|Particular||Integrated Incorporation Process||Normal Incorporation Process|
|Both the options are available with Companies for Incorporation.|
|Purposes||5-in-1 form||N. A.|
|No. of Forms required to File||1 (ONE)||5 (FIVE)|
|Steps of Incorporation||Single Step Incorporation||Three Steps Incorporation|
|Form Filing Requirement||Only one Form INC-29.||DIR-3- Application for DIN
INC-1 – Application for Name Approval
INC-7 – Incorporation of Company
DIR-12 – Appointment of First Directors
INC-22 – Situation of Registered Office
|Digital Signature||Only One DSC required.||DSC of both Subscribers Required.|
|Incorporation of Section 8
|Section 8 Company can’t be incorporate by this process.||Section 8 Company can be incorporated by this process.|
|DIN Allotment||Maximum 3 Persons can apply for DIN through this process.||Separate DIR-3 is to be filed for each person.|
|Narrower Name Proposal||Person can give only ONE Name for Approval.||Person has option to give SIX Names in the order of preference.|
|Name Keeping||While applying name applicant has to undertake necessary diligence regarding the name keeping, considering the guidelines issued by MCA for Name approval.
Drawback: Be sure for the proposed name because you can give only one name and if this name is not available with MCA you have to apply again will changes in all the documents. This is major drawback of this process.
|Person has option to give maximumSIX names. Therefore, comparatively less diligence requires.|
|Time frame||Approval of DIN, Name and Incorporation will be altogether.
Generally it takes 4-5 days.
|First DIN form will approve generally it takes 1 day. Second Name will Approve, generally it takes 7-10 days. Third Incorporation Approves, generally it takes 7- 10 days. So overall Incorporation of Company takes 20-25 days.
· Apply for DIN in form DIR 3: It is a STP form DIN is generated in e-form Challan.
· INC 1 takes 7-15 days for approval, maximum re-submission cases are there.
· INC 7, DIR-12 and INC-22 takes 15-25 days for approval.
In total 21-25 days.
If we calculate all of above incorporation of a Company under process can takes a month or more.
|Attachment of ID Proof||In case of Directors/ Shareholders who having DIN, it is not required to attach separate Address Proof/ ID Proof.||Even Director/Shareholders having DIN, is required to attach separate Address Proof/ ID Proof.|
|Approval Process||The form will be assisted by a separate team at ROC back office. Therefore, approval may be quick||The approval of e-form takes comparatively more time|
|Professional Certification||INC-29 requires Professional Certification.||All Forms needs certification except INC-7|
|Resubmission||Only single resubmission is allowed||Two resubmissions are allowed.|
|Refund of MONEY||In case of rejection of form, company can apply for refund of money by refund form.||No refund allowed.|
|No Tracking System||Here we are applying for 3 approvals in 1 e-form only and if anyone of them is not approved then complete application will fail.
Exp. If there is issue in DIN application, then the entire application will reject.
|Here you are applying in 2 separate forms. If one fails then other is safe.|
|Consolidation of Fees||Fee Structure will be like This:
INC-29 – 300/-
|Fee Structure will be like This:
1. DIN- 500/-
2. INC-7- 300/-
3. INC-22- 300/-
4. DIR-12- 300/-
|Stamp Duty on MOA||If paid up share Capital is upto 100,000/-. Then stamp duty is Rs. 300/- Stamp duty is vary from state to state. Above has been mentioned is with respect to Delhi||Same as on integrated Incorporation Process.|
|Stamp Duty on AOA||0.15% of Authorized Share Capital of the Company. Stamp duty is vary from state to state. Above has been mentioned is with respect to Delhi||Same as on integrated Incorporation Process.|
|PAN & TAN||Both can Apply along with incorporation.||Same as on integrated Incorporation Process.|
|Attachment||All most same in both processes.
Here is no duplicity of documents.
|All most same in both processes.|
(Author – CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi and can be contacted at [email protected])