With the ease of doing business initiatives taken up by the government in the recent years, the Company Incorporation process under the Companies Act, 2013 in particular has become easier and less timebound as compared to the process which was provided under the statute, a couple of years ago.
Similarly, Incorporation of Wholly Owned Subsidiary of a foreign entity which was seen as an exacting task earlier has also been simplified. Currently, the basic documents required for Incorporation of a wholly owned subsidiary of a foreign entity (let’s say an LLC incorporated in The United States of America) are passport/COI, address proof and PAN or PAN Undertaking of the proposed directors/subscribers and Authorised signatories (if applicable). Further, all the documents must be self-attested & notarized and/or apostilled, as may be applicable to the country in which the respective holding company (foreign entity) is located. For registered office address, a rent agreement and an NOC supported by latest utility bill must be attached. Also, such a company can appoint as many directors as per their requirements but one director must be resident in India.
The process begins with the availability of the desired name under the RUN service of MCA, wherein any available name can be applied for reservation by paying a fee of INR 1000 which will be reserved for a period of 20 days. Within this period, digitally signed webforms viz SPICe+ INC-32, Agile Pro S and INC-9 along with physically signed & notarized and/or apostilled MOA and AOA are to submitted with the Ministry of Corporate Affairs in addition to the stamp duty as may be applicable. Generally, within 48 working hours MCA will respond either by giving approval for the Incorporation or by seeking further information and allowing a chance for resubmission along with required documents. Finally on successful submission, and approval by the MCA; a Certificate of Incorporation having Corporate Identification Number along with DIN (if required), PAN and TAN is issued to the new company.
As per the statistical data available on the MCA portal, a total of 36,193 incorporation applications were approved in the first quarter of the Financial Year 2021-22 which includes Private Companies, Public Limited Companies, Foreign Companies as well as LLPs; as compared to previous year there is a 52.40% increase in successful incorporations in India, despite the fact that second wave of COVID-19 pandemic had hit the globe adversely. One of the reasons of this increase is that the pandemic has exacerbated global supply chains and it has clearly outlined a new global world order; consequently, the companies are compelled to adopt China plus one business strategy and avoid investing only in China and diversify their business into other countries. In this scenario India is one very lucrative destination for corporates all over the world. Also, the government initiatives to create smart cities, trade corridors, and industrial clusters also have the potential to create more business-friendly environments.
Thus, the current legal-regulatory framework under Ministry of Corporate Affairs will only add to the eventual growth of Indian Economy. In furtherance of this objective, the MCA portal is being made more user friendly with the launch of version 3.0 (V3.0) in the year 2022, thus ironing out all the difficulties faced by various stakeholders.
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