Simplified Guide for Incorporation of a Company

Introduction: With the introduction of SPICe Forms, the Ministry of Corporate Affairs (MCA) has simplified the procedure of company formation and thereby simplifying the ease of doing business in India. This article depicts the process of company formation through SPICe Forms & throws light on some newly introduced compliances such as GSTIN application, Employer code application (ESIC) & Establishment code application (EPFO) at the time of incorporation & verification of registered office and declaration of receipt of subscription money by the company by the Directors post incorporation.

INCORPORATION OF A COMPANY

As per Section 3 (1) of Companies Act, 2019, a company may be formed for any lawful purpose by—

(a) seven or more persons, where the company to be formed is to be a Public company;

(b) two or more persons, where the company to be formed is to be a Private company; or

(c) one person, where the company to be formed is to be One Person Company that is to say, a private company,

by subscribing their names or his name to a memorandum and complying with the requirements of the Companies Act in respect of registration.

STEP WISE PROCEDURE OF COMPANY INCORPORATION

Step 1: Obtain DIN of proposed directors:

DIN is the Directors Identification number which is a unique 8-digit number. As per Section 153 of Companies Act, 2013, every individual intending to be appointed as director of a company shall make an application for allotment of Director Identification Number to the Central Government in Form DIR 3 along with prescribed fees in case of existing company. However, application for allotment of DINs to the proposed first Directors in respect of new companies shall be made in SPICe form only.

Step 2: Obtain DSCs of subscribers:

Digital Signature Certificates (DSC) are the digital equivalent (that is electronic format) of physical or paper certificates. A digital certificate can be presented electronically to prove one’s identity, to access information or services on the Internet or to sign certain documents digitally. DSC of every subscriber to the memorandum is required mandatorily. The subscribers and witness or witnesses are required to affix their digital signatures to the e-MOA and e-AOA for the incorporation process.

Step 3: Check Company’s name availability:

Check availability of proposed name of the company at MCA site using the following hyperlink:

http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do

Importantly, it is suggested to check that the proposed name selected shall not contain any word as prohibited in Section 4(2) & (3) of the Companies Act, 2013 read with Rule 8 of the Companies (Incorporation) Rules, 2014.

Further, the proposed name of the company can also be reserved through RUN web service. RUN (Reserve Unique Name) is a simple and easy to use web service for reserving a name for a new company or for change of name for any existing company. The applicant has to apply through RUN service for reservation of proposed company name along with payment of applicable fees, which then will be processed by the Central Registration Centre (CRC).

Step 4 : Draft MOA & AOA of the company :

Memorandum of Association (MoA) represents the charter of the company. It is a legal document prepared during the formation and registration process of a company to define its relationship with shareholders and it specifies the objectives for which the company has been formed. An Article of Association ( AoA ) depicts the rules and regulations for the internal management of the company. It stipulates the duties, rights, and powers of the management of the company.

MOA and AOA can be drafted according to the prescribed tables (e.g. Table A & Table F respectively can be used to draft the MOA & AOA of the company limited by shares) including the objects of the company and the other rules & regulations for the company’s management.

Step 5: File SPICe Form – INC 32  

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 and/or application for PAN and TAN. 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. Also PAN and TAN would get issued to the Company.

SPICe Form is to be filed with ROC along with the following documents:

a. Form DIR-2 – declaration from first Directors

b. Declaration by Directors- regarding Deposits

c. DIN Declaration by proposed directors

d. INC-9 declaration by first subscribers and directors

e. Interest of Directors in other entities

f. Memorandum of Association (can be filed as eMOA in Form INC 33)

g. Articles of Association (can be filed as eAOA in Form INC 34)

h. Declaration by Director in case of any approval of Sector regulator is required

i. Proof of Registered Office Address

j. Address and identity proof of all the subscribers

Step 6: File Form AGILE or Form INC 35 with ROC for the GST, ESIC & EPFO registrations in one go

AGILE form is Application for Goods and services tax Identification number, employees state Insurance corporation registration plus Employees provident fund organisation registration (AGILE). Subscribers intending to incorporate company through SPICe eform can also apply for GSTIN / Establishment code as issued by EPFO / Employer Code as issued by ESIC through eform (INC-35). It is required to file application (SPICe) for incorporation of a company accompanying linked e-form AGILE “Application for Goods and services tax Identification number, employees state Insurance corporation registration pLus Employees provident fund organisation registration” along with eform SPICe MOA (INC-33) and eForm SPICe AOA (INC-34) to obtain GSTIN / Establishment Code / Employer Code.

This process will be applicable only for Companies incorporated by MCA through SPICe application. Other categories of applicants (Tax Deductor, Tax Collector, Casual Taxable person, ISD, etc.) for GSTIN shall follow the existing process of registration through Common Portal for GST registration.

AGILE form is to be filed with the Registrar of Companies to apply for GSTIN / Establishment code as issued by EPFO / Employer Code as issued by ESIC. The application (SPICe) for incorporation of a company shall be accompanied by a linked e-form INC-35 (AGILE) with effect from 31st March 2019, as notified vide the Companies (Incorporation) Third Amendment Rules, 2019 dated 29th March 2019. Though, it is optional to apply for GSTIN/ Establishment code as issued by EPFO/Employer Code as issued by ESIC at the time of incorporating company, & filing of INC-35 form along with SPICe form is mandatory.

Step 7: Obtain the COI, PAN, TAN, GSTIN, Establishment Code & Employer code of the company

Once the SPICe & AGILE eForms are processed and found complete, the proposed company would be registered with the Companies Act, 2013 and CIN would be allocated. PAN and TAN would get issued to the Company and also the GSTIN, establishment code under EPFO & employer code under ESIC.

Post Incorporation Processes

Step 8: Verification of Registered Office in Form INC 22

Pursuant to Section 12, Companies Act, 2013, every company is required to furnish with the Registrar the verification of its registered office within a period of 30 days of its incorporation. According to Rule 25, The Companies Incorporation Rules, 2014, the verification of the registered office is required to be filed in Form No.INC.22 along with prescribed fees.

The Form INC 22 shall be filed along with the following documents:

• the registered document of the title of the premises of the registered office in the name of the company; or
• the notarized copy of lease or rent agreement in the name of the company along with a copy of rent paid receipt not older than one month;
• the authorization from the owner or authorized occupant of the premises along with proof of ownership or occupancy authorization, to use the premises by the company as its registered office; and
• the proof of evidence of any utility service like telephone, gas, electricity, etc. depicting the address of the premises in the name of the owner or document, as the case may be, which is not older than two months.

Step 9: Requirement of Company Name Board & Official Publications

As per Section 12 (3), Companies Act, 2019, every company shall paint or affix

• its name, and
• the address of its registered office,

and keep the same painted or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous position, in legible letters, and if the characters employed therefor are not those of the language or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages.

The company shall get its name, address of its registered office and the Corporate Identity Number along with telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business letters, billheads, letter papers and in all its notices and other official publications.

Step 10: Declaration to be filed by the directors within 180 days from date of incorporation of company in Form INC 20A

According to Section 10A, Companies Act, 2013, a company incorporated after the commencement of the Companies (Amendment) Ordinance, 2019 and having a share capital shall not commence any business or exercise any borrowing powers unless—

(a) a declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and verified in Form INC 20A along with the fees as may be prescribed

(b) The company has filed with the Registrar a verification of its registered office in Form INC 22 (which we have already discussed in Step 8.)

Step 11: Appointment of Auditor

According to Section 139 (1) of Companies Act, 2013, every company is required to appoint, an individual or a firm, as an auditor at the first annual general meeting of the company, who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting.

Therefore, an auditor is to be appointed by the newly incorporated company at its first AGM.

On following all the above steps, a company can be incorporated & established successfully. Post incorporation the company achieves the status of a separate legal entity. All the compliances under Companies Act, 2013 & other corporate laws are applicable to the company. The company is being recognised by its name registered under the Companies Act, 2013.

AUTHOR: CS SHIKHA PUBBI