Incorporating Company in India = A Cup of Tea !!

Introduction

With an aim to successfully fulfill the Hon'ble Prime Minister's Ease of Doing Business initiative, the Ministry of Corporate Affairs (MCA) have been working effortlessly towards simplifying the procedures of setting up of and operating a company in India.

As part of this initiative the MCA has been making drastic changes in the incorporation process, since the introduction of Companies Act, 2013, in an effort to provide one stop facilities to the stakeholders. Recently, the MCA introduced advance integrated web forms named SPICe+ and AGILE PRO, available on MCA Portal w.e.f. 23rd February 2020.

With the introduction of these forms, the users can avail multiple services offered by 3 Central Government Ministries & Departments. (Ministry of Corporate Affairs, Ministry of Labour & Department of Revenue in the Ministry of Finance) and One State Government (Maharashtra), thereby saving as many procedures, time and cost for Starting a Business in India.

The list of services offered is provided below:-

1. Incorporation of Company
2. Allotment of Director Identification Number (DIN)
3. Issue of Permanent Account Number (PAN)
4. Issue of Tax Deduction and Collection Account Number (TAN)
5. Issue of EPFO Registration.
6. Issue of ESIC Registration.
7. Issue of Professional Tax Registration (Only for the state of Maharashtra)
8. Opening of Bank Account for the company.
9. Allotment of Goods and Services Tax Identification Number (GSTIN) 

This development spirit of the Ministry and the Government has resulted in the incorporation of approximately 16,000 new companies in India, despite of the slowdown in the overall business due to the COVID-19 pandemic, during the lockdown period.

Basics

Before getting into the depth understanding of this form, certain basics are required to be brushed up.

Q) What is a Company and its types ?

In a laymen language, A Company is an artificial judicial person, which is different from its members. While having a look at the Companies Act, 2013, it is defined under "section 2(20) as a company incorporated under this Act or under any previous company law". 

In India, based on the number of subscribers, companies are classified into various types, such as-

• One Person Company (OPC) - Only 1 member
• Private Limited Company - Having 2 or more members
• Public Limited Company - Having 7 or more members

Q) Who is a Member ?

Member means a 'person' (Individual/ Non- Individual), who subscribes to the memorandum of the company and every other person holding shares of the company, whose name is entered in the register of members of company or reflects as beneficial owner in the records of a depository. 

Q) Who is a Director ?

As per section 2(34) of Companies Act, 2013, " director' means a director appointed to the board of the company. In simple language, he is the person responsible for the management of the affairs of company.

An OPC shall be formed by atleast 1 Director, a Private Limited Company with atleast 2 and Public limited Company with atleast 3.

Q) What is Authorised Share Capital ?

As per section 2(8) Authorised Capital means such capital as authorised by the memorandum of a company to be the maximum amount of share capital of the company. It is the maximum limit of capital upto which the company can issue shares.

Q) What is Paid up Share Capital ?

It means such aggregate amount of money credited as paid-up against the issue of shares by the Company.

Q) What are Memorandum and Articles of Associations (MOA & AOA) ?

 MOA is basically the charter of the Company containing objects for which the company has been formed. AOA on the other hand are the rules and regulations upon which the company shall operate.

Incorporation of Company through SPICe+

After gaining brief knowledge of the terms above, we can conveniently shift towards the next step of understanding the requirements and procedure for incorporating a company in India.

Requirements

To proceed with the incorporation, the following documents and details shall be kept ready with the user:-

1. Digital Signature Certificate (DSC)

The proposed directors shall be having DSCs registered on their name to put their signatures on the forms to be filed with MCA. The DSCs can be obtained through authorised agents within a period of 2 days from making the application.

2. Director Identification Number (DIN)

The DIN must be kept handy before filing the form in case the proposed directors and already DIN holders, otherwise the same shall be allotted on the incorporation of company though SPICe+ Form.

3. Minimum 2 Proposed Names of the Company

Atleast 2 unique names should be decided before making the filing process.

4. Proof of Identity (POI) and Proof of Address (POA) of the proposed directors and subscribers

For the POI in case of Indian Nationals -

• Voters Identity Card/ 
• Passport/ 
• Driving License/ 
• Aadhar Card and 
• PAN Card(Mandatory) 

For the POI in case of Foreign Nationals -

• Passport

For POA in case of both Indian Nationals as well as Foreign Nationals - Bank Statement/ Electricity Bill/ Telephone or Mobile Bill Proof not older than two months 

Provided that the above documents shall be self attested and in case of Foreign Nationals, the aforesaid POI and POA  shall be notarized and apostille in the home country of the foreign nationals.

Note- Email Ids and Mobile numbers of directors shall also be kept ready.

5. Proof of Proposed Registered Address of the Company

This would cover Conveyance/ Lease deed/ Rent   Agreement/ Utility Services Bill depicting the address of the registered office -not older than two months (Telephone/ Mobile/ Gas/ Electricity), alongwith NOC (A proof that the Company is permitted to use the address as registered office of the Company if the same is owned by any other entity/ Person) 

6. Documents required to be filed alongwith Form AGILE PRO

A) GST Registration

• Proof of Principal place of business (Electricity bill not older than 2 months)
• Proof of appointment of Authorized Signatory for GSTN (Either Letter of Authorisation/ Copy of Resolution passed by BoD/ Managing Committee and Acceptance letter)

B) Bank Account Opening

• Proof of Identity of Authorized Signatory for opening Bank Account. (PAN Card)
• Proof of Address of Authorized Signatory for opening Bank Account (Aadhar Card/ Passport/ Voter ID)

C) EPFO/ ESIC Registration

• Specimen Signatures of Authorised Signatory
• Photograph of All the Directors

Procedure of Incorporation

 STEP-1 Register and login with the MCA21 Portal

Since the form SPICe+ web based form is a post-login service, the new users shall first need to register itself with Ministry of Corporate Affairs (MCA) whereas the existing users would need to login using their credentials.

Once the user is successfully logged in, he would find the Spice+ Form under the "MCA Services" Tab.

Once clicking the SPICe+ button, the user will be provided 2 options

A) File Fresh Application

B) Continue with Existing Application.

Where the application is freshly filed, the user may click the "File Fresh Application" tab on the other hand if he has already initiated filling up of form he shall continue with the "Existing Application" tab, where he would be required to enter a unique application number provided by the MCA, to continue with his process.     

STEP-2 Name Reservation

The SPICe+ form is divided into 2 parts (i.e. Part-A and Part-B) which provides 2 options to proceed with incorporation-

1) Reserve the name before filing incorporation application (Part-A)

2) File name reservation together with incorporation application (Part A + Part-B)

In case of doubt of availability of name it is advisable to first obtain the Name Approval and then proceed for incorporation, as if the name is not available, the application would be rejected and user will have to re-apply.

The name if seperately applied, shall be reserved for a period of 20 days, during which the user shall file the incorporation details in Part-B.

The Fee for reservation of name is INR 1000/- (Indian National Rupee One Thousand Only).

STEP-3 Incorporation Form

After furnishing the Name Reservation details in Part-A of the form, the user shall fill up all the necessary details and upload the required documents related to the company, its directors and subscribers in Part-B of the form which consists the details regarding following services :

1. Incorporation
2. DIN Allotment
3. Issue of PAN and TAN
4. Registration under EPFO and ESIC
5. Professional Tax Registration (State of Maharashtra only)
6. Opening of Bank Account
7. Allotment of GSTIN 

STEP-4 Certification and uploading of Forms

Once all the required information is filled up in both Part-A and Part-B of the form, the user may proceed to download the PDF file of forms generated during the process.

After downloading the forms, DSC shall be affixed on them at the designated places and the user can upload the linked forms on the MCA portal.

On uploading the forms and making the final payment, a challan would be generated having a SRN (Service Request Number), which shall be preserved for future reference and record.

Key Notes

1. The user will get only 5 attempts to modify the SPICe+ form saved on the portal, on expiry of which the whole process would be repeated.

2. In case the applicant has opted to file Part-A and Part-B of the form together, only one proposed name can be submitted by him for Name Reservation.

3. The declaration of Subscribers (INC-9), which was physically submitted earlier, is now auto generated in PDF format.

4. Registration under EPFO, ESIC and Professional Tax (Only for Maharashtra) and opening of Bank Account is mandatory for all the new companies.

5. In case of Bank Account, the user will have an option to select the banker from the dropdown list, and the branch nearest to the registered office will be allotted itself. 

6. Resubmission of the SPICe+ forms are allowed upto 2 times only.

7. The Maximu upload size of the forms, individually is 6 MB.

8. 'Zero Filing Fee' concession is available to companies getting incorporated with an Authorised Share Capital of INR 15,00,000/-, however the user need to pay the stamp duty.

Conclusion

In order to be successful in any phase of life, "CHANGE IS THE KEY". This Strategic step of the Ministry with a view to add value to the ease of doing business initiative of the Government of India has simplified the irrelevant long process of incorporation of company, into a 'ONE STOP' facility. This would result in a significant reduction of time and costs involved in incorporating a company in India, leading to inviting more people to operate business in an organised and transparent manner.