We have critically evaluated the change in the process to incorporate companies in India post deployment of the web forms involved in the company incorporation. The web form is a “one stop shop” for company incorporation and statutory registrations. and will make it easier for professionals to obtain these registrations in one go. Practitioners may find the below write-up informative and useful while incorporating a new company.
The World Bank’s Ease of Doing Business Survey 2020 ranked India 63rd, out of the 190 countries. This was a major improvement as compared to the last year’s ranking of 77. This survey had cited that India was lagging behind in parameters such as facilitating initiation of new corporate entities. The introduction of web based form SPICe+ is an effort towards securing 50th position on the said survey.
The MCA vide Companies (Incorporation) Fourth Amendment Rules, 2016 dated 1 October, 2016 revamped the company incorporation process with the introduction of single window filing procedure through e-form SPICe (Simplified Proforma for Incorporating Company electronically), for which a new e-form INC-32 was also released. The e-form SPICE was introduced to facilitate an integrated incorporation process. SPICe was by and large similar to the Integrated Incorporation Process with the facility of filling and the Memorandum and Articles of the proposed company electronically. Two new e-Forms viz. INC-33 and INC-34 were designed as e-MoA and e-AoA of company being
incorporated through the SPICe route. Accordingly, this enabled separate filing of these charter documents. This helped in mitigating/dealing with the file size issue which was pertinent when these charter documents were filed with the Incorporation form.
INTRODUCTION TO THE NEW WEB BASED SPICE+
SPICe+ Web form is a post-login service. Hence, existing registered users would need to login into their registered MCA account using their credentials. New users are required to create a MCA account first before using this service. It only takes some minutes to make a new MCA account. The web form SPICe+ has two parts viz.:
Part A- Name reservation for new companies; and
Part B- Incorporation and a bouquet of other services viz.
- DIN allotment
- Mandatory issue of PAN
- Mandatory issue of TAN
- Mandatory issue of EPFO registration
- Mandatory issue of ESIC registration
- Mandatory issue of Profession Tax registration
- Mandatory Opening of Bank Account for the Company
- Optional allotment of GSTIN (users may opt to apply for it post incorporation of the company.
MODE OF SUBMISSION
The users have an option of submitting Part A (Name Reservation) first and thereafter submit Part B (Incorporation and other services) or submitting both Part A and B together at one go. The practitioners who are experts in company incorporation can submit both Part A and Part B together to further reduce the time lines for company incorporation.
USER FRIENDLY DASHBOARD
A user friendly dashboard ensures that Part B can be submitted through a seamless process in continuation of Part A without the need of entering the SRN of the approved Part A. The dashboard also facilitates easy resubmission of the forms sent back by the Central Registration Office (“CRC”). The dashboard is the major step taken by the MCA towards real time monitoring. SPICe+ facilitates on-screen filing and real time validation of data ensuring that the process of incorporation of companies is seamless.
The approved name and other incorporation details submitted in Part A of SPICe+, would be automatically pre-filled in all other linked forms viz., AGILE-PRO, e-MoA, e-AoA, URC-1, INC-9. This has removed duplication of work..
ADDITIONAL INFORMATION TO BE PROVIDED DURING NAME RESERVATIONS
New fields introduced in Part A are:(a) Type of company,(b) Class of company,(c) Category of company,(d) Sub-Category of company,(e) Main division of industrial activity of the company; and(f) Description of the main division.Earlier, only proposed names were to be provided.
SAVING / MODIFICATION OF INFORMATION
A facility has been provided for saving / modification of the information entered in the web forms. Modifications can be made to SPICe+ upto 5 times even after generating pdf and affixing DSCs (“Digital Signature Certificates”). This feature has provided flexibility to the practitioners. This will reduce duplication of efforts in the cases of session time out. Also, it allows the practitioners to modify the data without filling the entire form again, thereby saving substantial time and efforts.
CHECK FORM AND PRE-SCRUTINY VALIDATIONS
Check all the forms and Pre- scrutiny validation (exclude DSC validation) will happen on web- forms itself. In case of issue popping up, the same can be resolved at the web-form level itself.
DSC AFFIXATION AND UPLOADING
The duly filled SPICe+ is to be converted into pdf format and digital signatures be affixed on it and then be uploaded along with the linked forms as per the existing process. The DSC and other validations happen at the time of uploading the forms. The form size limit continues to be 6 MB.
MANDATORY STATUTORY REGISTRATIONS
Under the SPICe+ regime, applying for Establishment Code under EPFO and Employer Code under ESIC has been made mandatory. Like the erstwhile SPICe eform, applying for PAN and TAN continues to be mandatory for all new companies. No compliance is required to be done in respect of EPFO and ESIC provisions until the Company breaches the threshold limits provided in the EPFO and ESIC provisions. Further, registration for Profession Tax has been mandatory for all new companies incorporated in the State of Maharashtra. Addition of this feature has ensured that the company need go to a plethora of regulatory authorities for getting various registrations. SPICe+ has proved to be a one stop shop for all statutory registrations.
MANDATORY OPENING OF BANK ACCOUNT
Opening of bank account of the Company has been made mandatory. Presently, Punjab National Bank and ICICI bank has been integrated with SPICe+ for opening a Bank account. Gradually, total 16 public and private sectors banks would be integrated with SPICe+ After the bank account is opened, the
“SPICe+ facilitates on-screen filing and real time validation of data ensuring that the process of incorporation of companies is seamless.”
“No compliance is required to be done in respect of EPFO and ESIC provisions until the Company breaches the threshold limits provided in the EPFO and ESIC provisions. Further, registration for Profession Tax has been mandatory for all new companies incorporated in the State of Maharashtra”
Company needs to complete the bank’s KYC. The selected bank shall itself allocate a branch nearest to the registered office of the company where the bank account shall be opened. This bank account can be closed later by the company as per their discretion. No minimum balance requirement shall apply at the time of incorporation. This feature has removed the requirement of passing a separate resolution for opening a bank account of the Company. Hence, the Company can now receive the subscription money from the subscribers to the MoA on the day of incorporation itself. This will enable.
the Company to file e-form INC-20A much earlier than the prescribed period of 180 days of incorporation (however the finance Minister has announced further 6 months moratorium due to Covid-19 effect). Early filing of INC-20A enables the company to commence its business operations quickly and hit the ground running.
MANDATORY PROCUREMENT OF DSC
As a significant push to its EODB agenda, DSC of all directors and subscribers has been made mandatory to be affixed on the web-form. However, if their number is more 20, all such directors and subscribers are exempted from affixing their DSC on the Articles of Association (AoA) and Memorandum of Association (MoA) and may physically sign the AoA and MoA.
SUBMISSION OF INC-9
INC-9 is auto-generated in pdf format and is to be submitted only in electronic form. This shall not apply when the total number of subscribers and directors exceeds 20 or subscribers and directors neither have DIN nor PAN. Here too a reasonable level of flexibility has been given by the MCA.
MOA & AOA INC-33 (e-MoA) and INC-34 (e-AoA)
shall be mandatorily used in the following circumstances: Ø If the total number of subscribers is upto 7 If the individual subscribers are Indian nationals; Ø If the individual subscribers who are foreign nationals hold a DIN, DSC and a business visa; or Ø If the non-individual subscribers are residents of India. Other than the above mentioned cases, signed physical copies of the notarized and apostilled MOA & AOA will have to be submitted as an attachment to SPICe+
OPTIONAL REQUIREMENT OF GSTIN
The Companies have been given the option to apply for GSTIN at the time of incorporation. If they choose to do so, they may also opt for Composition Scheme under the GST provisions. GSTIN can be applied just if address for correspondence is same as address of enrolled office of the organization entered in SPICe+ structure. Letter of Authorisation and Copy of Resolution passed by Board of Directors/Managing Committee and Acceptance letter is to be attached as proof of appointment of authorised signatory for applying for GSTIN.
AUTHORISED SIGNATORY FOR STATUTORY REGISTRATIONS IN AGILEPRO FORM
One of the first proposed directors of the company shall serve as the authorized signatory for the purpose of applying for GSTIN / EPFO/ ESIC/ Profession Tax and opening of the bank account of the company. Such authorized signatory must have valid PAN and must be a citizen and a resident of India. He should also have an Indian mobile number and an email-id for the purpose of OTP verification. Photo of the authorized director cum authorized signatory in jpg format must also be attached. Proof of Identity and proof of address of the authorized signatory shall be required for opening of bank account. Specimen signature card in prescribed format must be attached for registration with EPFO. Proposed directors, other than the abovementioned authorized signatory also must be added. The number of proposed directors shall be: Ø 1 for OPC, Ø 2 in case of private company, Ø 3 for public limited company, and Ø 5 for producer company. The user must ensure that the details of such proposed directors entered in the AGILE-PRO aligns with the details entered in the SPICe+ for the same person. Both SPICe+ form and AGILE-PRO form shall be signed by same director who is also the authorised signatory.
APPLICABILITY OF RUN SERVICE RUN
service will now be used only for ‘change of name’ of an existing company. Key changes in DSC procurement process As per the instructions received from the office of the Controller of Certifying Authorities, Government of India, a new process has been made applicable for all Licensed Certifying Authorities. According to this new process, the paper based option for Individual Class 2 and Class 3 DSC has been discontinued with effect from 20 February 2020. Now, all individual DSC will have to be applied in paperless DSC mode only. Under PAN based paperless DSC, the DSC applicant will now have to display his/her PAN Card and address proof in the web camera and it should be clearly visible while recording the video. Now, foreign national applying for DSC will need to provided an Indian mobile number to receive OTP during KYC account creation. One of the first proposed directors of the company shall serve as the authorized signatory for the purpose of applying for GSTIN / EPFO/ ESIC/ Profession Tax and opening of the bank account of the company. Such authorized signatory must have valid PAN and must be a citizen and a resident of India.
“Under PAN based paperless DSC, the DSC applicant will now have to display his/her PAN Card and address proof in the web camera and it should be clearly visible while recording the video. Now, foreign national applying for DSC will need to provided an Indian mobile number to receive OTP during KYC account creation”
On filing of application for reservation of name and incorporation documents, there is fee payable – however, this fee is not material.
The introduction of the web form SPICe+ and AGILE-PRO shows the Government of India’s strong will to improve its ranking in the ‘Ease of Doing Business’ Report and climb to the 50th position in the rankings. SPICe+ has ensured that a single window mechanism has been created by reducing procedures, time and cost for starting a new business in India. Today on incorporation of a company in India, it has a PAN card, TAN card, GSTIN, establishment code, employer code and a bank account. This will ensure that the management of the Company is focused on the strategic aspect of business
Founder & CEO| Fox Investor – Financial Blog Portal & A.V.A. Taxway Associates- Corporate & Tax Law Firm
Dr. Viibhor Agarwal has a Ph.D. in IPR, start-ups, and corporate law, as well as an MBA in finance from NMIMS Mumbai, and achieved numerous certifications in corporate law. He is a practicing corporate lawyer and the founder of two business verticals. He has advised over 2000 businesses, 5000 students, and 400 new start-ups all over India and other countries like Dubai, London, the USA, and Qatar. Dr. Viibhor Agarwal assists people with business expansion and branding, regardless of size, as well as business setup, financial literacy, start-up guidance, licensing, tax planning, and other legal compliance issues. Dr. Viibhor Agarwal’s goal is to provide complete financial and business literacy to all businessmen who want to start new businesses and grow existing businesses and to those students who want to open their start-ups. In each video, Dr. Viibhor Agarwal not only explains the method of the solution but also advises subscribers on practical tips learned from and faced by clients handled by Dr. Viibhor Agarwal daily. This blog portal provides you with an easy and clear solution to your business problem, allowing you to take your business to the next level.