In order to make it easier for companies to carry out business in India, the Ministry of Corporate Affairs has been simplifying the procedures detailed under the Companies Act 1956. In its General Circular of July 23 2011, the ministry sought to modify company incorporation procedures, which will enable promoters to incorporate their companies online within 24 hours.
The ministry has already introduced online approval of a director's identification number with effect from June 12 2011, and a list of proposed company names was made available online with effect from July 24 2011. A digital certificate of incorporation is already issued online by the registrar of companies. The additional e-forms of relevance to company incorporation are:
- E-form 1 (on the application or declaration for incorporation of a company);
- E-form 18 (on the notice of location or change of location of the registered office);
- E-form 32 (on the particulars of appointment of the managing director, directors, manager and secretary); and
- the e-form for a memorandum of association and articles of association.
Where such e-forms have been certified by practising professionals with regard to the accuracy of the information and declarations have been given by the subscribers, the application will be processed electronically and the digital certificate of incorporation will be issued online immediately by the registrar of companies. This is an optional addition to the existing process of backend processing of applications by the registrar of companies for cases where the details have not been certified by a practising professional.
However, if it is found that any information or declaration given by the company or the certificate given by the professional in the e-form and its attachments is wrong, false or illegal, then the subscribers, declarants and professionals shall be liable for penalties under the Companies Act 1956, as well as those prescribed in the regulations of the respective professional institutes.
Furthermore, where a company has been registered online on the basis of declarations made by the subscribers, declarants and certifications by the professionals given in the e-form and it is later found that the company ought not to have been registered under the Companies Act 1956 (read with the rules and regulations made therein), the registrar of companies will take necessary action to suspend the company and initiate the process of revoking its registration, after giving it an opportunity to be heard.
In view of the above immediate online approvals of a director's identification number, assuming the availability of the chosen name and registration of the above e-forms, once the process of online company incorporation is approved, it should be possible for the process to be completed within 24 hours.
For further information on this topic please contact Neha Goyal or Vikas Goel at Singhania & Partners LLP by telephone (+91 11 4153 1000), fax (+91 11 4153 1001) or email ([email protected] or [email protected]).