The year 2016 concluded with The Ministry of Corporate Affairs making amendments to the Companies (Incorporation) Rules, 2014 by notifying the Companies (Incorporation) Fifth Amendment Rules, 2016. These Rules became effective on January 1, 2017. The Fifth Amendment Rules made several Revisions in the Companies (Incorporation) Rules, 2014 with the view of making effective the Simplified Proforma for Incorporation of Companies Electronically (SPICe) that was introduced by the Ministry in October, 2016. These revisions revisions were made with a vision of promoting ease of doing business and incorporating companies in India. The thrust of the incorporation rules have diametrically shifted from P to E (Hyperlink: http://ssrana.in/News/CL%20Connect%20Newsletter/2016/04/From-P-to-E-Smidgeons-of-Digitization-on-Companies-Fourth-Amendment-Rules-2016.htm).
- Rule 4 of the Incorporation Rules, 2014 applies to One Person Companies (OPC) where subscriber to the Memorandum of an OPC shall nominate a person who shall become a member of the OPC in event of the subscriber’s demise or incapacity to contract. The name of the nominee shall be duly mentioned in the Memorandum of the OPC. After this Fifth Amendment in the Rules, such nomination shall be filed in Form INC-32 (SPICe) along with the nominee’s consent in Form INC-3.
- Rule 10 of the amended rules stipulate that when Articles contain entrenchment provisions, the company shall notify the Registrar of any such entrenchment provision in Form INC-7 or INC-32 (SPICe) along with the prescribed fee at the time of Incorporation of the Company. However, the rule regarding existing companies shall remain same and the filings can be done in Form MGT 14 within thirty days of the date of entrenchment of Articles with the prescribed fee.
- Rule 12 has been expanded in scope and now states that an application shall be filed with the registrar in Form INC 7 (Part I Company with more than seven subsidiaries) and Form INC 32 (SPICe).
- Rule 36, of the Incorporation Rules that introduced the Integrated Process for Incorporation has been removed. This rule was introduced by the Companies (Incorporation) Amendment Rules, 2015 for the purpose of simplifying the filing of forms for incorporation of a Company. The Companies (Incorporation) Forth Amendment Rules, 2016 had introduced Rule 38, unveiling the SPICe Rules. The Fifth Amendment provides that in case of incorporation of Section 8 Company, Form INC 32 shall be filed along with Form INC 13 (MoA) and Form INC 31 (AoA) as attachments. As under this rule application for Director Identification Number (for up to three directors), reservation of a name, incorporation of a company, reservation of a name for OPC, Private Company, Public Company, and Section 8 Company shall be filed in Form INC 32 (SPICe) with the concerned registrar with a fee of INR 500 in addition to the fee prescribed in the Companies (Registration of Offices and Fees) Rules, 2015.
- Further, the Fifth Amendment Rules, in order to go paperless and digital, prescribes that a promoter or an applicant of the proposed company shall propose only one name in Form INC 32 (SPICe). Additionally, now subscribers, witness, or witnesses, shall affix their Digital Signatures to the Memorandum of Association and Articles of Association.
- Now, a company adhering to these Rules to incorporate a company shall furnish a verification of their registered under Section 12 (2) of the Act by filing Form INC 32. Form INC 32 shall not be required to be filed in case the proposed company maintains its registered office as the given corresponding address. Form INC 2 will be omitted from the principal Rules.
The Ministry of Corporate Affairs had in a trail of amendments in the year 2016 made way for easy incorporation procedures by introducing the SPICe Rules and now by bringing forth the Fifth Amendment Rules that substantially reduces the time in readying the incorporation documents. Therefore, a company can now be incorporated in much lesser time.