Unravel The Process Of Company Incorporation - Your Step-by-Step Guide

As the world's seventh largest economy and developing nation for innovation, India is driven by plethora of opportunities for startups, companies, and LLPs to tap the business market segment. Aspiring business enthusiasts and entrepreneurs are always on the hook of company incorporation here. Understanding the process of incorporating a company in India is a vital first step towards achieving that success.

In this article, we discuss through the aspects of company incorporation in India, along with its legal framework that will help you smoothy understand the entire process.

Defining the Term Incorporation

The process and all the activities undertaken to bring a company into legal existence is the process of incorporation. Section 3 to 22 of Companies Act 2013 read with Companies (Incorporation) Rules 2014 governs the process of incorporation. It outlines legal requirements and frameworks; a person needs to comply with for incorporating a company. Once the company is incorporated, it becomes a separate entity from those who have invested their capital and who run the business.

Section 3 of Companies Act 2013

First let's review the legal guidelines in Section 3 of the Companies Act 2013. These are some key prerequisites that need to be met before proceeding with the process. It outlines the requirements for forming a company. This includes the minimum number of members required to form different types of companies, such as private and public companies.

As per the section sub section (1), a company may be formed for lawful purpose by –

1. 7 or more person for a public company
2. 2 or more person for a private company; or
3. 1 person for a One Person Company

The company thus formed may either be –

1. a company limited by shares; or
2. a company limited by guarantee or
3. an unlimited company

Procedure for Incorporation of Company

Filing of Spice+ INC 32 form is the first and foremost step for establishing your company. SPICE+ is an integrated application form used for the incorporation of companies in India. It's a simplified and streamlined process that combines various services, including the application for Director Identification Number (DIN), name reservation, incorporation of a new company, and more. Here is the detailed overview of this form.

Part A of SPICe+

Part A of SPICe+ primarily deals with the name reservation for the proposed company. You'll have to provide the basic details of the company incorporation in the fields present over there namely:

1. Type of company
2. Class of company
3. Category of company
4. Sub-Category of company
5. Main division of industrial activity of the company
6. Description of the main division

Name Reservation Provisions

In the proposed name filed, the individual needs to input the preferred name they wish to reserve. It's important for users to ensure that the chosen name doesn't include any restricted terms outlined in Section 4(2) & (3) of the Companies Act, 2013, along with Rule 8 of the Companies (Incorporation) Rules, 2014. You can also apply for two names, however, a pre-requisite fees of rupees 1000/-.

Name reservation requests must be submitted through the online platform found at www.mca.gov.in. This can be accomplished using the SPICe+ web service (Simplified Proforma for Incorporating Company Electronically Plus: INC-32) for new company incorporations, or the RUN (Reserve Unique Name) web service for name change requests. In instances where there are errors or deficiencies in the submission, the web form can be amended and resubmitted within a fifteen-day window.

Attachments Needed for SPICe+ (Part A)

The attachments required for SPICe+ (Part A) can vary depending on the type of company being incorporated (e.g., private limited, public limited, etc.) and the specific details of the proposed company. The attachments are optional and can be filed at the time of filling Part-B.

However, some common attachments that might be required are as follows: The main object of the proposed company;

In case the proposed name includes a reference of a registered Trademark name, the user must ensure that he has attached the consent of the owner or applicant for registration of the trade mark along with KYC details (bearing signatures) of Trademark owner. In case the TM owner is a body corporate, the NOC should be provided in the form of a Board Resolution along with KYC documents.

In case the proposed company is a subsidiary of an existing body corporate, an additional board resolution passed by such body corporate must be attached.

Disclaimers: Note that only a single attachment can be uploaded, and its size should not surpass 2MB for Part A SPICe+. If both Part A and Part B SPICe+ are submitted together, the total form size should still not exceed 8MB.

If multiple attachments are required for Part A SPICe+, kindly consolidate all documents into a single file before uploading.

How To File Form SPICe+ A?

To file form SPICe+ for company incorporation, follow the mentioned below steps:

1. Log in to MCA portal (www.mca.gov.in)
2. Access the 'SPICe+' feature under 'MCA Services.'
3. Choose 'New Application' and proceed to the relevant category, class, and sub-category of the company.
4. Specify the main division of industrial activity and proposed/approved name. Utilize the 'Auto-check' feature for preliminary scrutiny of the name.
5. The name based on information so provided shall get reserved for 20 days from the application.
6. If the user wants to extend the validity of name reservation timeline, it could be done for maximum 60 days provided an additional fee of 2000/- must be paid.
7. Once approved, users can now move towards Part B.

Part B of SPICe+

This section of the SPICe+ form deals with the subscription of shares and details about the directors and subscribers of the company. The fields in this section include:

Details of subscribers: Information about the individuals or entities subscribing to the shares of the company, including their names, addresses, occupation, number of shares subscribed, etc. The subscribers are commonly known as the shareholders/ members of the company.

Details of directors: Information about the directors of the company, including their names, addresses, DIN (Director Identification Number), passport number (if applicable), PAN (Permanent Account Number), etc.

Details of capital structure: Information related to type of equity, paid-up capital, authorized capital, and description about the same must be filled out.

Registered address: The registered address where the company, as per the official documents would be situated must be filled with provided attachment of No Objection Certificate (NOC) from the owner of the premises along with a utility bill in the name of the owner not older than 2 months.

Nominee (OPC): In case of incorporation of OPC company, it's mandatory by the laws to register a nominee in the field of nominee clause, who shall in the event of death, or any unforeseen circumstances maintain the perpetual succession of the company.

Details of stamp duty paid: Information in relation to stamp duty paid on the documents including amount paid, documents in which it's paid and where it has been paid has to mentioned out properly

TAN/PAN information: User needs to mandatory apply for TAN or PAN and must provide the area code, range code, and source of income for the same.

DIN allotment: Directors not having DIN can apply using the same SPICe+ form under 'Not having DIN' column by providing correct details. The request for Director Identification Number (DIN) allocation will also undergo evaluation, and once endorsed, DINs will be provided to directors whose names are listed as lacking DINs.

Attachments Needed for Part B

The attachments required for SPICe+ Part B filing include:

Declaration by Subscribers and First Directors (INC-9): This declaration is made by the subscribers and first directors of the company, confirming their consent to act as directors and their eligibility under the Companies Act. If the director or subscriber has either DIN/PAN or both then it is mandatory to file e-INC 9 using their DSC.

Declaration by First Directors (DIR-2): Similar to the above declaration, this one is specific to the first directors of the company

NOC from the owner of the registered office premises: A No Objection Certificate from the owner of the premises where the company's registered office will be located.

Proof of office address: Documents supporting the registered office address, such as utility bills (Not older than 2 months), lease agreement, or ownership deed.

Identity Proof and Address Proof: Documents supporting the identity and address of the subscribers and directors must be attached for the DIN allotment (if applied), DSC, declarations if made any, and incorporation.

MOA (INC-33) and AOA (INC-34): It is mandatory for the company to link or attach the MOA and AOA charter documents for the incorporation of the company.

Attachment for TAN application: Adhaar card and digital signature has to be provided for the application for TAN.

Table 1: Table for Linked MOA and AOA to be Filed

Mandatory Provisions Related to MOA and AOA

Physical copies of MoA/AoA must be signed and attached if the first subscribers are located outside India and MOA and AOA is executed outside India. These documents should be notarized or apostilled according to the Hague Apostille Convention rules.

If the country is a member of the Commonwealth, notarization should be done there. SPICe+ form allows a maximum of 7 subscribers for submission. If the number of subscribers exceeds 7, the SPICe+ form must be filed along with the attached Memorandum of Association (MoA) and Articles of Association (AoA). If a foreign Individual subscriber possesses a valid business visa for India and the MoA and AoA are executed within India, they may be filed electronically. However, if a business visa is not available, the MoA and AoA must be Apostilled or notarized, and electronic versions (e-MoA and e-AoA) are not acceptable.

Scenarios where the SPICe+ Part B must be submitted with MOA/ AOA attached as a pdf or must be submitted as e-version and the requirements of apostille and notarization are provided below:

Particulars	Documents	Apostilled/Notarized
Non-individual first subscribers based outside India	INC-32 with pdf MOA/AOA
Non-individual first subscribers based in India	INC-32 with linked e-MOA/e-AOA
Subscribers based in India	INC-32 with linked e-MOA/e-AOA
Subscribers and director based in India	INC-32 with linked e-MOA/e-AOA
Foreign (Subscriber/director/director cum subscriber) having valid DIN	INC-32 with linked e-MOA/e-AOA with valid business visa
	INC-32 with pdf MOA/AOA (if no business visa)
Foreign subscriber and director not having valid DIN	INC-32 with MOA/AOA

To view the full article click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.