SECTION 1. SHORT TITLE, EXTENT, COMMENCEMENT AND APPLICATION

(1) This Act may be called the Companies Act, 2013.

(2) It extends to the whole of India.

(3) This section shall come into force at once and the remaining provisions of this Act shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint and different dates may be appointed for different provisions of this Act and any reference in any provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

(4) The provisions of this Act shall apply to—

(a) companies incorporated under this Act or under any previous company law;

(b) insurance companies, except in so far as the said provisions are inconsistent with the provisions of the Insurance Act, 1938 (4 of 1938) or the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999);

(c) banking companies, except in so far as the said provisions are inconsistent with the provisions of the Banking Regulation Act, 1949 (10 of 1949);

(d) companies engaged in the generation or supply of electricity, except in so far as the said provisions are inconsistent with the provisions of the Electricity Act, 2003 (36 of 2003);

(e) any other company governed by any special Act for the time being in force, except in so far as the said provisions are inconsistent with the provisions of such special Act; and

(f) such body corporate, incorporated by any Act for the time being in force, as the Central Government may, by notification, specify in this behalf, subject to such exceptions, modifications or adaptation, as may be specified in the notification.

Clarification on the Notification dated 12-9-2013 regarding implementation of provisions of Companies Act, 2013

Circular No. 16/2013, dated 18-9-2013

The Ministry had issued a Notification No. 12-9-2013 bringing into force to 98 sections or part thereof of the Companies Act, 2013. The said notification is available on the Ministry’s website. This Ministry has been receiving requests for clarification as to whether the provisions of the Companies Act, 1956 corresponding to such 98 sections would continue to apply or not.

It is hereby clarified that with effect from 12-9-2013, the relevant provisions of the Companies Act, 1956, which correspond to provisions of 98 sections of the Companies Act, 2013 brought into force on 12-9-2013, cease to have effect from that date.

Clarification on transitional period for resolutions passed Under the Companies Act, 1956.

General Circular No. 32/2014, dated 23-07-2014

It has been brought to the notice of the Government that many companies have passed resolutions during financial year 2013-14 under the relevant provisions of the Companies Act, 1956 (Old Act) which are/were at different stages of implementation after coming into force of corresponding provisions of the new Companies Act, 2013 (New Act). Ministry has received suggestions that while section 6 of the General Clauses Act, 1897 protects the validity of such resolutions, it will be advisable if a suitable communication is also issued in the matter by the Ministry by way of abundant caution.

2. The matter has been examined in the light of similar issues clarified earlier. It is clarified that resolutions approved or passed by companies under relevant applicable provisions of the Old Act during the period from 1st September, 2013 to 31st March, 2014, can be implemented, in accordance with provisions of the Old Act, notwithstanding the repeal of the relevant provision subject to the conditions (a) that the implementation of the resolution actually commenced before 1st April, 2014 and (b) that this transitional arrangment will be available upto expiry of one year from the passing of the resolution or six months from the commencement of the corresponding provision in New Act whichever is later. It is also clarified that any amendment of the resolution must be in accordance with the relevant provision of the New Act.

SECTION 2. DEFINITIONS

[Clause (1), (3) to (6) (both inclusive), (8) to (12) (both inclusive), (14) to (22) (both inclusive), (24) to (28) (both inclusive), (29) [except sub clause (iv)], (30), (32) to (40) (both inclusive), (43) to (46) (both inclusive), (49) to (61) (both inclusive), (63) to (66) (both inclusive), (67) [except sub clause (ix)], (68) to (82) (both inclusive), (84), (86), (87) [except explanation (d)], (88), (89), (90) to (95) (both inclusive) effective from 12th September, 2013.]

[Clause (2), (7), (13), (31), (41), (42), (47), (48), (62), (83), (85), and explanation (d) of clause (87), effective from 1st April, 2014.]

[Clause (29) (iv) effective from 18th May 2016 and Clause (23) effective from 15th December, 2016]

[proviso to clause (87) effective from 20th September, 2017]

[Clause (67)(ix) not notified]

In this Act, unless the context otherwise requires,—

(1) “abridged prospectus” means a memorandum containing such salient features of a prospectus as may be specified by the Securities and Exchange Board by making regulations in this behalf;

(2) “accounting standards” means the standards of accounting or any addendum thereto for companies or class of companies referred to in section 133;

(3) “alter” or “alteration” includes the making of additions, omissions and substitutions;

(4) “Appellate Tribunal” means the National Company Law Appellate Tribunal constituted under section 410;

(5) “articles” means the articles of association of a company as originally framed or as altered from time to time or applied in pursuance of any previous company law or of this Act;

(6) “associate company”, in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company.

[30] [Explanation.—For the purpose of this clause,—

(a) the expression “significant influence” means control of at least twenty per cent. of total voting power, or control of or participation in business decisions under an agreement;

(b) the expression “joint venture” means a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement;]

Applicable Circular

Clarification with regard to holding of shares in a fiduciary capacity by associate company under section 2(6) of the Companies Act, 2013.

Circular No. 24/ 2014 dated 25th June, 2014

In continuation of the General circular No. 20/2013 dated 27th Dec, 2013, it is clarified that the shares held by a company in another company in a ‘fiduciary capacity’ shall not be counted for the purpose of determining the relationship of ‘associate company’ under section 2(6) of the Companies Act, 2013.

(7) “auditing standards” means the standards of auditing or any addendum thereto for companies or class of companies referred to in sub-section (10) of section 143;

(8) “authorised capital” or “nominal capital” means such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of the company;

(9) “banking company” means a banking company as defined in clause (c) of section 5 of the *Banking Regulation Act, 1949 (10 of 1949);

(10) “Board of Directors” or “Board”, in relation to a company, means the collective body of the       directors of the company;

(11) “body corporate” or “corporation” includes a company incorporated outside India, but does not include—

(i) a co-operative society registered under any law relating to co-operative societies; and

(ii) any other body corporate (not being a company as defined in this Act), which the Central Government may, by notification, specify in this behalf;

(12) “book and paper” and “book or paper” include books of account, deeds, vouchers, writings, documents, minutes and registers maintained on paper or in electronic form;

(13) “books of account” includes records maintained in respect of—

(i) all sums of money received and expended by a company and matters in relation to which the receipts and expenditure take place;

(ii) all sales and purchases of goods and services by the company;

(iii) the assets and liabilities of the company; and

(iv) the items of cost as may be prescribed under section 148 in the case of a company which belongs to any class of companies specified under that section;

(14) “branch office”, in relation to a company, means any establishment described as such by the company;

(15) “called-up capital” means such part of the capital, which has been called for payment;

(16) “charge” means an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage;

(17) “chartered accountant” means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the *Chartered Accountants Act, 1949 (38 of 1949) who holds a valid certificate of practice under sub-section (1) of section 6 of that Act;

(18) “Chief Executive Officer” means an officer of a company, who has been designated as such by it;

(19) “Chief Financial Officer” means a person appointed as the Chief Financial Officer of a company;

(20) “company” means a company incorporated under this Act or under any previous company law;

(21) “company limited by guarantee“ means a company having the liability of its members limited by the memorandum to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up;

(22) “company limited by shares” means a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them;

[10] [(23) “Company Liquidator” means a person appointed by the Tribunal as the Company Liquidator in accordance with the provisions of section 275 for the winding up of a company under this Act;]

(24) “company secretary” or “secretary” means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the *Company Secretaries Act, 1980 (56 of 1980) who is appointed by a company to perform the functions of a company secretary under this Act;

Exemption

Section 2(24) shall not apply to a Section 8 Company, vide Notification No. 466(E) dated 5th June, 2015.

The above mentioned exception shall be applicable to a Section 8 company which has not committed a default in filing its financial statements under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar, vide amendment notification G.S.R. 584(E) dated 13th June 2017. 

 (25) “company secretary in practice” means a company secretary who is deemed to be in practice under sub-section (2) of section 2 of the Company Secretaries Act, 1980 (56 of 1980);

(26) “contributory” means a person liable to contribute towards the assets of the company in the event of its being wound up;

(27) “control” shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner;

(28) [“Cost Accountant” means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 and who holds a valid certificate of practice under sub-section (1) of section 6 of that Act;][15]

(29) “court” means—

(i) the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any district court or district courts subordinate to that High Court under sub-clause (ii);

(ii) the district court, in cases where the Central Government has, by notification, empowered any district court to exercise all or any of the jurisdictions conferred upon the High Court, within the scope of its jurisdiction in respect of a company whose registered office is situate in the district;

(iii) the Court of Session having jurisdiction to try any offence under this Act or under any previous company law;

[(iv) the Special Court established under section 435][1];

(v) any Metropolitan Magistrate or a Judicial Magistrate of the First Class having jurisdiction to try any offence under this Act or under any previous company law;

(30) “debenture” includes debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not;

[Provided that—

(a) the instruments referred to in Chapter III-D of the Reserve Bank of India Act, 1934; and

(b) such other instrument, as may be prescribed by the Central Government in consultation with the Reserve                Bank of India, issued by a company,

shall not be treated as debenture;][16]

(31) “deposit” includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India;

(32) “depository” means a depository as defined in clause (e) of sub-section (1) of section 2 of the *Depositories Act, 1996 (22 of 1996);

(33) “derivative” means the derivative as defined in clause (ac) of section 2 of the *Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(34) “director” means a director appointed to the Board of a company;

(35) “dividend” includes any interim dividend;

(36) “document” includes summons, notice, requisition, order, declaration, form and register, whether issued, sent or kept in pursuance of this Act or under any other law for the time being in force or otherwise, maintained on paper or in electronic form;

(37) “employees’ stock option“ means the option given to the directors, officers or employees of a company or of its holding company or subsidiary company or companies, if any, which gives such directors, officers or employees, the benefit or right to purchase, or to subscribe for, the shares of the company at a future date at a pre-determined price;

(38) “expert” includes an engineer, a valuer, a chartered accountant, a company secretary, a cost accountant and any other person who has the power or authority to issue a certificate in pursuance of any law for the time being in force;

(39) “financial institution” includes a scheduled bank, and any other financial institution defined or notified under the Reserve Bank of India Act, 1934 (2 of 1934);

(40) “financial statement” in relation to a company, includes—

(i) a balance sheet as at the end of the financial year;

(ii) a profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year;

(iii) cash flow statement for the financial year;

(iv) a statement of changes in equity, if applicable; and

(v) any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv):

Provided that the financial statement, with respect to One Person Company, small company and dormant company, may not include the cash flow statement;

Exemption

For Private Companies, the proviso to Section 2(40) shall be read as follows vide Notification No. G.S.R. 583(E) dated 13^th June, 2017.:-

[14][“Provided that the financial statement, with respect to one person company, small company, dormant company and private company (if such private company is a start-up) may not include the cash flow statement;

Explanation. – For the purposes of this Act, the term“start-up‟ or “start-up company” means a private company incorporated under the Companies Act, 2013 (18 of 2013) or the Companies Act, 1956 (1 of 1956) and recognised as start-up in accordance with the notification issued by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry.”

The above exceptions/modifications/adaptations shall be applicable to a private company which has not committed a default in filing its financial statements under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar.]

(41) “financial year”, in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up:

[Provided that where a company or body corporate, which is a holding company or a subsidiary or associate company of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the [Central Government][36] may, on an application made by that company or body corporate in such form and manner as may be prescribed, allow any period as its financial year, whether or not that period is a year:

Provided further that any application pending before the Tribunal as on the date of commencement of the Companies (Amendment) Ordinance, 2018, shall be disposed of by the Tribunal in accordance with the provisions applicable to it before such commencement:][33]

[Provided also that][34] a company or body corporate, existing on the commencement of this Act, shall, within a period of two years from such commencement, align its financial year as per the provisions of this clause;

[12][Provided also that in case of a Specified IFSC private company, which is a subsidiary of a foreign company, the financial year of the subsidiary may be same as the financial year of its holding company and approval of the Tribunal shall not be required.]

[13] [Provided also that in case of a Specified IFSC public company, which is a subsidiary of a foreign company, the financial year of the subsidiary may be same as the financial year of its holding company and approval of the Tribunal shall not be required.]

[35] [Applicable Rules

Companies (Incorporation)Fourth Amendment Rules, 2018

Effective from 18th December, 2018

Rule 40.Application under sub-section (41) of section 2 for change in financial year

(1) The application for approval of concerned Regional Director under sub-section (41) of section 2 , shall be filed in e-Form No.RD-1along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 and shall be accompanied by the following documents, namely:-

(a) grounds and reasons for the application;

(b) a copy of the minutes of the board meeting at which the resolution authorising such change was passed, giving details of the number of votes cast in favour and or against the resolution;

(c) Power of Attorney or Memorandum of Appearance, as the case may be;

(d) details of any previous application made within last five years for change in financial year and outcome thereof along with copy of order.

(2) Where the Regional Director on examining the application, referred to in sub-rule (1), finds it necessary to call for further information or finds such application to be defective or incomplete in any respect, he shall give intimation of such information called for or defects or incompleteness, on the last intimated e-mail address of the person or the company, which has filed such application, directing the person or the company to furnish such information, or to rectify defects or incompleteness and to re-submit such application within a period of fifteen days, in e-Form No. RD-GNL-5.

Provided that a maximum of two re-submissions shall be allowed.

(3) (a) In case where such further information called for has not been provided or the defects or incompleteness has not been rectified to the satisfaction of the Regional Director within the period allowed under sub-rule (2), the Regional Director shall reject the application with reasons within thirty days from the date of filing application or within thirty days from the date of last re-submission made as the case may be.

(b) In case where the application is found to be in order, Regional Director shall allow and convey the order within thirty days from the date of application or within thirty days from the date of last re-submission, as the case may be.

(c) where no order for approval or re-submission or rejection has been explicitly made by the Regional Director within the stipulated time of thirty days, it shall be deemed that the application stands approved and an approval order shall be automatically issued to the applicant.

(4) The order conveyed by the Regional Director shall be filed by the company with the Registrar in Form No.INC-28 within thirty days from the date of receipt of the order along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.]

 

Applicable Circular

Clarification on filing of e-form RD- l-Conversion of public company into private company and change in a Financial Year-reg.

General Circular No. 03/2019 dated 11^th March, 2019

This Ministry vide notification no. G.S.R 1219(E) dated 18/12/18 has notified Companies (Incorporation Fourth Amendment) Rules, 20 18, whereby applications u/s 2(41) (change in a financial year) and u/s 14 of the Companies Act, 20 13 (conversion of public limited company into private company), along with e-form RD-1 shall be processed by Regional Directors.

2.Stakeholders have expressed certain difficulties in filing e-form RD-1 on account of aforesaid two purposes pending deployment of revised version of e-form RD- 1. It is therefore clarified and Regional Directors are advised to process e-form RD-1 for the above referred applications, if ‘others’ is selected on account of aforesaid two counts, till the revised form is deployed by this ministry.

3.Further, it is also clarified that such applications filed in e-form no.RD-1 should not be rejected merely on the ground that “others” is selected and “eform is not available”, till the said form is deployed by this Ministry.

 

Applicable Orders

Companies(Removal of Difficulties) Third Order, 2014

S.O. 1429(E).— In exercise of the powers conferred by sub-section (I) of Section 470 of the Companies Act,2013 (18 of 2013), the Central Government hereby makes the following Order, namely:-

1. (1) This Order may be called the Companies(Removal of Difficulties) Third Order, 2014.

(2) It shall come into force at once.

2. Jurisdiction, powers, authority and functions of Company Law Board.- Until the National Company Law Tribunal is constituted under section 408 of the Companies Act, 2013 (18 of 2013), the Board of Company Law Administration constituted in pursuance of sub-section(1) of Section 10E of the Companies Act, 1956 ( 1 of 1956) shall exercise the jurisdiction, powers, authority and functions under the first proviso to clause (41) of Section 2 of the Companies Act, 2013 (18 of 2013).

Applicable Notification

Delegation of powers to Regional Directors

Notification no.S.O. 6225 (E) dated 18^th December, 2018

In exercise of the powers conferred by section 458 of the Companies Act, 2013 (18 of 2013), the Central Government hereby delegates to the Regional Directors at Mumbai, Kolkata, Chennai, New Delhi, Ahmedabad, Hyderabad and Shillong, the powers and functions vested in it under the first proviso to clause (41) of section 2 and second proviso to sub-section (1) of section 14 of the said Act, subject to the condition that the Central Government may revoke such delegation of powers or may itself exercise the powers under the said sub-section, if in its opinion such a course of action is necessary in the public interest.

(42) “foreign company” means any company or body corporate incorporated outside India which—

(a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and

(b) conducts any business activity in India in any other manner.

(43) “free reserves” means such reserves which, as per the latest audited balance sheet of a company, are available for distribution as dividend:

Provided that—

(i) any amount representing unrealised gains, notional gains or revaluation of assets, whether shown as a reserve or otherwise, or

(ii) any change in carrying amount of an asset or of a liability recognised in equity, including surplus in profit and loss account on measurement of the asset or the liability at fair value,

shall not be treated as free reserves;

(44) “Global Depository Receipt” means any instrument in the form of a depository receipt, by whatever name called, created by a foreign depository outside India and authorised by a company making an issue of such depository receipts;

(45) “Government company” means any company in which not less than fifty-one per cent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company;

(46) “holding company”, in relation to one or more other companies, means a company of which such companies are subsidiary companies;

[Explanation.—For the purposes of this clause, the expression “company” includes any body corporate;][18]

(47) “independent director” means an independent director referred to in sub-section (5) of section 149;

(48) “Indian Depository Receipt” means any instrument in the form of a depository receipt created by a domestic depository in India and authorised by a company incorporated outside India making an issue of such depository receipts;

(49)[***][19]

(50) “issued capital” means such capital as the company issues from time to time for subscription;

“Specified IFSC Public Company” means an unlisted public company which is licensed to operate by the Reserve Bank of India or the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority of India from the International Financial Services Centre located in an approved multi services Special Economic Zone set-up under the Special Economic Zones Act, 2005 (28 of 2005) read with the Special Economic Zones Rules, 2006. (as provided vide Notification no. G.S.R. 8(E) dated 4th January 2017). NOTES The Central Government has, vide Notification no. G.S.R. 8(E) dated 4th January 2017, exempted the Specified IFSC Public Companies from certain provisions of Companies Act, 2013, which shall not apply or shall apply with such exceptions, modifications and adaptations as specified in the notification. The said exemptions have been captured in the relevant sections. “Specified IFSC Private Company” means a private company which is licensed to operate by the Reserve Bank of India or the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority of India from the International Financial Services Centre located in an approved multi services Special Economic Zone set-up under the Special Economic Zones Act, 2005 (28 of 2005) read with the Special Economic Zones Rules, 2006. (as provided vide Notification no. G.S.R. 9(E) dated 4th January 2017). NOTES The Central Government has, vide Notification no. G.S.R. 9(E) dated 4th January 2017, exempted the Specified IFSC Private Companies from certain provisions of Companies Act, 2013, which shall not apply or shall apply with such exceptions, modifications and adaptations as specified in the notification. The said exemptions have been captured in the relevant sections.

(51) “key managerial personnel”, in relation to a company, means—

(i) the Chief Executive Officer or the managing director or the manager;

(ii) the company secretary;

(iii) the whole-time director;

(iv) the Chief Financial Officer; [***][20]

(v) [such other officer, not more than one level below the directors who is in whole-time employment, designated as         key managerial personnel by the Board; and

(vi) such other officer as may be prescribed;] [21]

(52) “listed company” means a company which has any of its securities listed on any recognised stock exchange;

(53) “manager” means an individual who, subject to the superintendence, control and direction of the Board of Directors, has the management of the whole, or substantially the whole, of the affairs of a company, and includes a director or any other person occupying the position of a manager, by whatever name called, whether under a contract of service or not;

(54) “managing director” means a director who, by virtue of the articles of a company or an agreement with the company or a resolution passed in its general meeting, or by its Board of Directors, is entrusted with substantial powers of management of the affairs of the company and includes a director occupying the position of managing director, by whatever name called.

Explanation.—For the purposes of this clause, the power to do administrative acts of a routine nature when so authorised by the Board such as the power to affix the common seal of the company to any document or to draw and endorse any cheque on the account of the company in any bank or to draw and endorse any negotiable instrument or to sign any certificate of share or to direct registration of transfer of any share, shall not be deemed to be included within the substantial powers of management;

(55) “member”, in relation to a company, means—

(i) the subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company, and on its registration, shall be entered as member in its register of members;

(ii) every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company;

(iii) every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository;

(56) “memorandum” means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this Act;

(57) “net worth” means the aggregate value of the paid-up share capital and all reserves created out of the profits [, securities premium account and debit or credit balance of profit and loss account,] [22] after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation;

(58) “notification” means a notification published in the Official Gazette and the expression “notify” shall be construed accordingly;

(59) “officer” includes any director, manager or key managerial personnel or any person in accordance with whose directions or instructions the Board of Directors or any one or more of the directors is or are accustomed to act;

(60) “officer who is in default”, for the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any penalty or punishment by the way imprisonment, fine or otherwise, means any of the following officer of a company, namely:-

(i) whole-time director;

(ii) key managerial personnel;

(iii) where there is no key managerial personnel, such director or directors as specified by the Board in this behalf and who has or have given his or their consent in writing to the Board to such specification, or all the directors, if no director is so specified;

(iv) any person who, under the immediate authority of the Board or any key managerial personnel, is charged with any responsibility including maintenance, filing or distribution of accounts or records, authorises, actively participates in, knowingly permits, or knowingly fails to take active steps to prevent, any default;

(v) any person in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act, other than a person who gives advice to the Board in a professional capacity;

(vi) every director, in respect of a contravention of any of the provisions of this Act, who is aware of such contravention by virtue of the receipt by him of any proceedings of the Board or participation in such proceedings without objecting to the same, or where such contravention had taken place with his consent or connivance;

(vii) in respect of the issue or transfer of any shares of a company, the share transfer agents, registrars and merchant bankers to the issue or transfer;

Applicable Rules

Companies (Registration Offices and Fees) Rules, 2014

[Effective from 1st April, 2014]

Rule 12. Fees.—

* * *

(3) For the purpose of filing information to sub-clause (60) of section 2 of the Act, such information shall be filed in Form No. GNL.3 alongwith fee as applicable.

* * *

Applicable Circular

Clarification on prosecutions filed or internal adjudication proceedings initiated against Independent Directors, non- promoters and non-KMP non-executive directors – reg.

General Circular No.01 /2020 dated 2^nd March, 2020

Under  several provisions of the Companies Act, 2013 [Act], proceedings are required to be initiated against an officer in default for violations committed under the Art. The term “officer who is in default” is defined under section 2(60) of the Act, wherein various officers of the company have been identified.

2. Ordinarily, a whole-time director [WTD] and a key managerial personnel [KMP] are associated with the day-to-day functioning of the company and accordingly such WTDs and KMPs would be liable for defaults committed by a In absence of a KMP, such director or directors who have expressly given their consent for incurring liability in terms of the e-form GNL-3 filed with the Registrar would be liable. Where the consent for incurring liability for any of the provisions dealing with maintenance, filing or distribution of accounts or records is submitted in e-form GNL-3 by a person under the immediate authority of the Board or any KMP, the liability of such person will arise. However, in certain cases, the penal provisions in the Act hold a specific director, or officer, or any other person accountable for the default, in such cases, action should be initiated only against such director, or officer, or person, as the case may be, such as disclosure of interest by directors under section 184 of the Act.

3. Section 149 (12) is a non obstante clause which provides that the liability of an independent director (ID) or a non-executive director (NED) not being promoter or key managerial personnel would be only in respect of such acts of omission or commission by a company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently. In view of the express provisions of section 149(12), IDs and NEDs (non-promoter and non-KMP), should not be arrayed in any criminal or civil proceedings under the Act, unless the above mentioned criteria is met. Typically, apart from IDs, non- promoter and non-KMP, NEDs, would exist in the following cases:
   1. Directors nominated by the Government on the public sector undertakings;
   2. Directors nominated by Public Sector Financial Institutions, Financial Institutions or Banks having participation in equity of a company, or otherwise;
   3. Directors appointed in pursuance to any statutory or regulatory requirement such as directors appointed by the NCLT.

4. The nature of default is also crucial for arraigning officers of the company for defaults committed under the Act. All instances of filing of information/records with the registry, maintenance of statutory registers or minutes of the meetings, or compliance with the orders issued by the statutory authorities, including the NCLT under the Act are not the responsibility of the IDs or the NEDs, unless any specific requirement is provided in the Act or in such orders, as the case may be. The responsibility of the NEDs, ordinarily arise in such cases, where there are no WTDs and KMPs.

5. At the time of serving notices to the company, during inquiry, inspection, investigation, or adjudication proceedings, necessary documents may be sought so as to ascertain the involvement of the concerned officers of the company. In case, lapses are attributable to the decisions taken by the Board or its Committees, all care must be taken to ensure that civil or criminal proceedings are not unnecessarily initiated against the IDs or the NEDs, unless sufficient evidence exists to the contrary.

6. The records available in the office of the Registrar, including e-forms DIR-11 or DIR-12, along with copies of the annual returns or financial statements should also be examined so as to ascertain whether a particular director or the KMP was serving in the company as on the date of default.

7. In case of any doubts, with regard to the liability of any person, for any proceedings required to be initiated by the Registrar, guidance may be sought from the Ministry of Corporate Affairs through the office of Director General of Corporate Affairs. Consequently any such proceedings must be initiated after receiving due sanction from the Ministry.

8. All Registrars are directed to immediately and scrupulously follow the above mentioned Standard Operating Procedure with respect to all ongoing cases. Further, with respect to cases where prosecution may have been already filed but the above mentioned cases criteria is not satisfied, the same may be submitted to this Ministry for necessary examination and further direction thereon.

(61) “Official Liquidator” means an Official Liquidator appointed under sub-section (1) of section 359;

(62) “One Person Company” means a company which has only one person as a member;

(63) “ordinary or special resolution” means an ordinary resolution, or as the case may be, special resolution referred to in section 114;

(64) “paid-up share capital” or “share capital paid-up” means such aggregate amount of money credited as paid-up as is equivalent to the amount received as paid-up in respect of shares issued and also includes any amount credited as paid-up in respect of shares of the company, but does not include any other amount received in respect of such shares, by whatever name called;

(65) “postal ballot” means voting by post or through any electronic mode;

(66) “prescribed” means prescribed by rules made under this Act;

(67) “previous company law” means any of the laws specified below:—

(i) Acts relating to companies in force before the Indian Companies Act, 1866 (10 of 1866);

(ii) the Indian Companies Act, 1866 (10 of 1866);

(iii) the Indian Companies Act, 1882 (6 of 1882);

(iv) the Indian Companies Act, 1913 (7 of 1913);

(v) the Registration of Transferred Companies Ordinance, 1942 (Ordinance 54 of 1942);

(vi) the Companies Act, 1956 (1 of 1956); and

(vii) any law corresponding to any of the aforesaid Acts or the Ordinances and in force—

(A) in the merged territories or in a Part B State (other than the State of Jammu and Kashmir), or any part thereof, before the extension thereto of the Indian Companies Act, 1913 (7 of 1913); or

(B) in the State of Jammu and Kashmir, or any part thereof, before the commencement of the Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), in so far as banking, insurance and financial corporations are concerned, and before the commencement of the Central Laws (Extension to Jammu and Kashmir) Act, 1968 (25 of 1968), in so far as other corporations are concerned;

(viii) the Portuguese Commercial Code, in so far as it relates to sociedades anonimas; and

[(ix) the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961);][2]

(68) “private company” means a company having a minimum paid-up share capital [***][3]as may be prescribed, and which by its articles,—

(i) restricts the right to transfer its shares;

(ii) except in case of One Person Company, limits the number of its members to two hundred:

Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:

Provided further that—

(A) persons who are in the employment of the company; and

(B) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased,

shall not be included in the number of members; and

(iii) prohibits any invitation to the public to subscribe for any securities of the company;

EXEMPTIONS

The requirement of having minimum paid-up share capital shall not apply to a Section 8 Company, vide Notification No. 466(E) dated 5th June, 2015.

The above mentioned exception shall be applicable to a Section 8 company which has not committed a default in filing its financial statements under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar, vide amendment notification G.S.R. 584(E) dated 13th June 2017. 

 

Applicable Circular(s)

Clarification on the notification dated 12-9-2013 regarding

implementation of provisions of Companies Act, 2013 [Relevant extract]

General Circular No. 15/2013, dated 13-9-2013

The Companies Act, 2013 received the assent of the President on 29th August, 2013 and was notified in the Gazette of India on 30th August, 2013. Towards the proper implementation  of the Companies Act, 2013, first tranche of Draft Rules on 16 Chapters have been placed on the website of the Ministry on 9.9.2013 for inviting comments and objections/suggestions from the general public/stakeholders. Of the 16 Chapters, only 13 Chapters require specifying of Forms referred to in those Chapters. The draft Forms shall be placed on the website shortly.

2. Ministry of Corporate Affairs has also notified 98 sections for implementation of the provisions of the Companies Act, 2013 (the “said Act”) on 12.9.2013. Certain difficulties have been expressed by the stakeholders in the implementation of following provisions of the said Act. With a view to facilitate proper administration of the said Act, it is clarified that –

(i) Sub-section (68) of section 2: Registrar of Companies may register those Memorandum and Articles of Association received till 11.9.2013 as per the definition clause of the ‘private company’ under the Companies Act, 1956 without referring to the definition of ‘private company’ under the “said Act”.

(69) “promoter” means a person—

(a) who has been named as such in a prospectus or is identified by the company in the annual return referred to in section 92; or

(b) who has control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise; or

(c)  in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act:

Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional capacity;

(70) “prospectus” means any document described or issued as a prospectus and includes a red herring prospectus referred to in section 32 or shelf prospectus referred to in section 31 or any notice, circular, advertisement or other document inviting offers from the public for the subscription or purchase of any securities of a body corporate;

(71) “public company” means a company which—

(a) is not a private company; [and][23]

(b) has a minimum paid-up share capital [***][4], as may be prescribed:

Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles;

(72) “public financial institution” means-

(i) the Life Insurance Corporation of India, established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956);

(ii) the Infrastructure Development Finance Company Limited, referred to in clause (vi) of sub-section (1) of section 4A of the Companies Act, 1956 (1 of 1956) so repealed under section 465 of this Act;

(iii) specified company referred to in the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);

(iv) institutions notified by the Central Government under sub-section (2) of section 4A of the Companies Act, 1956 (1 of 1956) so repealed under section 465 of this Act;

(v) such other institution as may be notified by the Central Government in consultation with the Reserve Bank of India:

Provided that no institution shall be so notified unless—

(A) it has been established or constituted by or under any Central or State Act [other than this Act or the previous company law][24]; or

(B) not less than fifty-one per cent. of the paid-up share capital is held or controlled by the Central Government or by any State Government or Governments or partly by the Central Government and partly by one or more State Governments;

(73) “recognised stock exchange” means a recognised stock exchange as defined in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(74) “register of companies” means the register of companies maintained by the Registrar on paper or in any electronic mode under this Act;

(75) “Registrar” means a Registrar, an Additional Registrar, a Joint Registrar, a Deputy Registrar or an Assistant Registrar, having the duty of registering companies and discharging various functions under this Act;

(76) “related party”, with reference to a company, means—

(i) a director or his relative;

(ii) a key managerial personnel or his relative;

(iii) a firm, in which a director, manager or his relative is a partner;

(iv) a private company in which a director or manager [or his relative][5]is a member or director;

(v) a public company in which a director or manager is a director [and holds][6] along with his relatives, more than two per cent of its paid-up share capital;

(vi) any body corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager;

(vii) any person on whose advice, directions or instructions a director or manager is accustomed to act:

Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity;

(viii) [any body corporate which is—

           (A) a holding, subsidiary or an associate company of such company;

           (B) a subsidiary of a holding company to which it is also a subsidiary; or

           (C) an investing company or the venturer of the company;”;

Explanation.—For the purpose of this clause, “the investing company or the venturer of a company” means a body corporate whose investment in the company would result in the company becoming an associate company of the body corporate.][25]

EXEMPTIONS

The above clause (viii) shall not apply with respect to section 188 to a private company vide Notification no. G.S.R. 464(E) dated 5th June, 2015.

The above mentioned exception shall be applicable to a private company which has not committed a default in filing its financial statements under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar, vide amendment notification F. No. 1/1/2014- CL-V dated 13th June 2017. 

The above clause (viii) shall not apply with respect to section 188 to a Specified IFSC public company vide Notification no. G.S.R. 08(E).dated 04th January, 2017.

(ix) such other person as may be prescribed;

Applicable Rules

Companies (Specification of Definitions Details) Rules, 2014

[Effective from 1st April, 2014]

Rule 3. Related party.—For the purposes of sub-clause (ix) of clause (76) of section 2 of the Act, a director [other than an independent director ][7]or key managerial personnel of the holding company or his relative with reference to a company, shall be deemed to be a related party.

(77) “relative”, with reference to any person, means any one who is related to another, if—

(i) they are members of a Hindu Undivided Family;

(ii) they are husband and wife; or

(iii) one person is related to the other in such manner as may be prescribed;

 

Applicable Rules

Companies (Specification of Definitions Details) Rules, 2014

[Effective from 1st April, 2014]

Rule 4. List of relatives in terms of clause (77) of section 2.—A person shall be deemed to be the relative of another, if he or she is related to another in the following manner, namely:—

(1) Father:

Provided that the term “Father” includes step-father.

(2) Mother:

Provided that the term “Mother” includes the step-mother.

(3) Son:

Provided that the term “Son” includes the step-son.

(4) Son’s wife.

(5) Daughter.

(6) Daughter’s husband.

(7) Brother:

Provided that the term “Brother” includes the step-brother;

(8) Sister:

Provided that the term “Sister” includes the step-sister.

(78) “remuneration” means any money or its equivalent given or passed to any person for services rendered by him and includes perquisites as defined under the Income-tax Act, 1961 (43 of 1961);

(79) “Schedule” means a Schedule annexed to this Act;

(80) “scheduled bank” means the scheduled bank as defined in clause (e) of section 2 of the *Reserve Bank of India Act, 1934 (2 of 1934);

(81) “securities” means the securities as defined in clause (h) of section 2 of the *Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(82) “Securities and Exchange Board” means the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(83) “Serious Fraud Investigation Office” means the office referred to in section 211;

(84) “share” means a share in the share capital of a company and includes stock;

(85) “small company” means a company, other than a public company,—

(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than [ten crore rupees][26]; [and][8]

(ii) turnover of which [as per profit and loss account for the immediately preceding financial year][27] does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than [one hundred crore rupees.][28]:

Provided that nothing in this clause shall apply to—

(A) a holding company or a subsidiary company;

(B) a company registered under section 8; or

(C) a company or body corporate governed by any special Act;

(86) “subscribed capital” means such part of the capital which is for the time being subscribed by the members of a company;

(87) “subsidiary company” or “subsidiary”, in relation to any other company (that is to say the holding company), means a company in which the holding company—

(i) controls the composition of the Board of Directors; or

(ii) exercises or controls more than one-half of the [31] [total voting power] either at its own or together with one or more of its subsidiary companies:

[Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.][9]

Explanation.—For the purposes of this clause,—

(a) a company shall be deemed to be a subsidiary company of the holding company even if the control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding company;

(b) the composition of a company’s Board of Directors shall be deemed to be controlled by another company if that other company by exercise of some power exercisable by it at its discretion can appoint or remove all or a majority of the directors;

(c) the expression “company” includes any body corporate;

(d) “layer” in relation to a holding company means its subsidiary or subsidiaries; 

Applicable Rules

Companies (Restriction on number of layers) Rules, 2017

(Effective Date 20^th September, 2017)

2. Restriction on number of layers for certain classes of holding companies.—(1) On and from the date of commencement of these rules, no company, other than a company belonging to a class specified in sub-rule (2), shall have more than two layers of subsidiaries:

Provided that the provisions of this sub-rule shall not affect a company from acquiring a company incorporated outside India with subsidiaries beyond two layers as per the laws of such country:

Provided further that for computing the number of layers under this rule, one layer which consists of one or more wholly owned subsidiary or subsidiaries shall not be taken into account.

(2) The provisions of this rule shall not apply to the following classes of companies, namely:—

(a) a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);

(b) a non-banking financial company as defined in clause (f) of Section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934) which is registered with the Reserve Bank of India and considered as systematically important non-banking financial company by the Reserve Bank of India;

(c) an insurance company being a company which carries on the business of insurance in accordance with provisions of the Insurance Act, 1938 (4 of 1938) and the Insurance Regulatory Development Authority Act, 1999 (41 of 1999);

(d) a Government company referred to in clause (45) of section 2 of the Act.

(3) The provisions of this rule shall not be in derogation of the proviso to sub-section (1) of section 186 of the Act.

(4) Every company, other than a company referred to in sub-rule (2), existing on or before the commencement of these rules, which has number of layers of subsidiaries in excess of the layers specified in sub-rule (1) –

(i) shall file, with the Registrar a return in Form CRL-1 disclosing the details specified therein, within a period of one hundred and fifty days from the date of publication of these rules in the Official Gazette;

(ii) shall not, after the date of commencement of these rules, have any additional layer of subsidiaries over and above the layers existing on such date; and

(iii) shall not, in case one or more layers are reduced by it subsequent to the commencement of these rules, have the number of layers beyond the number of layers it has after such reduction or maximum layers allowed in subrule (1), whichever is more.

(5) If any company contravenes any provision of these rules the company and every officer of the company who is in default shall be punishable with fine which may extend to ten thousand rupees and where the contravention is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which such contravention continues.

Applicable Forms

Form CRL-1

 Return regarding number of layers

 (see clause (i) of sub-rule (4)of Rule 2)

 

1. (a) Name of the company: _______________

(b) CIN of the company: _______________

2. Number of layers of subsidiaries as on the date of commencement of these rules

3. Layer wise details of subsidiary companies

SN	Name of subsidiary	CIN of subsidiary company	Name of holding company		CIN of holding company	Percentage of shares held by holding company
Layer 1
1	SL1-1
2	SL1-2
3	SL1-3
Layer 2	……..
..	SL2-1
..	SL2-2
..	SL2-3
Layer 3..	…..
..	SL3-1
..	SL3-2
..	SL3-3
.Layer 4.	…….
..	SL4-1

..	SL4-2
..	SL4-3
..	……
..Upto   last	…..	….		….	…	…
layer

I (Name of director of the company signing the Form) am authorised by the Board of Directors of the company vide resolution number _____d ated ________ (DD/MM/YYYY) to sign this form and declare that —

(1) the information of the subsidiaries and the layers as contained in the form is true, correct and complete and no information has been suppressed or concealed.

(2) I have read the provisions of section 448 and 449 of Companies Act, 2013 which provide for punishment for false statement and punishment for false evidence respectively.

 

To be digitally signed by

 

Director         DSC

 

Director Identification Number of the Director

Date:

Place:

Clarification with regard to holding of shares or exercising power in a fiduciary capacity — Holding and Subsidiary relationship under section 2(87) of the Companies Act, 2013Applicable Circular(s)

General Circular No. 20 /2013, dated 27-12-2013

This Ministry has received a number of representations consequent upon notifying section 2(87) of the Companies Act, 2013 which defines “subsidiary company” or “subsidiary”. The stakeholders have requested this Ministry to clarify whether shares held or power exercisable by a company in a ‘fiduciary capacity’ will be excluded while determining if a particular company is a subsidiary of another company. The stakeholders have further pointed out that in terms of section 4(3) of the Companies Act, 1956, such shares or powers were excluded from the purview of holding-subsidiary relationship.

2. The matter has been examined in the Ministry and it is hereby clarified that the shares held by a company or power exercisable by it in another company in a ‘fiduciary capacity’ shall not be counted for the purpose of determining the holding-subsidiary relationship in terms of the provision of section 2(87) of the Companies Act, 2013.

Clarification relating to incorporation of a company i.e. company Incorporated outside India,

General Circular No. 23/2014, dated 25-6-2014

Government has received references seeking clarity about the status of subsidiaries incorporated/to be incorporated by companies incorporated outside India. Attention has, in particular, been drawn to the absence of the deeming provision of sub-section (7) of section 4 of the Companies Act, 1956 in the Companies Act, 2013 (New Act).

The matter has been examined in the Ministry in the light of sections 2(68), 2(71) and 2(87) of the New Act and it is clarified that there is no bar in the new Act for a company incorporated outside India to incorporate a subsidiary either as a public company or a private company. An existing company, being a subsidiary of a company incorporated outside India, registered under the Companies Act, 1956, either as private company or a public company by virtue of section 4(7) of that Act, will continue as a private company or public company, as the case may be, without any change in the incorporation status of such company.

  Applicable Notifications

Notification No. F. No. 01/13/2013-CL-V dated 20th September, 2017

S.O. 3086(E).—In exercise of the powers conferred by sub-section (3) of section 1 of the Companies Act, 2013 (18 of 2013), the Central Government hereby appoints the 20th September, 2017 as the date on which proviso to clause (87) of section 2 of the said Act shall come into force.

 

 

(88) “sweat equity shares” means such equity shares as are issued by a company to its directors or employees at a discount or for consideration, other than cash, for providing their know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called;

(89) “total voting power”, in relation to any matter, means the total number of votes which may be cast in regard to that matter on a poll at a meeting of a company if all the members thereof or their proxies having a right to vote on that matter are present at the meeting and cast their votes;

(90) “Tribunal” means the National Company Law Tribunal constituted under section 408;

(91) [“turnover” means the gross amount of revenue recognised in the profit and loss account from the sale, supply, or distribution of goods or on  account of services rendered, or both, by a company during a financial year;] [29]

(92) “unlimited company” means a company not having any limit on the liability of its members;

(93) “voting right” means the right of a member of a company to vote in any meeting of the company or by means of postal ballot;

(94) “whole-time director” includes a director in the whole-time employment of the company;

Applicable Rules

Companies (Specification of Definitions Details) Rules, 2014

[Effective from 1st April, 2014]

Rule 2. Definitions.—(1). In these rules, unless the context otherwise requires,-

* * *

(k). “Executive Director” means a whole time director as defined in clause (94) of section 2 of the Act;

[11] [(94A) “winding up” means winding up under this Act or liquidation under the Insolvency and Bankruptcy Code, 2016, as applicable.]

(95) words and expressions used and not defined in this Act but defined in the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) shall have the meanings respectively assigned to them in those Acts.

Applicable Rules

Companies (Specification of Definitions Details) Rules, 2014

[Effective from 1st April, 2014]

Rule 2. Definitions.—(1) In these rules, unless the context otherwise requires,—

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Certifying Authority” for the purpose of Digital Signature Certificate means a person who has been granted a licence to issue a Digital Signature Certificate under section 24 of the Information Technology Act, 2000 (21 of 2000) and the Certified Filing Center (CFC) under the Act;

(c) “digital signature” means the digital signature as defined under clause (p) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);

(d) “Digital Signature Certificate” means a Digital Signature Certificate as defined under clause (q) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000);

(e) “Director Identification Number” (DIN) means an identification number allotted by the Central Government to any individual, intending to be appointed as director or to any existing director of a company, for the purpose of his identification as a director of a company;

Provided that the Director Identification Number (DIN) obtained by the individuals prior to the notification of these rules shall be the DIN for the purpose of the Companies Act, 2013:

Provided further that “Director Identification Number” (DIN) includes the Designated Partnership Identification Number (DPIN) issued under section 7 of the Limited Liability Partnership Act, 2008 (6 of 2009) and the rules made thereunder;

(f) “e-Form” means a form in the electronic form as prescribed under the Act or the rules made thereunder and notified by the Central Government under the Act;

(g) “electronic Mail” means the message sent, received or forwarded in digital form using any electronic communication mechanism that the message so sent, received or forwarded is storable and retrievable;

(h) “electronic mode”, for the purposes of clause (42) of section 2 of the Act, means carrying out electronically based, whether main server is installed in India or not, including, but not limited to—

(i) business to business and business to consumer transactions, data interchange and other digital supply transactions;

(ii) offering to accept deposits or inviting deposits or accepting deposits or subscriptions in securities, in India or from citizens of India;

(iii) financial settlements, web based marketing, advisory and transactional services, database services and products, supply chain management;

(iv) online services such as telemarketing, telecommuting, telemedicine, education and information research; and

(v) all related data communication services,

whether conducted by e-mail, mobile devices, social media, cloud computing, document management, voice or data transmission or otherwise;

(i) “electronic record” means the electronic record as defined under clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000;

(j) “electronic Registry” means an electronic repository or storage system of the Central Government in which the information or documents are received, stored, protected and preserved in electronic form;

(k) “Executive Director” means a whole time director as defined in clause (94) of section 2 of the Act;

(l) “Fees” means the fees as specified in the Companies (Registration Offices and Fees) Rules, 2014;

(m) “Form” means a form set forth in the Act or the rules made thereunder which shall be used for the matter to which it relates;

(n) “Pre-fill” means the automated process of data input by the computer system from the database maintained in electronic registry of the Central Government;

(o) “Registrar’s Front Office” means an office maintained by the Central Government or an agency authorised by it to facilitate e-filing of documents into the electronic registry and their inspection and viewing;

(p) “Regional Director” means the person appointed by the Central Government in the Ministry of Corporate Affairs as a Regional Director;

(q) “section” means the section of the Act;

[32] [***]

(s) For the purposes of clause (d) of sub-section (1) of Section 164 and clause (f) of sub-section (1) of section 167 of the Act, “or otherwise” means any offence in respect of which he has been convicted by a Court under this Act or the Companies Act, 1956.

(2) The words and expressions used in these rules but not defined and defined in the Act or in (i) the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or (ii) the Securities and Exchange Board of India Act, 1992 (15 of 1992) or (iii) the Depositories Act, 1996 (22 of 1996) or (iv) the Information Technology Act, 2000 (21 of 2000) or rules and regulations made thereunder shall have the meanings respectively assigned to them under the Act or those Acts.

[1] Not Yet Notified

[2] Sec 2(67) (ix) not notified.

[3] Omitted words “of one lakh rupees or such higher paid-up share capital” by the Companies (Amendment) Act, 2015 vide Notification No. F No. 1/6/2015-CL.V dated 29th May 2015.

[4]Omitted words “of five lakh rupees or such higher paid-up share capital” by the Companies (Amendment) Act, 2015 vide Notification No. F No. 1/6/2015-CL.V dated 29th May 2015.

[5] Inserted by Companies (Removal of Difficulties) Sixth Order, 2014 vide SO. 1894(E) dated 24th July, 2014.

[6] Substituted for the words “or holds” by Companies (Removal of Difficulties) Fifth Order, 2014 vide S.O. 1820(E) dated 9th July, 2014.

[7] Inserted by Companies (Specification of Definition Details) Amendement Rules, 2014 vide Notification No. G.S.R. 507(E) dated 17th July, 2014.

[8] Substituted for “or” by the Companies (Removal of Difficulties) Order, 2015 vide S.O. 504 (E) dated 13th February, 2015.

[9] Effective w.e.f. 20^th September, 2017 vide Notification No. S.O. 3086(E) dated 20^th September, 2017.

[10] Substituted by the Insolvency and Bankruptcy Code, 2016,(31 of 2016), S. 255 & Eleventh Schedule. Prior to substitution it read as under:—

“Company Liquidator”, in so far as it relates to the winding up of a company, means a person appointed by—

(a)   the Tribunal in case of winding up by the Tribunal; or

(b)   the company or creditors in case of voluntary winding up, as a Company Liquidator from a panel of professionals maintained by the Central Government under sub-section (2) of section 275;”

[11] Inserted by the Insolvency and Bankruptcy Code, 2016,(31 of 2016), S. 255 & Eleventh Schedule.

[12] Inserted vide Notification no. G.S.R. 9(E).dated 04th January, 2017.

[13] Inserted vide Notification no. G.S.R. 08(E).dated 04th January, 2017.

[14] Inserted vide Notification No. G.S.R 583(E) dated 13th June, 2017

[15] Substituted by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9^th February, 2018. Prior to the substitution it read as under:

““cost accountant” means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959);”

[16] Inserted by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9th February, 2018.

[17] Inserted by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9th February, 2018.

[18] Inserted by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9th February, 2018.

[19] Omitted by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9th February, 2018.Prior to omission it read as under:

““interested director” means a director who is in any way, whether by himself or through any of his relatives or firm, body corporate or other association of individuals in which he or any of his relatives is a partner, director or a member, interested in a contract or arrangement, or proposed contract or arrangement, entered into or to be entered into by or on behalf of a company;”

[20] Omitted words “and” by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9th February, 2018.

[21] Substituted by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9^th February, 2018. Prior to the substitution it read as under:

“such other officer as may be prescribed;”

[22] Substituted for the words “and securities premium account,” by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9^th February, 2018.

[23] Inserted by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9th February, 2018.

[24] Inserted by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9th February, 2018.

[25] Substituted by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9th February, 2018. Prior to the substitution it read as under:

“any company which is—

(A)   a holding, subsidiary or an associate company of such company; or

(B)   a subsidiary of a holding company to which it is also a subsidiary;”

[26] Substituted for the words “five crore rupees” by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9^th February, 2018

[27] Substituted for the words “as per its last profit and loss account”by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9^th February, 2018.

[28] Substituted for the words “twenty crore rupees:”by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9^th February, 2018.

[29] Substituted by the Companies (Amendment) Act 2017 vide Notification No. File No. 1/1/2018-CL.I dated 9^th February, 2018. Prior to the substitution it read as under:

““turnover” means the aggregate value of the realisation of amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year;”

[30] Substituted by the Companies (Amendment) Act 2017 vide Notification No. S.O. 1833(E) dated 7^th May, 2018. Prior to the substitution it read as under:

“Explanation.—For the purposes of this clause, “significant influence” means control of at least twenty per cent of total share capital, or of business decisions under an agreement; ”

[31] Substituted for the words “ total share capital” by the Companies (Amendment) Act 2017 vide Notification No. S.O. 1833(E)  dated 7^th May, 2018.

[32] Omitted by the Companies (Specification of Definitions Details) Amendment Rules, 2018.vide Notification No. F. No. 01/13/2013- CL-V-Pt-I dated 7^th May, 2018.Prior to omission it read as under:

“(r) “Total Share Capital”, for the purposes of clause (6) and clause (87) of section 2, means the aggregate of the—

(a) paid-up equity share capital; and

(b) convertible preference share capital;”

[33] Substituted by The Companies (Amendment) Ordinance , 2018 dated 2nd November, 2018. Prior to substitution it read as under:-

“Provided that on an application made by a company or body corporate, which is a holding company or a subsidiary [or associate company][17] of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Tribunal may, if it is satisfied, allow any period as its financial year, whether or not that period is a year:”

[34] Substituted for the words “Provided further that” by The Companies (Amendment) Ordinance , 2018 dated 2nd November, 2018.

[35]  Inserted by Companies (Incorporation)Fourth Amendment Rules, 2018 vide Notification No. F. No. 1/13/2013 CL-V, Part-I, Vol.II dated 18^th December, 2018.

[36] Powers of Central Government delegated to Regional Director vide notification no. S.O. 6225 (E) dated 18^th December, 2018

SECTION 3. FORMATION OF COMPANY

[Effective from 1st April, 2014]

(1) A company may be formed for any lawful purpose by—

(a) seven or more persons, where the company to be formed is to be a public company;

(b) two or more persons, where the company to be formed is to be a private company; or

(c) one person, where the company to be formed is to be One Person Company that is to say, a private company,

by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of registration:

Provided that the memorandum of One Person Company shall indicate the name of the other person, with his prior written consent in the prescribed form, who shall, in the event of the subscriber’s death or his incapacity to contract become the member of the company and the written consent of such person shall also be filed with the Registrar at the time of incorporation of the One Person Company along with its memorandum and articles:

Provided further that such other person may withdraw his consent in such manner as may be prescribed:

Provided also that the member of One Person Company may at any time change the name of such other person by giving notice in such manner as may be prescribed:

Provided also that it shall be the duty of the member of One Person Company to intimate the company the change, if any, in the name of the other person nominated by him by indicating in the memorandum or otherwise within such time and in such manner as may be prescribed, and the company shall intimate the Registrar any such change within such time and in such manner as may be prescribed:

Provided also that any such change in the name of the person shall not be deemed to be an alteration of the memorandum.

(2) A company formed under sub-section (1) may be either—

(a) a company limited by shares; or

(b) a company limited by guarantee; or

(c) an unlimited company.

[7] [Provided that a Specified IFSC private company shall be formed only as a company limited by shares.]

[8] [Provided that a Specified IFSC public company shall be formed only as a company limited by shares.]

Companies (Incorporation) Rules, 2014

[Effective from 1st April, 2014]

Rule 2. Definitions.—(1) In these rules, unless the context otherwise requires,—

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(b) “Annexure” means the Annexure to these rules;

(c) “Form” or “e-Form” means a form in the electronic form or non-electronic form as specified under the Act or Rules made there under and notified by the Central Government under the Act;

(d) “Fees” means fees as specified in the Companies (Registration offices and fees) Rules, 2014;

(e) “Regional Director” means the person appointed by the Central Government in the Ministry of Corporate Affairs as a Regional Director;

(f) “Section” means the section of the Act;

(2) Words and expressions used in these rules but not defined and defined in the Act or in Companies (Specification of definitions details) Rules, 2014 shall have the meanings respectively assigned to them in the Act and said rules.

Rule 3. One Person Company.—(1) Only a natural person who is an Indian citizen and resident in India-

(a) shall be eligible to incorporate a One Person Company;

(b) shall be a nominee for the sole member of a One Person Company.

[9] [Explanation I. – For the purposes of this rule, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding financial year.

[(2) A natural person shall not be member of more than a One Person Company at any point of time and the said person shall not be a nominee of more than a One Person Company.][5]

(3) Where a natural person, being member in One Person Company in accordance with this rule becomes a member in another such Company by virtue of his being a nominee in that One Person Company, such person shall meet the eligibility criteria specified in sub rule (2) within a period of one hundred and eighty days.

(4) No minor shall become member or nominee of the One Person Company or can hold share with beneficial interest.

(5) Such Company cannot be incorporated or converted into a company under section 8 of the Act.

(6) Such Company cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporate.

(7) No such company can convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, except threshold limit (paid up share capital) is increased beyond fifty lakh rupees or its average annual turnover during the relevant period exceeds two crore rupees.

Rule 4. Nomination by the subscriber or member of One Person Company.—For the purposes of first proviso to sub-section (1) of section 3—

(1) The subscriber to the memorandum of a One Person Company shall nominate a person, after obtaining prior written consent of such person, who shall, in the event of the subscriber’s death or his incapacity to contract, become the member of that One Person Company.

(2) The name of the person nominated under sub-rule (1) shall be mentioned in the memorandum of One Person Company and [such nomination in Form No. INC.32 (SPICe) along with consent of such nominee obtained in Form No INC.3][6] and fee as provided in the Companies (Registration offices and fees) Rules, 2014 shall be filed with the Registrar at the time of incorporation of the company along with its memorandum and articles.

(3) The person nominated by the subscriber or member of a One Person Company may, withdraw his consent by giving a notice in writing to such sole member and to the One Person Company:

Provided that the sole member shall nominate another person as nominee within fifteen days of the receipt of the notice of withdrawal and shall send an intimation of such nomination in writing to the Company, along with the written consent of such other person so nominated in Form No. INC.3.

(4) The company shall within thirty days of receipt of the notice of withdrawal of consent under sub-rule (3) file with the Registrar, a notice of such withdrawal of consent and the intimation of the name of another person nominated by the sole member in Form No INC.4 along with fee as provided in the Companies (Registration offices and fees) Rules, 2014 and the written consent of such another person so nominated in Form No. INC.3.

(5) The subscriber or member of a One Person Company may, by intimation in writing to the company, change the name of the person nominated by him at any time for any reason including in case of death or incapacity to contract of nominee and nominate another person after obtaining the prior consent of such another person in Form No. INC.3:

Provided that the company shall, on the receipt of such intimation, file with the Registrar, a notice of such change in Form No INC.4 along with fee as provided in the Companies (Registration offices and fees) Rules, 2014 and with the written consent of the new nominee in Form No. INC.3 within thirty days of receipt of intimation of the change.

(6) Where the sole member of One Person Company ceases to be the member in the event of death or incapacity to contract and his nominee becomes the member of such One Person Company, such new member shall nominate within fifteen days of becoming member, a person who shall in the event of his death or his incapacity to contract become the member of such company, and the company shall file with the Registrar an intimation of such cessation and nomination in Form No INC.4 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 within thirty days of the change in membership and with the prior written consent of the person so nominated in Form No. INC.3.

[***][1]

Rule 6. One Person Company to convert itself into a public company or a private company in certain cases.—(1) Where the paid up share capital of an One Person Company exceeds fifty lakh rupees [or less and][2] its average annual turnover during the relevant period exceeds two crore rupees, it shall cease to be entitled to continue as a One Person Company.

(2) Such One Person Company shall be required to convert itself, within six months of the date on which its paid up share capital is increased beyond fifty lakh rupees or the last day of the relevant period during which its average annual turnover exceeds two crore rupees as the case may be, into either a private company with minimum of two members and two directors or a public company with at least of seven members and three directors in accordance with the provisions of section 18 of the Act.

(3) The One Person Company shall alter its memorandum and articles by passing a resolution in accordance with sub-section (3) of section 122 of the Act to give effect to the conversion and to make necessary changes incidental thereto.

(4) The One Person Company shall within period of sixty days from the date of applicability of sub-rule (1), give a notice to the Registrar in Form No. INC.5 informing that it has ceased to be a One Person Company and that it is now required to convert itself into a private company or a public company by virtue of its paid up share capital or average annual turnover, having exceeded the threshold limit laid down in sub-rule (1).

Explanation.—For the purposes of this rule,- “relevant period” means the period of immediately preceding three consecutive financial years;

(5) If One Person Company or any officer of the One Person Company contravenes the provisions of these rules, One Person Company or any officer of the One Person Company shall be punishable with fine which may extend to ten thousand rupees and with a further fine which may extend to one thousand rupees for every day after the first during which such contravention continues.

(6) A One Person company can get itself converted into a Private or Public company after increasing the minimum number of members and directors to two or minimum of seven members and two or three directors as the case may be, and by maintaining the minimum paid-up capital as per requirements of the Act for such class of company and by making due compliance of section 18 of the Act for conversion.

Rule 7. Conversion of private company into One Person Company.—(1) A private company other than a company registered under section 8 of the Act [having paid up share capital of fifty lakhs rupees or less and average annual turnover during the relevant period][3] is two crore rupees or less may convert itself into one person company by passing a special resolution in the general meeting.

(2) Before passing such resolution, the company shall obtain No objection in writing from members and creditors.

(3) The one person company shall file copy of the special resolution with the Registrar of Companies within thirty days from the date of passing such resolution in Form No. MGT. 14.

(4) The company shall file an application in Form No. INC.6 for its conversion into One Person Company along with fees as provided in in the Companies (Registration offices and fees) Rules, 2014, by attaching the following documents, namely:—

(i) The directors of the company shall give a declaration by way of affidavit duly sworn in confirming that all members and creditors of the company have given their consent for conversion, the paid up share capital company is fifty lakhs rupees or less or average annual turnover is less than two crores rupees, as the case may be;

(ii) the list of members and list of creditors;

(iii) the latest Audited Balance Sheet and the Profit and Loss Account; and

(iv) the copy of No Objection letter of secured creditors.

(5) On being satisfied and complied with requirements stated herein the Registrar shall issue the Certificate.

[Rule 7A. Penalty—If a One Person Company or any officer of such company contravenes any of the provisions of these rules, the One Person Company or any officer of the such Company shall be punishable with fine which may extend to five thousand rupees and with a further fine which may extend to five hundred rupees for every day after the first offence during which such contravention continues.][4]

 

SECTION 3A. MEMBERS SEVERALLY LIABLE IN CERTAIN CASES

[Effective from 9th February 2018]

If at any time the number of members of a company is reduced, in the case of a public company, below seven, in the case of a private company, below two, and the company carries on business for more than six months while the number of members is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and is cognisant of the fact that it is carrying on business with less than seven members or two members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued therefor.

FAQs on SPICe

1. How many names can be applied for in SPICe (INC-32)?

Only one. However, for reservation of a name prior to filing SPICe (INC-32), you may use INC-1 (in which up to 6 names can be proposed) and then input the SRN of approved INC-1 into SPICe.

2. What is the mode of grievance redressal?

In case of technical problems i.e., form upload, pre-scrutiny errors, DSC related, payment related queries, please raise a ticket on www.mca.gov.in/myservices….. and await a resolution. You may also call up Corporate Seva Kendra at 01244832500 after 48 hours if ticket is not resolved.In case of resubmission / rejection remarks, please contact 01244832500 and select option 1 for CRC. For escalation you may send a mail to crc.escalation@mca.gov.in

3. Is INC-22 still required to be filed with SPICe?

It is not required to be filed with SPICe (INC-32) if a company is registered with address for correspondence only (in INC-32). INC-22, is required to be filed within 30 days of its incorporation, for intimating the registered office address.

4. What is the process for obtaining approved e-MOA (INC-33) and e- AOA (INC-34)?

The users may obtain approved e-MOA (INC-33) and e- AOA (INC-34) through certified copies facility available on MCA.

5. Is, PAN and AADHAAR mandatory?

Yes. The companies (incorporation) rules notified has liberalized many requirements in respect of Proof of Identity and Proof of residence in respect of Subscribers and Directors. The Companies (Incorporation) third Amendment Rules dated 27th July 2016 has relaxed the mandatory attachment of proof of identity and residence in respect of a subscriber having a valid DIN.

6. Which attachments are removed in SPICe form?

Attachment no. 7 (Proof of relation) and 9 (NOC from any other person) are deleted.

7. Is it mandatory to use eMoA and eAoA? Can physical copies of MoA/AoA be signed and attached with SPICe forms?

Yes. It is mandatory in all cases of Indian subscribers, foreign individual subscribers (having a valid DIN) and where the number of such subscribers is not more than seven. No physical copies of MoA/AoA are required to be attached.

8. Can SPICe be used for incorporation of producer companies?

No. For incorporation of producer companies, unregistered companies and companies being formed with more than 7 subscribers, new version of INC-7 shall be used.

9. If a body corporate is one of the subscribers/promoters, can DSC of anauthorised Director be affixed?

Yes.

• Can, foreign subscribers file SPICe (INC-32) or are they required to file in INC-7?

Yes, foreign subscribers having valid DIN can file SPICe(INC-32) with eMoA(INC-33) and eAoA(INC-34) as linked forms. However, in case of foreign individual subscribers without a valid DIN, form INC-7 shall be used with physical MoA and AoA.

11. In SPICe AoA (INC-34) if additional Article is required, how to enter the same?

SPICe AoA (INC-34) has facility for adding, modifying, deleting and entrenching Articles.

12. Can we enter the conditions ofprivatecompany as required under Section 5 of the Companies, Act, 2013 in SPICe AoA(INC-34)?

Yes, SPICe AoA (INC-34) has facility for adding, modifying, deleting and entrenching Articles.

13. Can we enter the names of first directors as required under Companies Act, 2013, in SPICe AoA (INC-34)?

Yes, SPICe AoA has facility for adding, modifying, deleting and entrenching Articles.

14. What if there are more than seven subscribers to MoA and AoA?

INC-7 shall be used.

15. Incaseof subscriber to the memorandum is a foreign national residing outside India, his signatures and address etc. shall be witnessed by a Notary Public/Embassy/Consulate offices of Embassies as per the Rule 13 of the Companies (Incorporation) Rules, 2014. In such cases, how the DSC of such a witness be affixed?

In such cases, SPICe (INC-32) shall be filed with manually signed and duly attested MoA and AoA.

16. Is DSC mandatory for Subscribers?

Yes, DSC is mandatory for all subscribers and witnesses in eMoA(INC-33) and eAoA(INC-34). eMoA and eAoA shall be used only where the maximum number of subscribers do not exceed 7. In case the number of subscribers are more than 7, INC-7 shall be used and DSC is not mandatory in such cases.

17. Can we use SPICe form now for resubmitting incorporation applications filed in form INC-2 /7 earlier?

No. SPICe cannot be used in such cases. However, form INC-2/7 shall be available for resubmission cases only for a period of 15 days from the date the form was sent for resubmission by CRC.

• Whether subscribers’ photo is required in SPICe forms?

No. Subscribers’ photo is not required.

19. How many resubmissions are permitted for SPICe forms?

Two.

20. Can OPCs be incorporated using SPICe forms?

Yes. Form INC-2 will no longer be available for filing.

21. Can LLPs be incorporated using SPICe forms?

No.

22. What is the word limit for writing objects in eMoA?

For main Objects (Field 3(a)), character limit is 20,000 and for furtherance of objects (Field 3(b)), it is 1,00,000 characters.

23. Please clarify on attestation requirements in respect of foreign companies wanting to form a subsidiary in India?

Attestation requirements will be as per Rule 13 of the Companies (Incorporation) Rules, 2014.

24. Is SPICe eMoA (INC-33) and SPICe eAoA (INC-34) to be uploaded separately?

SPICe eMoA and eAoA have to be uploaded as ‘Linked Forms’ to SPICe (INC-32).

25. What if the subscribers to eMoA and eAOA are at different places as only one witness is provided?

eMoA and eAOA would be witnessed after all subscribers have signed as is happening presently.

26. Is refund applicable if SPICe forms get rejected?

Yes.

27. What is the maximum upload size of SPICe forms?

6 MB.

28. Can NIDHI Company be incorporated using SPICe forms?

Yes.

29. Is filing of SPICe forms optional or mandatory for the incorporation of companies?

Presently it is optional. However in the next few weeks, SPICe form would be the only form available for incorporation of any company except for a Producer Public Company or a Part I Company or in cases where there are more than seven subscribers.

[1] Omitted by the Companies (Incorporation) Amendment Rules 2015 vide Notification F. No. 01/13/2013 CL-V (Part-I) dated 1st May 2015.Prior to omission it read as under:

Rule 5. Penalty.—If One Person Company or any officer of such company contravenes the provisions of these rules, One Person Company or any officer of the One Person Company shall be punishable with fine which may extend to ten thousand rupees and with a further fine which may extend to one thousand rupees for every day after the first during which such contravention continues.

[2] Substituted vide Notification dated 1st May 2015 — Companies (Incorporation) Amendment Rules 2015

[3] Substituted for “having paid up share capital of fifty lakhs rupees or less or average annual turnover during the relevant period” by the Companies (Incorporation) Amendment Rules 2015 vide Notification F .No. 01/13/2013 CL-V (Part-I) dated 1st May 2015.

[4] Inserted by the Companies (Incorporation) Amendment Rules 2015 vide Notification F .No. 01/13/2013 CL-V (Part-I) dated 1st May 2015.

[5] Substituted by the Companies (Incorporation)  Third Amendment Rules 2016 vide Notification 743(E) dated 27th July 2016. Prior to substitution it read as under:

“(2) No person shall be eligible to incorporate more than a One Person Company or become nominee in more than one such company.”

[6] Substituted for the words “such nomination in Form No INC.2 along with consent of such nominee obtained in Form No INC.3″ by the Companies (Incorporation) Fifth amendment Rules 2016 vide Notification no. F. No. 1/13/2013 CL -V dated 29th December 2016 effective from 1 st January 2017

[7] Inserted vide Notification no. G.S.R. 9(E).dated 04th January, 2017.

[8] Inserted vide Notification no. G.S.R. 9(E).dated 04th January, 2017.

[9] Substituted by the Companies (Incorporation) Third Amendment Rules, 2018 vide Notification No. F. No. 1/13/2013-CL-V, part-I, Vol.II dated 27^th July, 2018.. Prior to the substitution it read as under:

“ Explanation.—For the purposes of this rule, the term resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one calendar year.”

SECTION 4. MEMORANDUM

[Effective from 1st April, 2014]

(1) The memorandum of a company shall state—

(a) the name of the company with the last word “Limited” in the case of a public limited company, or the last words “Private Limited” in the case of a private limited company:

EXEMPTIONS

In case of a Government Company, the words “in the case of a public limited company, or the last words “Private Limited” in the case of a private limited company” shall be omitted vide Notifcation GSR 463 (E) dated 5th June, 2015

The above mentioned exception shall be applicable to a government company which has not committed a default in filing its financial statements under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar, vide amendment notification F. No. 1/2/2014- CL-V dated 13th June 2017. 

Provided that nothing in this clause shall apply to a company registered under section 8;

[12] [Provided further that a Specified IFSC private company shall have the suffix “International Financial Service Company” or “IFSC” as part of its name.]

[14] [Provided further that a Specified IFSC public company shall have the suffix “International Financial Service Company” or “IFSC” as part of its name.]

(b) the State in which the registered office of the company is to be situated;

(c) the objects for which the company is proposed to be incorporated and any matter considered necessary in furtherance thereof;

[13][Provided that a Specified IFSC private company shall state its objects to do financial services activities, as permitted under the Special Economic Zones Act, 2005 read with the Special Economic Zones Rules, 2006 and any matter considered necessary in furtherance thereof, in accordance with license to operate, from International Financial Services Centre located in an approved multi services Special Economic Zone, granted by the Reserve Bank of India or the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority of India.]

[15] [Provided that a Specified IFSC public company shall state its objects to do financial services activities, as permitted under the Special Economic Zones Act, 2005 (28 of 2005) read with the Special Economic Zones Rules, 2006 and any matter considered necessary in furtherance thereof, in accordance with license to operate, from International Financial Services Centre located in an approved multi services Special Economic Zone, granted by the Reserve Bank of India or the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority of India.]

(d) the liability of members of the company, whether limited or unlimited, and also state,—

(i) in the case of a company limited by shares, that liability of its members is limited to the amount unpaid, if any, on the shares held by them; and

(ii) in the case of a company limited by guarantee, the amount up to which each member undertakes to contribute—

(A) to the assets of the company in the event of its being wound-up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member, as the case may be; and

(B) to the costs, charges and expenses of winding-up and for adjustment of the rights of the contributories among themselves;

(e) in the case of a company having a share capital,—

(i) the amount of share capital with which the company is to be registered and the division thereof into shares of a fixed amount and the number of shares which the subscribers to the memorandum agree to subscribe which shall not be less than one share; and

(ii) the number of shares each subscriber to the memorandum intends to take, indicated opposite his name;

(f) in the case of One Person Company, the name of the person who, in the event of death of the subscriber, shall become the member of the company.

(2) The name stated in the memorandum shall not—

(a) be identical with or resemble too nearly to the name of an existing company registered under this Act or any previous company law; or

(b) be such that its use by the company—

(i) will constitute an offence under any law for the time being in force; or

(ii) is undesirable in the opinion of the [Central Government][1].

(3) Without prejudice to the provisions of sub-section (2), a company shall not be registered with a name which contains—

(a) any word or expression which is likely to give the impression that the company is in any way connected with, or having the patronage of, the Central Government, any State Government, or any local authority, corporation or body constituted by the Central Government or any State Government under any law for the time being in force; or

(b) such word or expression, as may be prescribed,

unless the previous approval of the Central Government has been obtained for the use of any such word or expression.

(4) A person may make an application, in such form and manner and accompanied by such fee, as may be prescribed, to the Registrar for the reservation of a name set out in the application as—

(a) the name of the proposed company; or

(b) the name to which the company proposes to change its name.

(5) [16] [(i) Upon receipt of an application under sub-section (4), the Registrar may, on the basis of information and documents furnished along with the application, reserve the name for a period of twenty days from the date of approval or such other period as may be prescribed:

Provided that in case of an application for reservation of name or for change of its name by an existing company, the Registrar may reserve the name for a period of sixty days from the date of approval.]

(ii) Where after reservation of name under clause (i), it is found that name was applied by furnishing wrong or incorrect information, then,—

(a) if the company has not been incorporated, the reserved name shall be cancelled and the person making application under sub-section (4) shall be liable to a penalty which may extend to one lakh rupees;

(b) if the company has been incorporated, the Registrar may, after giving the company an opportunity of being heard—

(i) either direct the company to change its name within a period of three months, after passing an ordinary resolution;

(ii) take action for striking off the name of the company from the register of companies; or

(iii) make a petition for winding up of the company.

(6) The memorandum of a company shall be in respective forms specified in Tables A, B, C, D and E in Schedule I as may be applicable to such company.

(7) Any provision in the memorandum or articles, in the case of a company limited by guarantee and not having a share capital, purporting to give any person a right to participate in the divisible profits of the company otherwise than as a member, shall be void.

Applicable Rules

Companies (Incorporation) Rules, 2014

[Effective from 1st April, 2014]

[17] [Rule 8. Names which resemble too nearly with name of existing company.- (1) A name applied for shall be deemed to resemble too nearly with the name of an existing company, if, and only if, after comparing the name applied for with the name of an existing company by disregarding the matters set out in sub-rule (2), the names are same.

(2)The following matters are to be disregarded while comparing the names under sub-rule (1):-

(a) the words like Private, Pvt, Pvt., (P), OPC Pvt. Ltd., IFSC Limited, IFSC Pvt. Limited, Producer Limited, Limited, Unlimited, Ltd, Ltd., LLP, Limited Liability Partnership, company, and company, & co, & co., co., co, corporation, corp, corpn, corp or group;

(b) the plural or singular form of words in one or both names;

A. Illustrations

(i) Green Technology Ltd. is same as Greens Technology Ltd. and Greens Technologies Ltd.

(ii) Pratap Technology Ltd. is same as Prataps Technology Ltd. and Prataps Technologies Ltd.

(iii) SM Computers Ltd. is not same as SMS Computers Ltd.

 

(c) type and case of letters, spacing between letters, punctuation marks and special characters used in one or both names;

B. Illustrations

(i) ABC Ltd. is same as A.B.C. Ltd. and A B C Ltd.

(ii) TeamWork Ltd. is same as Team@Work Ltd. and Team-Work Ltd.

 

(d) use of different tenses in one or both names;

C. Illustrations

(i) Ascend Solutions Ltd. is same as Ascended Solutions Ltd. and Ascending Solutions Ltd.

(ii) Speak English Solutions Limited is same as Spoken English Solutions Limited.

 

(e) use of different phonetic spellings including use of misspelled words of an expression;

D. Illustrations

(i) Chemtech Ltd. is same as Chemtec Ltd., Chemtek Ltd., Cemtech Ltd., Cemtek Ltd., Kemtech Ltd., and Kemtek Ltd.

(ii) Bee Kay Ltd is same as BK Ltd, Be Kay Ltd., B Kay Ltd., Bee K Ltd., B.K. Ltd. and Beee Kay Ltd.

 

(f) use of host name such as ‘www’ or a domain extension such as ‘net’ ,’org’, ‘dot’ or ‘com’ in one or both names;

E. Illustrations

(i) Ultra Solutions Ltd. is same as Ultrasolutions.com Ltd.

(ii) Supreme Ultra Solutions Ltd. is not the same as Ultrasolutions.com Ltd.

 

(g) the order of words in the names;

F. Illustrations

(i) Ravi Builders and Contractors Ltd. is same as Ravi Contractors and Builders Ltd.

(ii) Ravi Builders and Contractors Limited is not the same as Ravi Shankar Builders and Contractors Limited.

 

(h) use of the definite or indefinite article in one or both names;

G. Illustrations

(i) Congenial Tours Ltd. is same as A Congenial Tours Ltd. and The Congenial Tours Ltd.

(ii) Isha Industries Limited is not the same as Anisha Industries Limited.

 

(i) a slight variation in the spelling of the two names including a grammatical variation thereof;

H. Illustrations

(i) Color Technologies Ltd. is same as Colour Technologies Ltd.

(ii) Disc Solutions Ltd. is same as Disk Solutions Ltd. but it is not same as Disco Solutions Ltd.

 

(j) complete translation or transliteration, and not part thereof, of an existing name, in Hindi or in English;

I. Illustrations

(i) National Electricity Corporation Ltd. is same as Rashtriya Vidyut Nigam Ltd.

(ii) Hike Construction Ltd. is not the same as Hike Nirman Ltd.

 

(k) addition of the name of a place to an existing name, which does not contain the name of any place;

J. Illustrations

(i) If Salvage Technologies Ltd. is an existing name, it is same as Salvage Technologies Delhi Ltd and Salvage Delhi Technologies Ltd.

(ii) Retro Pharmaceuticals Ranchi Ltd. is not the same as Retro Pharmaceuticals Chennai Ltd.

 

(l) addition, deletion, or modification of numerals or expressions denoting numerals in an existing name, unless the numeral represents any brand;

K. Illustrations

(i) Thunder Services Ltd is same as Thunder11 Services Ltd and OneThunder Services Ltd.

(ii) Style Garments11  Ltd. is same as Style Garments Ltd. and Style12 Garments Ltd.

(iii) One 11 Power Equipment Ltd is not the same as One Power Equipment Ltd, if One 11 represents a brand:

Provided that clauses (f) to (h) and clauses (k) and (l) shall not be disregarded while comparing the names, if a no objection by way of a Board resolution has been provided by an existing company.

8A. Undesirable names.- (1) The name shall be considered undesirable, if-

(a) it is prohibited under the provisions of section 3 of the Emblems and Names (Prevention and Improper Use) Act, l95O (12 of 1950), unless a previous permission has been obtained under that Act;

(b) save as provided in section 35 of the Trade Marks Act, 1999 (47 of 1999), the name includes a trade mark registered under the Trade Marks Act, 1999 and the rules framed thereunder in the same class of goods or services in which the activity of the company is being carried out or is proposed to be carried out, unless the consent of the owner [18] [***], of the trade mark, as the case may be, has been obtained and produced by the promoters;

(c) it includes any word or words which are offensive to any section of the people;

(d) the proposed name is identical with or too nearly resembles the name of a limited liability partnership.

Provided that the provisions of rule 8 shall apply mutatis mutandis while determining whether a proposed name is too nearly resembling the name of a limited liability partnership,

(e) the proposed name is identical with or too nearly resembles with a name which is for the time being reserved in accordance with rule 9:

Provided that the provisions of rule 8 shall apply mutatis mutandis while determining whether a proposed name is too nearly resembling with a reserved name;

(f) the company’s main business is financing, leasing, chit fund, investments, securities or combination thereof, but the proposed name is not indicative of such related financial activities, viz.. Chit Fund or Investment or Loan, etc.;

(g) the company’s name is indicative of activities financing, leasing, chit fund, investments, securities or combination thereof, but the company’s main business is not related to such activities;

(h) it resembles closely the popular or abbreviated description of an existing company or limited liability partnership;

(i) the proposed name is identical with or too nearly resembles the name of a company or limited liability partnership incorporated outside India and reserved by such company or limited liability partnership with the Registrar:

Provided that if a foreign company is incorporating its subsidiary company in India, then the original name of the holding company as it is may be allowed with the addition of word India or name of any Indian State or city, if otherwise available:

Provided further that provisions of rule 8 shall apply mutatis mutandis while determining whether a proposed name is too nearly resembling the name of a company or limited liability partnership incorporated outside India;

(i) any part of the proposed name includes the words indicative of a separate type of business constitution or legal person or any connotation thereof e.g. co-operative, sehkari, trust, LLP, partnership, society, proprietor, HUF firm, Inc., PLC, GmbH, SA, PTE, Sdn, AG, etc.;

Explanation.- For the purposes of this clause, it is hereby clarified that the name including phrase ‘Electoral Trust’ may be allowed for registration of companies to be formed under section 8 of the Act, in accordance with the Electoral Trusts Scheme, 2013 notified by the Central Board of Direct taxes (CBDT);

Provided that name application is accompanied with an affidavit to the effect that the name to be obtained shall be only for the purpose of registration of companies under the said Electoral Trust Scheme as notified by the Central Board of Direct Taxes;

(k) the proposed name contains the words ‘British India;

(l) the proposed name implies association or connection with an embassy or consulate of a foreign government;

(m) the proposed name includes or implies association or connection with or patronage of a national hero or any person held in high esteem or important personages who occupied or are occupying important positions in the Government;

(n) the proposed name is identical to the name of a company dissolved as a result of liquidation proceeding and a period of two years has not elapsed from the date of such dissolution;

Provided that if the proposed name is identical with the name of a company which is struck off in pursuance of action under section 248 of the Act or under section 560 of the Companies Act, 1956 (1 of 1956) then the same shall not be allowed before the expiry of twenty years from the date of publication in the Official Gazette being so struck off;

(o) it is identical with the name of a limited liability partnership in liquidation or the name of a limited liability partnership which is struck off up to a period of five years;

(p) the proposed name include words such as ‘Insurance’, ‘Bank’, ‘Stock Exchange’, Venture Capital’, ‘Asset Management’, ‘Nidhi’, ‘Mutual Fund’, etc., unless a declaration is submitted by the applicant that the requirements mandated by the respective regulator, such as IRDA, RBI, SEBI, MCA, etc. have been complied with by the applicant;

(q) the proposed name includes the word “State”, in case the company is not a Government company;

(r) the proposed name is containing only the name of a continent, country, State, city such as Asia limited, Germany Limited, Haryana Limited or Mysore Limited;

(s) Use of descriptive names, where the name merely consists of commonly used words to describe an activity.

Explanation.- For the purposes of this clause-

(A) the term “commonly used words” refers to use of generic expressions which may be used by any other company to describe its trade;

(B) while determining whether a name is descriptive or not, the objects of the proposed company or the order of words appearing in a name shall not be relevant;

(C) the name shall not be deemed to be descriptive where “commonly used words” are used in addition to other words in the name;

A. Illustrations

(i)  The names Silk Manufacturers Private Limited and Manufacturers Silk Ltd. are descriptive names as they merely describe an activity which may also be carried out by any other company and the order of the words is not relevant while determining a descriptive name.

(ii) The names Computer World Ltd., Food Star Ltd., Tour Hub Ltd or House of Chocolate Ltd are not descriptive as the names do not merely consist of commonly used words.

(iii) The names Technical Vista Ltd or Vista Technical are not descriptive as the names do not merely consist of commonly used words and the order of the words is not relevant while determining whether a name is descriptive.

(iv) The name Drinking Water Plant Ltd. is a descriptive name, even if the object of the company is not related to making drinking water plant as it consists of commonly used words and objects of the proposed company is not relevant while determining whether a name is descriptive.

(v) The name Silk Wise Manufacturers Private Limited is not descriptive as it contains words other than commonly used words.

(t) the proposed name includes name of any foreign country or any city in a foreign country, the same shall be allowed if the applicant produces any proof of significance of business relations with such foreign country like memorandum of understanding with a company of such country;

Provided that the name combining the name of a foreign country with the use of India like India Japan or Japan India shall be allowed if, there is a government to government participation or patronage and no company shall be incorporated using the name of an enemy country.

Explanation.- For the purposes of this clause, ‘enemy country’ means so declared by the Government of India from time to time.

(u) the proposed name of a section 8 company under the Act does not include the words Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral Trust and the like, etc.

(v) the proposed name of a Nidhi company under the Act does not have the last words “Nidhi Limited” as a part of its name.

(w) the proposed name has been released from the register of companies upon change of name of a company and three years have not elapsed since the date of change unless a specific direction has been received from the competent authority in the course of compromise, arrangement or amalgamation.

(2) The applicant shall declare in affirmative or negative (to affirm or deny) whether he is using or has been using in the last five years, the name applied or incorporation of company or LLP in any other business constitution like Sole proprietor or Partnership or any other incorporated or unincorporated entity and if, yes details thereof and No Objection Certificate from other partners and associates for use of such name by the proposed Company or LLP, as the case may be, and also a declaration as to whether such other business shall be taken over by the proposed company or LLP or not.

8B. Word or expression which can be used only after obtaining previous approval of Central Government. ln terms clause (b) of  sub-section (3) of section 4, the following words and combinations thereof shall not be used in the name of a company in English or any of the languages depicting the same meaning unless the previous approval of the Central Government has been obtained for the use of any such word or expression:-

(a) Board;

(b) Commission;

(c) Authority;

(d) Undertaking;

(e) National;

(f) Union;

(g) Central;

(h) Federal;

(i) Republic;

(j) President;

(k) Rashtrapati;

(l) Small Scale Industries;

(m) Khadi and Village Industries Corporation;

(n) Financial Corporation and the like;

(o) Municipal;

(p) Panchayat;

(q) Development Authority;

(r) Prime Minister or Chief Minister;

(s) Minister;

(t) Nation;

(u) Forest corporation;

(v) Development Scheme;

(w) Statute or Statutory;

(x) Court or Judiciary;

(y) Governor;

(z) the use of word Scheme with the name of Government (s), State, India, Bharat or any Government authority or in any manner resembling with the schemes launched by Central, State or local Governments and authorities; and

(za) Bureau.]

[19] [Rule 9. Reservation of name or change of name.—An application for reservation of name shall be made through the web service available at www.mca.gov.in by using web service SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32), and for change of name by using web service RUN (Reserve Unique Name) along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014, which may either be approved or rejected, as the case may be, by the Registrar, Central Registration Centre after allowing resubmission of such web form within fifteen days for rectification of the defects, if anv, with effect from the 23^rd February, 2020.]

[3][Rule 36. Integrated Process for Incorporation. — Refer Section 7] 

Applicable Circulars

Use of Word ‘National’ in the names of Companies or Limited Liability Partnerships (LLPs)

Circular No. 2/2014, dated 11-2-2014

It has come to the knowledge of this Ministry that Companies/Limited Liability Partnerships are being registered with the word ‘National’ in their names. It is being intimated that no company should be allowed to be registered with the word ‘National’ as part of its title unless it is a government company and the Central/State Government(s) has a stake in it. This should be stringently enforced by all Registrar of Companies (ROCs) while registering companies. Similarly, the word ‘Bank’ may be allowed in the name of an entity only when such entity produces a ‘No Objection Certificate’ from the RBI in this regard. By the same analogy the word “Stock Exchange” or “Exchange” should be allowed in name of a company only where ‘No Objection Certificate’ from SEBI in this regard is produced by the Promoters.

One time opportunity for extension of period of Reservation of Name

Circular No. 11/2014, dated 12-5-2014

Services for incorporation of companies were not available on the MCA21 portal to stakeholders from 1st April, 2014 to 28th April 2014 because of the deployment requirement for new E-forms. Many stakeholders had reserved names for the purpose of Company incorporation with 60 days prescribed validity expiring during the above mentioned period. They could not avail of the 60 days prescribed period for using the name to complete the corresponding incorporation requirements due to the non-availability of services.

2. In view of this, the validity of reservation of all such names with due date of expiry between 1st April, 2014 to 28th April, 2014 is hereby extended upto 31st May, 2014. All applicants whose cases fall in the above mentioned category may be advised to file relevant E-forms for incorporating companies under the Companies Act, 2013 well before the extended validity period.

Extension of validity period for names reserved as on 31st March, 2014

 Circular No. 13/2014, dated 23–5- 2014

In continuation of the General Circular No. 11/2014 dated 12th May, 2014, approval of the Competent Authority is hereby conveyed to extend the continuity of all the reserved names as on 31st March, 2014 for another fifteen days period from the date of the issue of this circular.

Clarification relating to incorporation of a company i.e. company Incorporated outside India,

Circular No. 23/2014, dated 25-6-2014

Government has received references seeking clarity about the status of subsidiaries incorporated/to be incorporated by companies incorporated outside India. Attention has, in particular, been drawn to the absence of the deeming provision of sub-section (7) of section 4 of the Companies Act, 1956 in the Companies Act, 2013 (New Act).

The matter has been examined in the Ministry in the light of sections 2(68), 2(71) and 2(87) of the New Act and it is clarified that there is no bar in the new Act for a company incorporated outside India to incorporate a subsidiary either as a public company or a private company. An existing company, being a subsidiary of a company incorporated outside India, registered under the Companies Act, 1956, either as private company or a public company by virtue of section 4(7) of that Act, will continue as a private company or public company, as the case may be, without any change in the incorporation status of such company. 

Clarification with regard to use of the words “Commodity Exchange” in a company

Circular No. 26/2014, dated 26-6-2014

In continuation of this Ministry’s circular no. 02/2014 dated 11.02.2014, it is hereby clarified the use of the word “Commodity Exchange” may be allowed only where a “No Objection Certificate” from the Forward Markets Commission (FMC) is furnished by the applicant. All other provisions of the Companies (Incorporation) Rules, 2014 will continue to be applicable.

2. It is also clarified that the certificate from Forward Markets Commission will also be required in cases of companies registered with the words “Commodity Exchange” before the issue of this circular.

Registration of names of the Companies shall be in consonance with the provisions of the Emblems and Names (Prevention of Improper Use) Act, 1950

Circular No. 29/2014, dated 11-7-2014

In continuation of this Ministry’s circular No. 02/2014 and 26/2014 dated 11.02.2014 and 27.06.2014 respectively, it is hereby directed that while allotting names to Companies/ Limited Liability Partnerships, the Registrar of Companies concerned should exercise due care to ensure that the names are not in contravention of the provisions of the Emblems and Names (Prevention of Improper Use) Act, 1950. To this end it is necessary that Registrars are fully familiar with the provisions of the said Act.

Extension of Validity of reserved names

Circular No. 31/2014, dated 19-7-2014

The Service Provider of MCA-21 has brought to the notice of the Ministry that the letters of intimation issued in respect of 9522 cases for reservation of names (INC.1) allow the applicants to use reserved names within 60 days of date of such intimation. This is at variance with the implementation in the MCA-21. This is causing inconvenience to the stakeholders.

In view of this, the validity of 1930 of the above mentioned 9522 cases for reservations of names which have expired as on the date of this circular is hereby extended upto 18th August, 2014. Further, in case of 6864 cases where names have been reserved and are yet to be used, the time period as indicated in the letters of intimations is allowed. All applicants may accordingly be advised to file relevant e-forms for incorporation of companies under the Companies Act, 2013 well before the validity period.

Applicable Notifications

Notification w.r.t. Central Registration Centre (CRC) having territorial jurisdiction all over India

S.O. 218(E) In exercise of the powers conferred by sub-sections (1) and (2) of section 396 of the Companies Act, 2013 (18 of 2013) (herein after referred to as the Act), the Central Government hereby establishes a Central Registration Centre (CRC) having territorial jurisdiction all over India, for discharging or carrying out the function of processing and disposal of applications for reservation of names under the provisions of the said Act.

2. The CRC shall function under the administrative control of Registrar of Companies, Delhi (ROC Delhi), who shall act as the Registrar of the CRC until a separate Registrar is appointed to the CRC. The CRC shall process applications for reservation of name i.e. e-Form No. INC-1 filed along with the prescribed fee as provided in the Companies (Registration of Offices and Fees) Rules, 2014.

3. Processing and approval of name or names proposed in e-Form No.lNC-29 shall continue to be done by the respective Registrar of Companies having jurisdiction over incorporation of companies under the Companies Act,2013 as per the provisions of the Act and the rules made thereunder.

4. The CRC shall be located at Indian Institute of Corporate Affairs (llCA), PIot No. 6,7, 8, Sector 5, IMT Manesar, District Gurgaon (Haryana), Pin Code- 122050.

5. This notification shall come into force from 26th January, 2016.

[F.No. A-4201 1 /03/21{-Ad.ll]

[1] Powers of Central Government delegated to Registrar of Companies vide Notification No. S.O.1353(E) dated 21st May, 2014

[2] Inserted by the Companies (Incorporation) Amendment Rules 2015 vide Notification F. No. 01/13/2013 CL-V (Part-I) dated 1st May 2015

[3] Inserted by the Companies (Incorporation) Amendment Rules, 2015 vide GSR 349 (E) dated 1st May, 2015.

[4] Omitted by the Companies (Incorporation) Amendment Rules, 2016 vide GSR 99(E) dated 22nd Jan, 2016.Prior to omission it read as under:

(b) The name shall be considered undesirable, if-

“(ii) it is not in consonance with the principal objects of the company as set out in the memorandum of association.”

[5]Omitted by the Companies (Incorporation) Amendment Rules, 2016 vide GSR 99(E) dated 22nd Jan, 2016.Prior to omission it read as under:

“(x) the proposed name is vague or an abbreviated name such as ‘ABC limited’ or ‘23K limited’ or ‘DJMO’ Ltd: abbreviated name based on the name of the promoters will not be allowed. For example:- BMCD Limited representing first alphabet of the name of the promoter like Bharat, Mahesh, Chandan and David: Provided that existing company may use its abbreviated name as part of the name for formation of a new company as subsidiary or joint venture or associate company but such joint venture or associated company shall not have an abbreviated name only e.g. Delhi Paper Mills Limited can get a joint venture or associated company as DPM Papers Limited and not as DPM Limited.”

[6] Omitted by the Companies (Incorporation) Amendment Rules, 2016 vide GSR 99(E) dated 22nd Jan, 2016.Prior to omission it read as under:

(xvii) “it is intended or likely to produce a misleading impression regarding the scope or scale of its activities which would be beyond the resources at its disposal.”

[7] Omitted by the Companies (Incorporation) Amendment Rules, 2016 vide GSR 99(E) dated 22nd Jan, 2016.Prior to omission it read as under:

” (3) If any company has changed its activities which are not reflected in its name, it shall change its name in line with its activities within a period of six months from the change of activities after complying with all the provisions as applicable to change of name. ”

[8] Omitted by the Companies (Incorporation) Amendment Rules, 2016 vide GSR 99(E) dated 22nd Jan, 2016.Prior to omission it read as under:

“(4) In case the key word used in the name proposed is the name of a person other than the name(s) of the promoters or their close blood relatives, No objection from such other person(s) shall be attached with the application for name. In case the name includes the name of relatives, the proof of relation shall be attached and it shall be mandatory to furnish the significance and proof thereof for use of coined words made out of the name of the promoters or their relatives.”

[9] Substituted by Companies (Incorporation) Second Amendment Rules, 2018 vide Notification No. F.No. 1/13/2013 CL-V, part-I, Vol. II dated 23^rd March, 2018. Prior to substitution it read as under:

“Rule 9. Reservation of name.- An application for reservation of name shall be made through the web service available at www.mca.gov.in by using RUN (Reserve Unique Name) along with fee as provided in the Companies (Registration offices and fees) Rules, 2014, which may either be approved or rejected, as the case may be, by the Registrar, Central Registration Centre”

[10] Substituted by the Companies (Incorporation) Third Amendment Rules 2016 vide Notification 743(E) dated 27th July 2016. Prior to substitution it read as under:

“(ii) it includes the name of a registered trade mark or a trade mark which is subject of an application for registration, unless the consent of the owner or applicant for registration, of the trade mark, as the case may be, has been obtained and produced by the promoters;”

[11]  Omitted “comma” by the Companies (Incorporation) Third Amendment Rules 2016 vide Notification 743(E) dated 27th July 2016.

[12] Inserted vide Notification no. G.S.R. 9(E).dated 04th January, 2017.

[13] Inserted vide Notification no. G.S.R. 9(E).dated 04th January, 2017.

[14] Inserted vide Notification no. G.S.R. 08(E).dated 04th January, 2017.

[15] Inserted vide Notification no. G.S.R. 08(E).dated 04th January, 2017.

[16] Substituted by the Companies (Amendment) Act, 2017 vide Notification No. S.O. 351 (E) dated 23rd January, 2018 effective from 26th January, 2018. Prior to the substitution it read as under:
“(i) Upon receipt of an application under sub-section (4), the Registrar may, on the basis of information and documents furnished along with the application, reserve the name for a period of sixty days from the date of the application.”

[17]Substituted by the Companies (Incorporation) Fifth Amendment Rules, 2019 vide Notification No. F. No. 1/13/2013 CL-V, part-I, Vol.III  dated  10th, May, 2019. Prior to substitution it read as under:

“Rule 8. Undesirable names.—(1) In determining whether a proposed name is identical with another, the differences on account of the following shall be disregarded—

(a) the words like Private, Pvt, Pvt., (P), Limited, Ltd, Ltd., LLP, Limited Liability Partnership;

(b) words appearing at the end of the names – company, and company, co., co, corporation, corp, corpn, corp.;

(c) plural version of any of the words appearing in the name;

(d) type and case of letters, spacing between letters and punctuation marks;

(e) joining words together or separating the words does not make a name distinguishable from a name that uses the similar, separated or joined words;

(f) use of a different tense or number of the same word does not distinguish one name from another;

(g) using different phonetic spellings or spelling variations shall not be considered as distinguishing one name from another. Illustration (For example, P.Q. Industries limited is existing then P and Q Industries or Pee Que Industries or P n Q Industries or P & Q Industries shall not be allowed and similarly if a name contains numeric character like 3, resemblance shall be checked with ‘Three’ also;)

(h) misspelled words, whether intentionally misspelled or not, do not conflict with the similar, properly spelled words;

(i) the addition of an internet related designation, such as .com, .net, .edu, .gov, .org, .in does not make a name distinguishable from another, even where (.) is written as ‘dot’;

(j) the addition of words like New, Modern, Nav, Shri, Sri, Shree, Sree, Om, Jai, Sai, The, etc. does not make a name distinguishable from an existing name and similarly, if it is different from the name of the existing company only to the extent of adding the name of the place, the same shall not be allowed; such names may be allowed only if no objection from the existing company by way of Board resolution is submitted;

(k) different combination of the same words does not make a name distinguishable from an existing name, e.g., if there is a company in existence by the name of “Builders and Contractors Limited”, the name “Contractors and Builders Limited” shall not be allowed unless it is change of name of existing company;

(l) if the proposed name is the Hindi or English translation or transliteration of the name of an existing company or limited liability partnership in English or Hindi, as the case may be.

(2) (a) The name shall be considered undesirable, if—

(i) it attracts the provisions of section 3 of the Emblems and Names (Prevention and Improper Use) Act, 1950 (12 of 1950);

[(ii) it includes the name of a trade mark registered or a trade mark which is subject of an application for registration under the Trade Marks Act, 1999 and the rules framed thereunder unless the consent of the owner or applicant for registration, of the trade mark, as the case may be, has been obtained and produced by the promoters;][10]

(iii) it includes any word or words which are offensive to any section of the people;

(b) The name shall also be considered undesirable, if—

(i) the proposed name is identical with or too nearly resembles the name of a limited liability partnership;

(ii)[4] [***]

Provided that every name need not be necessarily indicative of the objects of the company, but when there is some indication of objects in the name, then it shall be in conformity with the objects mentioned in the memorandum;

(iii) the company’s main business is financing, leasing, chit fund, investments, securities or combination thereof, such name shall not be allowed unless the name is indicative of such related financial activities, viz., Chit Fund or Investment or Loan, etc.;

(iv) it resembles closely the popular or abbreviated description of an existing company or limited liability partnership;

(v) the proposed name is identical with or too nearly resembles the name of a company or limited liability partnership incorporated outside India and reserved by such company or limited liability partnership with the Registrar:

Provided that if a foreign company is incorporating its subsidiary company in India, then the original name of the holding company as it is may be allowed with the addition of word India or name of any Indian state or city, if otherwise available;

(vi) any part of the proposed name includes the words indicative of a separate type of business constitution or legal person or any connotation thereof e.g. co-operative, sehkari, trust, LLP, partnership, society, proprietor, HUF, firm, Inc., PLC, GmbH, SA, PTE, Sdn, AG etc.;

Explanation.—For the purposes of this sub-clause, it is hereby clarified that the name including phrase ‘Electoral Trust’ may be allowed for Registration of companies to be formed under section 8 of the Act, in accordance with the Electoral Trusts Scheme, 2013 notified by the Central Board of Direct Taxes (CBDT):

Provided that name application is accompanied with an affidavit to the effect that the name to be obtained shall be only for the purpose of registration of companies under Electoral Trust Scheme as notified by the Central Board of Direct Taxes;

(vii) the proposed name contains the words ‘British India’;

(viii) the proposed name implies association or connection with embassy or consulate or a foreign government;

(ix) the proposed name includes or implies association or connection with or patronage of a national hero or any person held in high esteem or important personages who occupied or are occupying important positions in Government;

(x) [5] [***]

Provided that existing company may use its abbreviated name as part of the name for formation of a new company as subsidiary or joint venture or associate company but such joint venture or associated company shall not have an abbreviated name only e.g. Delhi Paper Mills Limited can get a joint venture or associated company as DPM Papers Limited and not as DPM Limited:

Provided further that the companies well known in their respective field by abbreviated names are allowed to change their names to abbreviation of their existing name after following the requirements of the Act;

(xi) the proposed name is identical to the name of a company dissolved as a result of liquidation proceeding and a period of two years have not elapsed from the date of such dissolution:

Provided that if the proposed name is identical with the name of a company which is struck off in pursuance of action under section 248 of the Act, [or under section 560 of the Companies Act, 1956 (1 of 1956) ][2]then the same shall not be allowed before the expiry of twenty years from the publication in the Official Gazette being so struck off;

(xii) it is identical with or too nearly resembles the name of a limited liability partnership in liquidation or the name of a limited liability partnership which is struck off up to a period of five years;

(xiii) the proposed name include words such as ‘Insurance’, ‘Bank’, ‘Stock Exchange’, ‘Venture Capital’, ‘Asset Management’, ‘Nidhi’, ‘Mutual fund’ etc., unless a declaration is submitted by the applicant that the requirements mandated by the respective regulator, such as IRDA, RBI, SEBI, MCA etc. have been complied with by the applicant;

(xiv) the proposed name includes the word “State”, the same shall be allowed only in case the company is a government company;

(xv) the proposed name is containing only the name of a continent, country, state, city such as Asia limited, Germany Limited, Haryana Limited, Mysore Limited;

(xvi) the name is only a general one, like Cotton Textile Mills Ltd. or Silk Manufacturing Ltd., and not Lakshmi Silk Manufacturing Co. Ltd;

(xvii) [6] [***]

(xviii) the proposed name includes name of any foreign country or any city in a foreign country, the same shall be allowed if the applicant produces any proof of significance of business relations with such foreign country like Memorandum of Understanding with a company of such country:

Provided that the name combining the name of a foreign country with the use of India like India Japan or Japan India shall be allowed if, there is a government to government participation or patronage and no company shall be incorporated using the name of an enemy country.

Explanation.—For the purposes of this clause, enemy country means so declared by the Central Government from time to time.

(3) [7] [***]

(4) [8] [***]

(5) The applicant shall declare in affirmative or negative (to affirm or deny) whether they are using or have been using in the last five years, the name applied for incorporation of company or LLP in any other business constitution like Sole proprietor or Partnership or any other incorporated or unincorporated entity and if, yes details thereof and No Objection Certificate from other partners and associates for use of such name by the proposed Company or LLP, as the case may be, and also a declaration as to whether such other business shall be taken over by the proposed company or LLP or not.

(6) The following words and combinations thereof shall not be used in the name of a company in English or any of the languages depicting the same meaning unless the previous approval of the Central Government has been obtained for the use of any such word or expression—

(a) Board;

(b) Commission;

(c) Authority;

(d) Undertaking;

(e) National;

(f) Union;

(g) Central;

(h) Federal;

(i) Republic;

(j) President;

(k) Rashtrapati;

(l) Small Scale Industries;

(m) Khadi and Village Industries Corporation;

(n) Financial [***][11] Corporation and the like;

(o) Municipal;

(p) Panchayat;

(q) Development Authority;

(r) Prime Minister or Chief Minister;

(s) Minister;

(t) Nation;

(u) Forest corporation;

(v) Development Scheme;

(w) Statute or Statutory;

(x) Court or Judiciary;

(y) Governor;

(z) the use of word Scheme with the name of Government(s), State, India, Bharat or any government authority or in any manner resembling with the schemes launched by Central, state or local Governments and authorities; and

(za) Bureau.

(7) For the Companies under section 8 of the Act, the name shall include the words foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust and the like etc. Every company incorporated as a “Nidhi” shall have the last word ‘Nidhi Limited’ as part of its name.

(8) The names released on change of name by any company shall remain in data base and shall not be allowed to be taken by any other company including the group company of the company who has changed the name for a period of three years from the date of change subject to specific direction from the competent authority in the course of compromise, arrangement and amalgamation.”

[18] Omitted the words “or applicant for registration” by the Companies (Incorporation) Eighth Amendment Rules, 2019 vide Notification No. G.S.R. 793(E) dated 16th October, 2019.

[19] Substituted by companies (Incorporation) Amendment Rules, 2020 vide Notification No. G.S.R 128(E) dated 18th February, 2020 effective from 23rd February, 2020. Prior to substitution, it read as under:

[Rule 9. Reservation of name.- An application for reservation of name shall be made through the web service available at www.mca.gov.in by using RUN (Reserve Unique Name) along with fee as provided in the Companies (Registration offices and fees) Rules, 2014, which may either be approved or rejected, as the case may be, by the Registrar, Central Registration Centre after allowing re-submission of such application within fifteen days for rectification of the defects, if any.]

SECTION 5. ARTICLES

[Effective from 1st April, 2014]

(1) The articles of a company shall contain the regulations for management of the company.

(2) The articles shall also contain such matters, as may be prescribed:

Provided that nothing prescribed in this sub-section shall be deemed to prevent a company from including such additional matters in its articles as may be considered necessary for its management.

(3) The articles may contain provisions for entrenchment to the effect that specified provisions of the articles may be altered only if conditions or procedures as that are more restrictive than those applicable in the case of a special resolution, are met or complied with.

(4) The provisions for entrenchment referred to in sub-section (3) shall only be made either on formation of a company, or by an amendment in the articles agreed to by all the members of the company in the case of a private company and by a special resolution in the case of a public company.

(5) Where the articles contain provisions for entrenchment, whether made on formation or by amendment, the company shall give notice to the Registrar of such provisions in such form and manner as may be prescribed.

(6) The articles of a company shall be in respective forms specified in Tables, F, G, H, I and J in Schedule I as may be applicable to such company.

(7) A company may adopt all or any of the regulations contained in the model articles applicable to such company.

(8) In case of any company, which is registered after the commencement of this Act, in so far as the registered articles of such company do not exclude or modify the regulations contained in the model articles applicable to such company, those regulations shall, so far as applicable, be the regulations of that company in the same manner and to the extent as if they were contained in the duly registered articles of the company.

(9) Nothing in this section shall apply to the articles of a company registered under any previous company law unless amended under this Act.

Applicable Rules

Companies (Incorporation) Rules, 2014

[Effective from 1st April, 2014]

Rule 10. Entrenchment provision in Articles.—Where the articles contain the provisions for entrenchment, the company shall give notice to the Registrar of such provisions in Form No. INC.2 or [[2] [***] [3] [SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32)] [1], as the case may be, along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 at the time of incorporation of the company or in case of existing companies, the same shall be filed in Form No.MGT.14 within thirty days from the date of entrenchment of the articles, as the case may be, along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014.

Rule 11. Model Articles.—The model articles as prescribed in Table F, G, H, I and J of Schedule I may be adopted by a company as may be applicable to the case of the company, either in totality or otherwise.

[1] Substituted for the words ” Form No. INC-7″ by the Companies (Incorporation) Fifth amendment Rules 2016 vide Notification no. F. No. 1/13/2013 CL -V dated 29th December 2016 effective from 1 st January 2017

[2] Omitted words “Form No. INC.7” by  Companies (Incorporation) Amendment Rules, 2018 vide Notification No. G.S.R. 49(E) dated 20th January, 2018 effective from 26th January, 2018.

[3] Substituted for the words “Form No. INC. 32 (SPICe)” by companies (Incorporation) Amendment Rules, 2020 vide Notification No. G.S.R 128(E) dated 18^th February, 2020 effective from 23^rd February, 2020.

SECTION 6. ACT TO OVER-RIDE MEMORANDUM, ARTICLES, ETC.

[Effective from 1st April, 2014]

Save as otherwise expressly provided in this Act—

(a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution passed by the company in general meeting or by its Board of Directors, whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and

(b) any provision contained in the memorandum, articles, agreement or resolution shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.

 

 

SECTION 7. INCORPORATION OF COMPANY

[Effective from 1st April, 2014 , sub-section (7) except clause (c) & (d) effective from 1st June, 2016, clause (c) & (d) of sub-section (7) effective from 15th December, 2016 ]

(1) There shall be filed with the Registrar within whose jurisdiction the registered office of a company is proposed to be situated, the following documents and information for registration, namely:—

(a) the memorandum and articles of the company duly signed by all the subscribers to the memorandum in such manner as may be prescribed;

(b) a declaration in the prescribed form by an advocate, a chartered accountant, cost accountant or company secretary in practice, who is engaged in the formation of the company, and by a person named in the articles as a director, manager or secretary of the company, that all the requirements of this Act and the rules made thereunder in respect of registration and matters precedent or incidental thereto have been complied with;

(c) [19] [declaration]  from each of the subscribers to the memorandum and from persons named as the first directors, if any, in the articles that he is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief;

(d) the address for correspondence till its registered office is established;

(e) the particulars of name, including surname or family name, residential address, nationality and such other particulars of every subscriber to the memorandum along with proof of identity, as may be prescribed, and in the case of a subscriber being a body corporate, such particulars as may be prescribed;

(f) the particulars of the persons mentioned in the articles as the first directors of the company, their names, including surnames or family names, the Director Identification Number, residential address, nationality and such other particulars including proof of identity as may be prescribed; and

(g) the particulars of the interests of the persons mentioned in the articles as the first directors of the company in other firms or bodies corporate along with their consent to act as directors of the company in such form and manner as may be prescribed.

(2) The Registrar on the basis of documents and information filed under sub-section (1) shall register all the documents and information referred to in that sub-section in the register and issue a certificate of incorporation in the prescribed form to the effect that the proposed company is incorporated under this Act.

(3) On and from the date mentioned in the certificate of incorporation issued under sub-section (2), the Registrar shall allot to the company a corporate identity number, which shall be a distinct identity for the company and which shall also be included in the certificate.

(4) The company shall maintain and preserve at its registered office copies of all documents and information as originally filed under sub-section (1) till its dissolution under this Act.

(5) If any person furnishes any false or incorrect particulars of any information or suppresses any material information, of which he is aware in any of the documents filed with the Registrar in relation to the registration of a company, he shall be liable for action under section 447.

(6) Without prejudice to the provisions of sub-section (5) where, at any time after the incorporation of a company, it is proved that the company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company, or by any fraudulent action, the promoters, the persons named as the first directors of the company and the persons making declaration under clause (b) of sub-section (1) shall each be liable for action under section 447.

(7) Without prejudice to the provisions of sub-section (6), where a company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company or by any fraudulent action, the Tribunal may, on an application made to it, on being satisfied that the situation so warrants,—

(a) pass such orders, as it may think fit, for regulation of the management of the company including changes, if any, in its memorandum and articles, in public interest or in the interest of the company and its members and creditors; or

(b) direct that liability of the members shall be unlimited; or

(c) direct removal of the name of the company from the register of companies; or

(d) pass an order for the winding up of the company; or

(e) pass such other orders as it may deem fit:

Provided that before making any order under this sub-section,—

(i) the company shall be given a reasonable opportunity of being heard in the matter; and

(ii) the Tribunal shall take into consideration the transactions entered into by the company, including the obligations, if any, contracted or payment of any liability.

Applicable Rules

Companies (Incorporation) Rules, 2014

[Effective from 1st April, 2014]

[23] [Rule 9. Reservation of name or change of name.- An application for reservation of name shall be made through the web service available at www.mca.gov.in by using web service SPICe+ (Simplified Proforma for Incorporating company Electronically Plus: INC-32), and for change of name by using web service RUN (Reserve Unique Name) along with fee as provided in the companies (Registration Offices and Fees) Rules, 2014, which may either be approved or rejected, as the case may be, by the Registrar, Central Registration Centre after allowing resubmission of such web form within fifteen days for rectification of the defects, if anv, with effect from the 23^rd February, 2020.]

[13] [Rule 12. Application for incorporation of companies. An application for registration of a company shall be filed, with the Registrar within whose jurisdiction the registered office of the company is proposed to be situated, in [24] [“SPICe+ (Simplified Proforma for Incorporating company Electronically Plus: INC-32)] along with the fee as provided under the Companies (Registration offices and fees) Rules, 2014;

Provided that in case pursuing of any of the objects of a company requires registration or approval from sectoral regulators such as the Reserve Bank of India, the Securities and Exchange Board, registration or approval, as the case may be, from such regulator shall be obtained by the proposed company before pursuing such objects and a declaration in this behalf shall be submitted at the stage of incorporation of the company]

Rule 13. Signing of memorandum and articles.—The Memorandum and Articles of Association of the company shall be signed in the following manner, namely:—

(1) The memorandum and articles of association of the company shall be signed by each subscriber to the memorandum, who shall add his name, address, description and occupation, if any, in the presence of at least one witness who shall attest the signature and shall likewise sign and add his name, address, description and occupation, if any and the witness shall state that “I witness to subscriber/ subscriber(s), who has/ have subscribed and signed in my presence (date and place to be given); further I have verified his or their Identity Details (ID) for their identification and satisfied myself of his/her/their identification particulars as filled in”

(2) Where a subscriber to the memorandum is illiterate, he shall affix his thumb impression or mark which shall be described as such by the person, writing for him, who shall place the name of the subscriber against or below the mark and authenticate it by his own signature and he shall also write against the name of the subscriber, the number of shares taken by him.

[Explanation.- For the purposes of sub-rule (1) and sub-rule (2), the type written or printed particulars of the subscribers and witnesses shall be allowed as if it is written by the subscriber and witness respectively so long as the subscriber and the witness as the case may be appends his or her signature or thumb impression, as the case may
be.][8]

(3) Such person shall also read and explain the contents of the memorandum and articles of association to the subscriber and make an endorsement to that effect on the memorandum and articles of association.

(4) Where the subscriber to the memorandum is a body corporate, the memorandum and articles of association shall be signed by director, officer or employee of the body corporate duly authorized in this behalf by a resolution of the board of directors of the body corporate and where the subscriber is a Limited Liability Partnership, it shall be signed by a partner of the Limited Liability Partnership, duly authorized by a resolution approved by all the partners of the Limited Liability Partnership:

Provided that in either case, the person so authorized shall not, at the same time, be a subscriber to the memorandum and articles of Association.

(5) Where subscriber to the memorandum is a foreign national residing outside India—

(a) in a country in any part of the Commonwealth, his signatures and address on the memorandum and articles of association and proof of identity shall be notarized by a Notary (Public) in that part of the Commonwealth.

(b) in a country which is a party to the Hague Apostille Convention, 1961, his signatures and address on the memorandum and articles of association and proof of identity shall be notarized before the Notary (Public) of the country of his origin and be duly apostillised in accordance with the said Hague Convention.

(c) in a country outside the Commonwealth and which is not a party to the Hague Apostille Convention, 1961, his signatures and address on the memorandum and articles of association and proof of identity, shall be notarized before the Notary (Public) of such country and the certificate of the Notary (Public) shall be authenticated by a Diplomatic or Consular Officer empowered in this behalf under section 3 of the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948 (40 of 1948) or, where there is no such officer by any of the officials mentioned in section 6 of the Commissioners of Oaths Act, 1889 (52 and 53 Vic.C.10), or in any Act amending the same;

(d) visited in India and intended to incorporate a company, in such case the incorporation shall be allowed if, he/she is having a valid Business Visa.

Explanation.—For the purposes of this clause, it is hereby clarified that, in case of Person is of Indian Origin or Overseas Citizen of India, requirement of business Visa shall not be applicable.

Rule 14. Declaration by professionals.—For the purposes of clause (b) of sub-section (1) of section 7, the declaration by an advocate, a Chartered Accountant, Cost accountant or Company Secretary in practice shall be in Form No. INC.8.

Explanation (i) “chartered accountant” means a chartered accountant as defined in clause (b) of sub-section 1 of section 2 of the Chartered Accountants Act, 1949 (ii) “Cost Accountant” means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 and (iii) “company secretary” means a “company secretary” or “secretary” means as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980.

[20] [Rule 15. Declaration from Subscribers and First Directors.- For the purposes of clause (c) of sub-section (1) of section 7, the declaration shall be submitted by each of the subscribers to the memorandum and each of the first directors named in the articles in Form No.INC-9]

Rule 16. Particulars of every subscriber to be filed with the Registrar at the time of incorporation.—(1) The following particulars of every subscriber to the memorandum shall be filed with the Registrar—

(a) Name (including surname or family name) and recent Photograph affixed and scan with MOA and AOA:

(b) Father’s/Mother’s/name:

(c) Nationality:

(d) Date of Birth:

(e) Place of Birth (District and State):

(f) Educational qualification:

(g) Occupation:

(h) Income-tax permanent account number:

(i) Permanent residential address and also Present address (Time since residing at present address and address of previous residence address(es) if stay of present address is less than one year) similarly the office/ business addresses:

(j) Email id of Subscriber;

(k) Phone No. of Subscriber;

(l) Fax no. of Subscriber (optional).

Explanation.—information related to (i) to (l) shall be of the individual subscriber and not of the professional engaged in the incorporation of the company;

(m) Proof of Identity:

-For Indian Nationals:

-PAN Card (mandatory) and any one of the following

-Voter’s identity card

-Passport copy

-Driving License copy

-Unique Identification Number (UIN)

-For Foreign nationals and Non Resident Indians

-Passport

[Explanation.- In case the subscriber is already holding a valid DIN, and the particulars provided therein have been updated as on the date of application, and the declaration to this effect is given in the application, the proof of identity and residence need not be attached.][9]

(n) Residential proof such as Bank Statement, Electricity Bill, Telephone / Mobile Bill:

Provided that Bank statement Electricity bill, Telephone or Mobile bill shall not be more than two months old;

(o) Proof of nationality in case the subscriber is a foreign national;

(p) If the subscriber is already a director or promoter of a company(s), the particulars relating to-

(i) Name of the company;

(ii) Corporate Identity Number;

(iii) Whether interested as a director or promoter;

(q) [***] [10]

(2) Where the subscriber to the memorandum is a body corporate, then the following particulars shall be filed with the Registrar—

(a) Corporate Identity Number of the Company or Registration number of the body corporate, if any

(b) GLN, if any;

(c) the name of the body corporate

(d) the registered office address or principal place of business;

(e) E-mail Id;

(f) if the body corporate is a company, certified true copy of the board resolution specifying inter alia the authorization to subscribe to the memorandum of association of the proposed company and to make investment in the proposed company, the number of shares proposed to be subscribed by the body corporate, and the name, address and designation of the person authorized to subscribe to the Memorandum;

(g) if the body corporate is a limited liability partnership [***][11], certified true copy of the resolution agreed to by all the partners specifying inter alia the authorization to subscribe to the memorandum of association of the proposed company and to make investment in the proposed company, the number of shares proposed to be subscribed in the body corporate, and the name of the partner authorized to subscribe to the Memorandum;

(h) the particulars as specified above for subscribers in terms of clause (e) of sub-section (1) of section 7 for the person subscribing for body corporate;

(i) in case of foreign bodies corporate, the details relating to—

(i) the copy of certificate of incorporation of the foreign body corporate; and

(ii) the registered office address.

Rule 17. Particulars of first directors of the company and their consent to act as such.—The particulars of each person mentioned in the articles as first director of the company and his interest in other firms or bodies corporate along with his consent to act as director of the company shall be filed in Form No.DIR.12 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014.

Rule 18. Certificate of incorporation.— [The Certificate of Incorporation shall be issued by the Registrar in Form No.INC-11 and the Certificate of Incorporation shall mention permanent account number of the company where if it is issued by the Income-tax Department.][15]

[***][14]

[Rule 38. Simplified Proforma for Incorporating Company Electronically [25] [Plus (SPICE+)”] – (l) The application for incorporation of a company under this Rule shall be in [24] [“SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32)”] alongwith e-Memorandum of Association (e-MOA) in Form No. IN-33 and e-Articles of Association (e-AOA) in Form no. INC-34.

Provided that in case of incorporation of a company falling under section 8 of the Act, [24] [“SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32)”] shall be filed along with FORM No. INC-13 (Memorandum of Association) and FORM No. INC-31 (Articles of Association) as attachments.

[17] [Provided further that in case of incorporation of a company having more than seven subscribers or where any of the subscriber to the MOA/AOA is signing at a place outside India, MOA/AOA shall be filed with [24] [“SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32)”] in the respective formats as specified in Table A to J in Schedule I without filing form INC-33 and INC-34]

(2) For the purpose of sub-rule(1), the application for allotment of Director Identification Number upto three Directors, reservation of a name, incorporation of company and appointment of Directors of the proposed for One Person Company, private company, public company and a company falling under Section 8 of the Act, shall be filed in [24] [“SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32)”], with the Registrar, within whose jurisdiction the registered office of the company is proposed to be situated along with the fee of rupees five hundred in addition to the registration fee as specified in the Companies (Registration of Offices and Fees) Rules, 2014.

Provided that where an applicant has applied for reservation of a name under Rule 9 and which has been approved therein, he may fill the reserved name as proposed name of the company.

[18] [Provided further that in case of companies incorporated, with effect from the 26th day of January, 2018, with a nominal capital of less than or [21] [equal to rupees fifteen lakhs] or in respect of companies not having a share capital whose number of members as stated in the articles of association does not exceed twenty, fee on INC-32 (SPICe) shall not be applicable.]

(3) For the purpose of fling SPICe Form, the particulars of maximum of three directors shall be allowed to be filled in [24] [“SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32)”] and allotment of Director Identification Number of maximum of three proposed directors shall be permitted in [24] [“SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32)”] in case of proposed directors not having approved Director Identification Number.

(4) The promoter or applicant of the proposed company shall propose only one name in [24] [“SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32)”].

(5) The promoter or applicant of the proposed company shall prepare Memorandum of Association (e-MOA) in Form No. INC.33 and Articles of Association (e-AoA) in Form No. INC-34, in accordance with Rule 13.

Provided that the subscribers and witness or witnesses shall affix their digital signatures to the e-MOA and e-AOA.

(6) For incorporation using application as provided in this rule, provisions of the sub- clause (i) of sub-section (5) of section 4 of the Act, rule 9 and clause (a) of sub-rule (1) of rule 16 to the extent of affixing recent photograph shall not apply.

(7) A Company using the provisions of this rule may furnish verification of its registered office under sub-section (2) of section 12 of the Act by filing [24] [“SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32)”] in which case the company shall attach along with such Form No. INC-32 (SPICe), any of the documents referred to in sub-rule (2) of rule 25.

(8) Form no. INC-22 shall not be required to be filed in case the proposed company maintains its registered office at the given correspondence address.

(9) (a) Where the Registrar, on examining [24] [“SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32)”], finds that it is necessary to call for further information or find such application or document to be defective or incomplete in any respect, he shall give intimation to the applicant to remove the defects and re-submit the e-form within fifteen days from the date of such intimation given by the Registrar.

(b) After the resubmission of the document, if the registrar still finds that the document is defective or incomplete in any respect, he shall give one more opportunity of fifteen days to remove such defects or deficiencies.

Provided that the total period for re-submission of documents shall not exceed thirty days.

(10) The Certificate of Incorporation of company shall be issued by the Registrar in Form No. INC-11”.][12]

[22] [Rule 38A. Application for registration of the Goods and Service Tax Identification Number (GSTIN), Employees’ State Insurance Corporation (ESIC) registration and Employees’ Provident Fund Organisation(EPFO) registration [26] [and Profession Tax Registration and Opening of Bank Account]

The application for incorporation of a company under rule 38 shall be accompanied by e-form [27][AGILE-PRO-S] (lNC-35) containing an application for registration of the following numbers, namely:

–

(a) GSTIN with effect from 31st March, 2019

(b) EPFO with effect from 8th April, 2019

(c) ESIC with effect from 15th April, 2019]

[28](d)      Profession Tax Registration with effect from the 23rd February, 2020

(e)   Opening Bank Account with effect from the 23rd February, 2020

(f)   Shops and Establishment Registration.]

 

 

Applicable Circulars

Power of ROCs to obtain Declaration/Affidavits from Subscribers/First Directors at the time of Incorporation

General Circular No. 11/2013 dated 29^th May, 2013

 

The matter of protection of interest of investors including depositors is very important to ensure healthy corporate capital market environment in the country. The recent instances of raising of monies by companies in a manner which is opaque/convoluted, non- accountable and which does not protect interests of depositors have been taken note of by the Ministry seriously.

Keeping in view the need to protect the interest of investors and ensure that companies raise monies in accordance with the provisions of Companies Act/Deposit Rules, it is clarified that in exercise of the powers under the Companies Act, the Registrar of Companies may obtain declaration/affidavits from subscribers/first directors first at the time of incorporation and from the directors, subsequently whenever company changes its objects, to the effect that company/directors shall not accept deposits unless compliance with the applicable provisions of Companies Act, 1956, RBI Act, 1934 and SEBI Act, 1992 and rules/directions/regulations made thereunder are duly complies and filed with the concerned authorities.

Relaxation to Foreign Nationals while filing Incorporation Forms from mandatory requirement of PAN

Circular No. 12/2014, dated 22-5-2014

Attention of Ministry has been drawn to difficulties being faced by Foreign Nationals while filing Incorporation form (lNC-7) due to mandatory requirement of submission of PAN details of intending Directors at the time of filing the application for incorporation.

It is hereby clarified that PAN details are mandatory only for those foreign nationals who are required to possess “PAN” in terms of provisions of the Income Tax Act, 1961 on the date of application for incorporation. Where the intending Director who is a Foreign National is not required to compulsorily possess PAN, it will be sufficient for such a person to furnish his/ her passport number, alongwith undertaking stating that provisions of mandatory applicability of PAN are not applicable to the person concerned. The form of Declaration is required to be made in the proforma enclosed. 

Applicability of PAN requirement for Foreign Nationals

Circular No. 16/2014, dated 10-6-2014

In continuation of the General Circular No. 12/2014 dated 22.05.2014 regards the above subject, it is clarified that the provisions of the said Circular are applicable to a Foreign National who is a subscriber/ promoter at the time of incorporation of the Company.

2. In case the said subscriber/promoter does not possess Permanent Account Number (PAN), he/she shall furnish a declaration in the prescribed proforma, as an attachment to the Incorporation Form (INC.7).
3. Further, it is clarified that, in case of a Resident Director of the proposed company he/she shall be required to submit PAN details at the time of incorporation.

Applicable Notifications

Constitution of Central Registration Centre to process forms pertaining to registration of companies

Notification No. 218(E) dated 22^nd January, 2016

S.O. 218(E).- In exercise of the powers conferred by sub-sections (1) and (2) of section 396 of the Companies Act, 2013 (18 of 2013) (herein after referred to as the Act), the Central Government hereby establishes a Central Registration Centre (CRC) having territorial jurisdiction all over India, for discharging or carrying out the function of processing and disposal of applications for reservation of names under the provisions of the said Act.

2. The CRC shall function under the administrative control of Registrar of Companies, Delhi (ROC Delhi), who shall act as the Registrar of the CRC until a separate Registrar is appointed to the CRC. The CRC shall process applications for reservation of name i.e., e-Form No. INC-1 filed along with the prescribed fee as provided in the Companies (Registration of Offices and Fees) Rules, 2014.

3. Processing and approval of names or names proposed in e-Form No.INC-29  shall continue to be done by the respective Registrar of Companies having jurisdiction over incorporation of companies under the Companies Act, 2013 as per the provisions of the Act and the rules made thereunder.

4. The CRC shall be located at Indian Institute of Corporate Affairs (IICA), Plot No. 6, 7, 8, Sector 5, IMT Manesar, District Gurgaon (Haryana), Pin Code- 122050.

5. This notification shall come into force from 26^thJanuary, 2016.

 

Jurisdiction of Central Registration Centre to process forms pertaining to registration of companies

Notification No. S.O. 1211(E) dated 23^rd March 2016

In exercise of the powers conferred by sub-sections (1) and (2) of Section 396 of the Companies Act, 2013 (18 of 2013) (hereinafter referred to as the Act), the Central Registration Centre (herein after referred to CRC) established vide notification number. S.O. 218(E) dated 22^ND  January 2016 shall also exercise functional jurisdiction of processing and disposal of e-forms and all related matters pertaining to registration of companies under section 7,8 and 366 of the Companies Act, 2013 having territorial jurisdiction all over India.

2. The CRC shall process forms pertaining to registration of companies i.e. e-forms(INC-2, INC-7 and INC-29 along  with linked forms INC-22, DIR-12 and URC-1 and any other forms as may be notified by the Central Government) filed along with the prescribed fee as provided in the Companies (Registration of Offices and Fees) Rules, 2014.
3. The jurisdiction, processing and approval of name or names proposed in e-Form number INC-29 hitherto exercised by the respective Registrar of companies having jurisdiction over incorporation of companies under the Companies Act, 2013 and the rules made thereunder shall forthwith be exercised by Registrar, CRC.
4. The jurisdictional Registrar of companies, other than Registrar CRC, within whose jurisdiction the registered office of the company is situated shall continue to have jurisdiction over the companies incorporated by the Registrar, CRC under the Companies Act, 2013 for all other provisions of the Act and the rules made thereunder, which may be relevant after incorporation.
5. This notification shall come into force from28^thMarch, 2016

FAQs on SPICe

1. How many names can be applied for in SPICe (INC-32)?

Only one. However, for reservation of a name prior to filing SPICe (INC-32), you may use INC-1 (in which up to 6 names can be proposed) and then input the SRN of approved INC-1 into SPICe.

2. What is the mode of grievance redressal?

In case of technical problems i.e., form upload, pre-scrutiny errors, DSC related, payment related queries, please raise a ticket on www.mca.gov.in/myservices….. and await a resolution. You may also call up Corporate Seva Kendra at 01244832500 after 48 hours if ticket is not resolved.In case of resubmission / rejection remarks, please contact 01244832500 and select option 1 for CRC. For escalation you may send a mail to crc.escalation@mca.gov.in

3. Is INC-22 still required to be filed with SPICe?

It is not required to be filed with SPICe (INC-32) if a company is registered with address for correspondence only (in INC-32). INC-22, is required to be filed within 30 days of its incorporation, for intimating the registered office address.

4. What is the process for obtaining approved e-MOA (INC-33) and e- AOA (INC-34)?

The users may obtain approved e-MOA (INC-33) and e- AOA (INC-34) through certified copies facility available on MCA.

5. Is, PAN and AADHAAR mandatory?

Yes. The companies (incorporation) rules notified has liberalized many requirements in respect of Proof of Identity and Proof of residence in respect of Subscribers and Directors. The Companies (Incorporation) third Amendment Rules dated 27th July 2016 has relaxed the mandatory attachment of proof of identity and residence in respect of a subscriber having a valid DIN.

6. Which attachments are removed in SPICe form?

Attachment no. 7 (Proof of relation) and 9 (NOC from any other person) are deleted.

7. Is it mandatory to use eMoA and eAoA? Can physical copies of MoA/AoA be signed and attached with SPICe forms?

Yes. It is mandatory in all cases of Indian subscribers, foreign individual subscribers (having a valid DIN) and where the number of such subscribers is not more than seven. No physical copies of MoA/AoA are required to be attached.

8. Can SPICe be used for incorporation of producer companies?

No. For incorporation of producer companies, unregistered companies and companies being formed with more than 7 subscribers, new version of INC-7 shall be used.

9. If a body corporate is one of the subscribers/promoters, can DSC of anauthorised Director be affixed?

Yes.

• Can, foreign subscribers file SPICe (INC-32) or are they required to file in INC-7?

Yes, foreign subscribers having valid DIN can file SPICe(INC-32) with eMoA(INC-33) and eAoA(INC-34) as linked forms. However, in case of foreign individual subscribers without a valid DIN, form INC-7 shall be used with physical MoA and AoA.

11. In SPICe AoA (INC-34) if additional Article is required, how to enter the same?

SPICe AoA (INC-34) has facility for adding, modifying, deleting and entrenching Articles.

12. Can we enter the conditions ofprivatecompany as required under Section 5 of the Companies, Act, 2013 in SPICe AoA(INC-34)?

Yes, SPICe AoA (INC-34) has facility for adding, modifying, deleting and entrenching Articles.

13. Can we enter the names of first directors as required under Companies Act, 2013, in SPICe AoA (INC-34)?

Yes, SPICe AoA has facility for adding, modifying, deleting and entrenching Articles.

14. What if there are more than seven subscribers to MoA and AoA?

INC-7 shall be used.

15. Incaseof subscriber to the memorandum is a foreign national residing outside India, his signatures and address etc. shall be witnessed by a Notary Public/Embassy/Consulate offices of Embassies as per the Rule 13 of the Companies (Incorporation) Rules, 2014. In such cases, how the DSC of such a witness be affixed?

In such cases, SPICe (INC-32) shall be filed with manually signed and duly attested MoA and AoA.

16. Is DSC mandatory for Subscribers?

Yes, DSC is mandatory for all subscribers and witnesses in eMoA(INC-33) and eAoA(INC-34). eMoA and eAoA shall be used only where the maximum number of subscribers do not exceed 7. In case the number of subscribers are more than 7, INC-7 shall be used and DSC is not mandatory in such cases.

17. Can we use SPICe form now for resubmitting incorporation applications filed in form INC-2 /7 earlier?

No. SPICe cannot be used in such cases. However, form INC-2/7 shall be available for resubmission cases only for a period of 15 days from the date the form was sent for resubmission by CRC.

• Whether subscribers’ photo is required in SPICe forms?

No. Subscribers’ photo is not required.

19. How many resubmissions are permitted for SPICe forms?

Two.

20. Can OPCs be incorporated using SPICe forms?

Yes. Form INC-2 will no longer be available for filing.

21. Can LLPs be incorporated using SPICe forms?

No.

22. What is the word limit for writing objects in eMoA?

For main Objects (Field 3(a)), character limit is 20,000 and for furtherance of objects (Field 3(b)), it is 1,00,000 characters.

23. Please clarify on attestation requirements in respect of foreign companies wanting to form a subsidiary in India?

Attestation requirements will be as per Rule 13 of the Companies (Incorporation) Rules, 2014.

24. Is SPICe eMoA (INC-33) and SPICe eAoA (INC-34) to be uploaded separately?

SPICe eMoA and eAoA have to be uploaded as ‘Linked Forms’ to SPICe (INC-32).

25. What if the subscribers to eMoA and eAOA are at different places as only one witness is provided?

eMoA and eAOA would be witnessed after all subscribers have signed as is happening presently.

26. Is refund applicable if SPICe forms get rejected?

Yes.

27. What is the maximum upload size of SPICe forms?

6 MB.

28. Can NIDHI Company be incorporated using SPICe forms?

Yes.

29. Is filing of SPICe forms optional or mandatory for the incorporation of companies?

Presently it is optional. However in the next few weeks, SPICe form would be the only form available for incorporation of any company except for a Producer Public Company or a Part I Company or in cases where there are more than seven subscribers.

 

 

[1] Inserted by the Companies (Incorporation) Second Amendment Rules, 2015 vide Notification No. F No. 1/13/2013-CL-V dated 29th May, 2015

[2] Substituted by the Companies (Incorporation) Amendment Rules 2015 vide vide Notification F No. 01/13/2013 CL-V (Part-I), dated 1st May 2015. Prior to substitution, it read as under:

“the specimen signature and latest photograph duly verified by the banker or notary shall be in the prescribed Form No. INC.10”

[3] Form INC.10 substituted by the Companies (Incorporation) Amendment Rules 2015 vide Notification F No. 01/13/2013 CL-V (Part-I), dated 1st May 2015.

[4] Form INC.11 substituted by the Companies (Incorporation) Amendment Rules 2015 vide vide Notification F No. 01/13/2013 CL-V (Part-I), dated 1st May 2015

[5] Inserted by the Companies (Incorporation) Amendment Rules, 2016 vide Notification No. G.S.R 99(E) dated 22nd Jan, 2016

[6] Substituted by the Companies (Incorporation) Amendment Rules, 2016 vide Notification No. G.S.R 99(E) dated 22nd Jan, 2016. Prior to substitution it read as under:

“(c) In case, the Registrar is of the opinion that the document is defective or incomplete in any respect after giving such two opportunities, the e-form INC.29 of the proposed company shall be rejected.”

[9] Inserted by the Companies (Incorporation) Third Amendment Rules 2016 vide Notification 743(E) dated 27th July 2016

[10]Omitted by the Companies (Incorporation) Third Amendment Rules 2016 vide Notification 743(E) dated 27th July 2016, prior to omission it read as under:

“the promoter or first director shall self attest his signature and latest photograph in [Form No. INC 10”

[11] Omitted words ” or partnership firm” by the Companies (Incorporation) Third Amendment Rules 2016 vide Notification 743(E) dated 27th July 2016.

[12] Substituted by the Companies (Incorporation) Fifth amendment Rules 2016 vide Notification no. F. No. 1/13/2013 CL -V dated 29th December 2016 effective from 1 st January 2017, prior to substitution it read as under:-

“Rule 38. Simplified Proforma for incorporating Company Electronically (SPICE)

(1) The simplified integrated process for incorporation of a company in Form No. INC-32  alongwith e-Memorandum of Association in Form No. INC-33 and e-Articles of Association in Form No. INC-34.

(2) The provisions of sub-rule (2) to sub-rule (13) of rule 36 shall apply mutatis mutandis for incorporation under this rule.

Provided that for the purposes of references to form numbers INC-29, INC-30 and INC-31 in rule 36 with Form No. INC-32, Form no.  INC-33 and Form No. INC-34 shall be substituted respectively.”

[13]  Substituted by Companies (Incorporation) Amendment Rules, 2018 vide G.S.R. 49(E) dated 20th January, 2018 effective from 26th January, 2018. Prior to substitution it read as under:

“Rule 12. Application for incorporation of companies.—An application shall be filed, with the Registrar within whose jurisdiction the registered office of the company is proposed to be situated, in [Form No. INC.7 (Part I Company and Company with more than seven subscribers) and Form no. INC.32 (SPICe)] along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 for registration of a company.

Provided that in case pursuing of any of the objects of the company requires registration or approval from sectoral regulators such as Reserve Bank of India, Securities and Exchange Board, registration or approval, as the case may be, from such regulator shall be obtained by the company before pursuing such objects and declaration in this behalf shall be submitted at the stage of incorporation of the company.”

[14] Omitted “Rule 36 on Integrated Process for Incorporation” by the Companies (Incorporation) Fifth amendment Rules 2016 vide Notification no. F. No. 1/13/2013 CL -V dated 29th December 2016 effective from 1 st January 2017

[15] Substituted by the Companies (Incorporation) Amendment Rules, 2017 vide Notification no. G.S.R. 70(E) dated 25^th January 2017 effective from 30^th January 2017, prior to substitution it read as under:-

“The Certificate of Incorporation shall be issued by the Registrar in Form No. INC.11.”

[16] Substituted by Companies (Incorporation) Second Amendment Rules, 2018 vide Notification No. F.No. 1/13/2013 CL-V, part-I, Vol. II dated 23^rd March, 2018. Prior to substitution it read as under:

“Rule 9. Reservation of name.- An application for reservation of name shall be made through the web service available at www.mca.gov.in by using RUN (Reserve Unique Name) along with fee as provided in the Companies (Registration offices and fees) Rules, 2014, which may either be approved or rejected, as the case may be, by the Registrar, Central Registration Centre”

[17] Inserted by Companies (Incorporation) Amendment Rules, 2018 vide G.S.R. 49(E) dated 20th January, 2018 effective from 26th January, 2018.

[18] Inserted by Companies (Incorporation) Amendment Rules, 2018 vide G.S.R. 49(E) dated 20th January, 2018 effective from 26th January, 2018.

[19] Substituted for the words “an affidavit” by the Companies (Amendment)Act, 2017 vide Notification No. File No. 1/1/2018- CL.I dated 27^th July, 2018.

[20] Substituted by the Companies (Incorporation) Third Amendment Rules, 2018 vide Notification No. F. No. 1/13/2013-CL-V, part-I, Vol.II dated 27^th July, 2018.. Prior to the substitution it read as under:

“ Rule 15. Affidavit from subscribers and first directors.—For the purposes of clause (c) of sub-section (1) of section 7, the affidavit shall be submitted by each of the subscribers to the memorandum and each of the first directors named in the articles in Form No. INC.9.”

[21] Substituted for the words “equal to rupees ten lakhs” by the Companies (Incorporation) Second Amendment Rules, 2019 dated 6th March, 2019 effective from 18th March, 2019.

[22]Inserted by the Companies (Incorporation) Third Amendment Rules, 2019 vide Notification No. G.S.R. 275(E)dated 29th March, 2019.

[23] Substituted by Companies (Incorporation) Amendment Rules, 2020 vide Notification No. G.S.R 128(E) dated 18^th February, 2020 effective from 23^rd February, 2020. Prior to substitution, it read as under:

[Rule 9. Reservation of name.- An application for reservation of name shall be made through the web service available at www.mca.gov.in by using RUN (Reserve Unique Name) along with fee as provided in the Companies (Registration offices and fees) Rules, 2014, which may either be approved or rejected, as the case may be, by the Registrar, Central Registration Centre after allowing re-submission of such application within fifteen days for rectification of the defects, if any.]

[24] Substituted for the words “Form No INC-32 (SPICe)” Companies (Incorporation) Amendment Rules, 2020 vide Notification No. G.S.R 128(E) dated 18^th February, 2020 effective from 23^rd February, 2020.

[25] Inserted by the Companies (Incorporation) Amendment Rules, 2020 vide Notification No. G.S.R 128(E) dated 18^th February, 2020 effective from 23^rd February, 2020.

[26] Inserted by the Companies (Incorporation) Amendment Rules, 2020 vide Notification No. G.S.R 128(E) dated 18^th February, 2020 effective from 23^rd February, 2020.

[27] Substituted for the word “AGILE-PRO” by Companies (Incorporation) Fourth Amendment Rules, 2021 vide Notification No. G.S.R. 392(E) dated 7th June, 2021

[28] Substituted by the Companies (Incorporation) Fourth Amendment Rules, 2021 vide Notification No. G.S.R. 392(E) dated 7th June, 2021. Prior to substitution it read as under:—

“[(c)   Profession Tax Registration with effect from the 23rd February, 2020

(d)   Opening of Bank Account with effect from 23rd February, 2020]”

SECTION 8. FORMATION OF COMPANIES WITH CHARITABLE OBJECTS, ETC.

[Effective from 1st April, 2014 except sub-section (9), sub-section (9) effective from 15th December, 2016 ]

(1) Where it is proved to the satisfaction of the [Central Government][1] that a person or an association of persons proposed to be registered under this Act as a limited company—

(a) has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;

(b) intends to apply its profits, if any, or other income in promoting its objects; and

(c) intends to prohibit the payment of any dividend to its members,

the [Central Government][1] may, by licence issued in such manner as may be prescribed, and on such conditions as it deems fit, allow that person or association of persons to be registered as a limited company under this section without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited”, and thereupon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section.

(2) The company registered under this section shall enjoy all the privileges and be subject to all the obligations of limited companies.

(3) A firm may be a member of the company registered under this section.

(4) (i) A company registered under this section shall not alter the provisions of its memorandum or articles except with the previous approval of the [Central Government][2].

(ii) A company registered under this section may convert itself into company of any other kind only after complying with such conditions as may be prescribed.

(5) Where it is proved to the satisfaction of the [Central Government][1] that a limited company registered under this Act or under any previous company law has been formed with any of the objects specified in clause (a) of sub-section (1) and with the restrictions and prohibitions as mentioned respectively in clauses (b) and (c) of that sub-section, it may, by licence, allow the company to be registered under this section subject to such conditions as the [Central Government][1] deems fit and to change its name by omitting the word “Limited”, or as the case may be, the words “Private Limited” from its name and thereupon the Registrar shall, on application, in the prescribed form, register such company under this section and all the provisions of this section shall apply to that company.

(6) [The Central Government][3] may, by order, revoke the licence granted to a company registered under this section if the company contravenes any of the requirements of this section or any of the conditions subject to which a licence is issued or the affairs of the company are conducted fraudulently or in a manner violative of the objects of the company or prejudicial to public interest, and without prejudice to any other action against the company under this Act, direct the company to convert its status and change its name to add the word “Limited” or the words “Private Limited”, as the case may be, to its name and thereupon the Registrar shall, without prejudice to any action that may be taken under sub-section (7), on application, in the prescribed form, register the company accordingly:

Provided that no such order shall be made unless the company is given a reasonable opportunity of being heard:

Provided further that a copy of every such order shall be given to the Registrar.

(7) Where a licence is revoked under sub-section (6), the Central Government may, by order, if it is satisfied that it is essential in the public interest, direct that the company be wound up under this Act or amalgamated with another company registered under this section:

Provided that no such order shall be made unless the company is given a reasonable opportunity of being heard.

(8) Where a licence is revoked under sub-section (6) and where the Central Government is satisfied that it is essential in the public interest that the company registered under this section should be amalgamated with another company registered under this section and having similar objects, then, notwithstanding anything to the contrary contained in this Act, the Central Government may, by order, provide for such amalgamation to form a single company with such constitution, properties, powers, rights, interest, authorities and privileges and with such liabilities, duties and obligations as may be specified in the order.

(9) If on the winding up or dissolution of a company registered under this section, there remains, after the satisfaction of its debts and liabilities, any asset, they may be transferred to another company registered under this section and having similar objects, subject to such conditions as the Tribunal may impose, or may be sold and proceeds thereof credited to[5][Insolvency and Bankruptcy Fund formed under section 224 of the Insolvency and Bankruptcy Code, 2016 ].

(10) A company registered under this section shall amalgamate only with another company registered under this section and having similar objects.

(11) If a company makes any default in complying with any of the requirements laid down in this section, the company shall, without prejudice to any other action under the provisions of this section, be punishable with fine which shall not be less than ten lakh rupees but which may extend to one crore rupees and the directors and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than twenty-five thousand rupees but which may extend to twenty-five lakh rupees, or with both:

Provided that when it is proved that the affairs of the company were conducted fraudulently, every officer in default shall be liable for action under section 447.

Applicable Rules

Companies (Incorporation) Rules, 2014

[Effective from 1st April, 2014]

Rule 19. License under section 8 for new companies with charitable objects etc.— (1) A person or an association of persons (hereinafter referred to in this rule as the proposed company”), desirous of incorporating a company with limited liability under sub-section (1) of section 8 without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited”, shall make an application in [6] [Form INC-32 (SPICe)] along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 to the Registrar for a license under sub-section (1) of section 8.

(2) The memorandum of association of the proposed company shall be in Form No. INC.13.

(3) The application under sub-rule (1) shall be accompanied by the following documents, namely:—

(a)  [7][the memorandum] and articles of association of the proposed company;

(b) the declaration in Form No. INC.14 by an Advocate, a Chartered Accountant, Cost Accountant or Company Secretary in practice, that [7][the memorandum] and articles of association have been drawn up in conformity with the provisions of section 8 and rules made thereunder and that all the requirements of the Act and the rules made thereunder relating to registration of the company under section 8 and matters incidental or supplemental thereto have been complied with;

(c) an estimate of the future annual income and expenditure of the company for next three years, specifying the sources of the income and the objects of the expenditure;

(d) the declaration by each of the persons making the application in Form No. INC.15.

Rule 20. License for existing companies.—(1) A limited company registered under this Act or under any previous company law, with any of the objects specified in clause (a) of sub-section (1) of section 8 and the restrictions and prohibitions as mentioned respectively in clause (b) and (c) of that sub-section, and which is desirous of being registered under section 8, without the addition to its name of the word “Limited” or as the case may be, the words “Private Limited”, shall make an application in Form No. INC.12 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 to the Registrar for a licence under sub-section (5) of section 8.

(2) The application under sub-rule (1), shall be accompanied by the following documents, namely:—

(a) the memorandum and articles of association of the company;

(b) the declaration as given in Form No. INC.14 by an Advocate, a Chartered accountant, Cost Accountant or Company Secretary in Practice, that the memorandum and articles of association have been drawn up in conformity with the provisions of section 8 and rules made thereunder and that all the requirements of the Act and the rules made thereunder relating to registration of the company under section 8 and matters incidental or supplemental thereto have been complied with;

(c) For each of the two financial years immediately preceding the date of the application, or when the company has functioned only for one financial year, for such year (i) the financial statements, (ii) the Board’s reports, and (iii) the audit reports, relating to existing companies

(d) a statement showing in detail the assets (with the values thereof), and the liabilities of the company, as on the date of the application or within thirty days preceding that date;

(e) an estimate of the future annual income and expenditure of the company for next three years, specifying the sources of the income and the objects of the expenditure;

(f) the certified copy of the resolutions passed in general/board meetings approving registration of the company under section 8; and

(g) a declaration by each of the persons making the application in Form No. INC.15.

[(2)][4] The company shall, within a week from the date of making the application to the Registrar, publish a notice at his own expense, and a copy of the notice, as published, shall be sent forthwith to the Registrar and the said notice shall be in Form No. INC.26 and shall be published—

(a) at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the proposed company is to be situated or is situated, and circulating in that district, and at least once in English language in an English newspaper circulating in that district; and

(b) on the websites as may be notified by the Central Government.

(4) The Registrar may require the applicant to furnish the approval or concurrence of any appropriate authority, regulatory body, department or Ministry of the Central Government or the State Government(s).

(5) The Registrar shall, after considering the objections, if any, received by it within thirty days from the date of publication of notice, and after consulting any authority, regulatory body, Department or Ministry of the Central Government or the State Government(s), as it may, in its discretion, decide whether the license should or should not be granted.

(6) The licence shall be in Form No. INC.16. or Form No. INC.17, as the case may be, and the Registrar shall have power to include in the licence such other conditions as may be deemed necessary by him.

(7) The Registrar may direct the company to insert in its memorandum, or in its articles, or partly in one and partly in the other, such conditions of the license as may be specified by the Registrar in this behalf.

Rule 21. Conditions for conversion of a company registered under Section 8 into a company of any other kind.—(1) A company registered under section 8 which intends to convert itself into a company of any other kind shall pass a special resolution at a general meeting for approving such conversion.

(2) The explanatory statement annexed to the notice convening the general meeting shall set out in detail the reasons for opting for such conversion including the following, namely:—

(a) the date of incorporation of the company;

(b) the principal objects of the company as set out in the memorandum of association;

(c) the reasons as to why the activities for achieving the objects of the company cannot be carried on in the current structure i.e. as a section 8 company;

(d) if the principal or main objects of the company are proposed to be altered, what would be the altered objects and the reasons for the alteration;

(e) what are the privileges or concessions currently enjoyed by the company, such as tax exemptions, approvals for receiving donations or contributions including foreign contributions, land and other immovable properties, if any, that were acquired by the company at concessional rates or prices or gratuitously and, if so, the market prices prevalent at the time of acquisition and the price that was paid by the company, details of any donations or bequests received by the company with conditions attached to their utilization etc.

(f) details of impact of the proposed conversion on the members of the company including details of any benefits that may accrue to the members as a result of the conversion.

(2) A certified true copy of the special resolution along with a copy of the Notice convening the meeting including the explanatory statement shall be filed with the Registrar in Form No. MGT. 14 along with the fee.

(3) The company shall file an application in Form No. INC.18 with the Regional Director with the fee along with a certified true copy of the special resolution and a copy of the Notice convening the meeting including the explanatory statement for approval for converting itself into a company of any other kind and the company shall also attach the proof of serving of the notice served to all the authorities mentioned in sub-rule (2) of rule 22.

(4) A copy of the application with annexures as filed with the Regional Director shall also be filed with the Registrar.

Rule 22. Other conditions to be complied with by companies registered under section 8 seeking conversion into any other kind.—(1) The company shall, within a week from the date of submitting the application to the Regional Director, publish a notice at its own expense, and a copy of the notice, as published, shall be sent forthwith to the Regional Director and the said notice shall be in Form No. INC.19 and shall be published—

(a) at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and at least once in English language in an English newspaper having a wide circulation in that district; and

(b) on the website of the company, if any, and as may be notified or directed by the Central Government.

(2) The company shall send a copy of the notice, simultaneously with its publication, together with a copy of the application and all attachments by registered post or hand delivery, to the Chief Commissioner of Income Tax having jurisdiction over the company, Income Tax Officer who has jurisdiction over the company, the Charity Commissioner, the Chief Secretary of the State in which the registered office of the company is situated, any organisation or Department of the Central Government or State Government or other authority under whose jurisdiction the company has been operating and if any of these authorities wish to make any representation to Regional Director, it shall do so within sixty days of the receipt of the notice, after giving an opportunity to the Company.

(3) The copy of proof of serving such notice shall be attached to the application.

(4) The Board of directors shall give a declaration to the effect that no portion of the income or property of the company has been or shall be paid or transferred directly or indirectly by way of dividend or bonus or otherwise to persons who are or have been members of the company or to any one or more of them or to any persons claiming through any one or more of them.

(4) Where the company has obtained any special status, privilege, exemption, benefit or grant(s) from any authority such as Income Tax Department, Charity Commissioner or any organisation or Department of Central Government, State Government, Municipal Body or any recognized authority, a “No Objection Certificate” must be obtained, if required under the terms of the said special status, privilege, exemption, benefit or grant(s) from the concerned authority and filed with the Regional Director, along with the application.

(5) The company should have filed all its financial statements and Annual Returns upto the financial year preceding the submission of the application to the Regional Director and all other returns required to be filed under the Act up to the date of submitting the application to the Regional Director and in the event the application is made after the expiry of three months from the date of preceding financial year to which the financial statement has been filed, a statement of the financial position duly certified by chartered accountant made up to a date not preceding thirty days of filing the application shall be attached.

(6) The company shall attach with the application a certificate from practicing Chartered Accountant or Company Secretary in practice or Cost Accountant in practice certifying that the conditions laid down in the Act and these rules relating to conversion of a company registered under section 8 into any other kind of company, have been complied with.

(7) The Regional Director may require the applicant to furnish the approval or concurrence of any particular authority for grant of his approval for the conversion and he may also obtain the report from the Registrar.

(8) On receipt of the application, and on being satisfied, the Regional Director shall issue an order approving the conversion of the company into a company of any other kind subject to such terms and conditions as may be imposed in the facts and circumstances of each case including the following conditions, namely:—

(a) the company shall give up and shall not claim, with effect from the date its conversion takes effect, any special status, exemptions or privileges that it enjoyed by virtue of having been registered under the provisions of section 8;

(b) if the company had acquired any immovable property free of cost or at a concessional cost from any government or authority, it may be required to pay the difference between the cost at which it acquired such property and the market price of such property at the time of conversion either to the government or to the authority that provided the immovable property;

(c) any accumulated profit or unutilised income of the company brought forward from previous years shall be first utilized to settle all outstanding statutory dues, amounts due to lenders claims of creditors, suppliers, service providers and others including employees and lastly any loans advanced by the promoters or members or any other amounts due to them and the balance, if any, shall be transferred to the Investor Education and Protection Fund within thirty days of receiving the approval for conversion.

(9) Before imposing the conditions or rejecting the application, the company shall be given a reasonable opportunity of being heard by the Regional Director

(10) On receipt of the approval of the Regional Director,—

(i) the company shall convene a general meeting of its members to pass a special resolution for amending its memorandum of association and articles of association as required under the Act consequent to the conversion of the section 8 company into a company of any other kind;

(ii) the Company shall thereafter file with the Registrar.—

(a) a certified copy of the approval of the Regional Director within thirty days from the date of receipt of the order in Form No. INC.20 along with the fee;

(b) amended memorandum of association and articles of association of the company;

(c) a declaration by the directors that the conditions, if any imposed by the Regional Director have been fully complied with.

(11) On receipt of the documents referred to in sub rule (10) above, the Registrar shall register the documents and issue the fresh Certificate of Incorporation.

Rule 23. Intimation to Registrar of revocation of license issued under section 8.— Where the license granted to a company registered under section 8 has been revoked, the company shall apply to the Registrar in Form No. INC.20 along with the fee to convert its status and change of name accordingly.

[1] Powers of Central Government delegated to Registrar of Companies vide Notification No. S.O.1353(E) dated 21st May, 2014

[2] Powers of Central Government delegated to Regional Director vide Notification No. No. S.O. 4090(E) dated 19th December, 2016, for alteration of memorandum in case of conversion into another kind of company and to the Registrar of Companies in all other cases vide Notification No. S.O.1353(E) dated 21st May, 2014

[3] Powers of Central Government delegated to Regional Director vide Notification No. S.O. 4090(E) dated 19th December, 2016.

[4] to be renumbered as (3).

[5] Substituted for the words “ Rehabilitation and Insolvency Fund formed under section 269” by the Insolvency and Bankruptcy Code, 2016,(31 of 2016), S. 255 & Eleventh Schedule.

[6] Substituted for the words “Form No. INC.12” by Companies (Incorporation) Sixth Amendment Rules, 2019 vide Notification dated 7th June, 2019.

[7] Substituted for the words “the draft memorandum” by Companies (Incorporation) Sixth Amendment Rules, 2019 vide Notification dated 7th June, 2019.

SECTION 9. EFFECT OF REGISTRATION

[Effective from 1st April, 2014]

From the date of incorporation mentioned in the certificate of incorporation, such subscribers to the memorandum and all other persons, as may, from time to time, become members of the company, shall be a body corporate by the name contained in the memorandum, capable of exercising all the functions of an incorporated company under this Act and having perpetual succession [1][***] with power to acquire, hold and dispose of property, both movable and immovable, tangible and intangible, to contract and to sue and be sued, by the said name.

[1] Omitted the words “and a common seal” by the Companies (Amendment) Act, 2015 vide Notification No S.O. 1440(E) dated 29th May 2015.