Incorporate your company for free and with ease!

Published on 05 Feb 2018 by Tushar

In an attempt to ease procedures for new as well as existing companies, the Ministry of Corporate Affairs (MCA) has introduced a slew of changes to the procedures for the incorporation of a company.

The MCA has introduced three distinctly helpful changes to the steps leading up to the incorporation.

1. Incorporate your company

The Ministry of Corporate Affairs (MCA) has announced that there will be no fees apart from the mandatory stamp duty charges for incorporation of a Company. (Stamp duty charges differ from state to state)

The changes are applicable to 'Small Companies' mainly as only those companies which have a paid-up capital of maximum Rs. 10 Lakh can avail the benefits.

Therefore the following can be filed without having to pay any statutory/ government charges-

  1. Simplified Proforma for Incorporating Company Electronically (SPICe) forms;
  2. e-Memorandum of Association (e-MoA);
  3. e-Articles of Association (e-AoA).

Effectively a start-up can save a few thousand rupees which is a welcome change for the start-up incorporation atmosphere in India.

2. Reserve Unique Name (RUN) Form

Reserve Unique Name (RUN) forms have been introduced by the MCA to simplify the name reservation process of a company.

The rules earlier required a company to reserve a name-

  1. In case of advance booking of the name; through the Name Reservation — INC-1 form (RUN form has replaced the INC-1 form) or,
  2. In case where name being registered during the process of incorporation- SPICe Form.

2.1 RUN v/s SPICe for name registration

  1. RUN gives a chance to start-up founders to book a company name in advance.
  2. A major drawback of using SPICe form used to be that Entrepreneurs or Professionals were unable to obtain prior name approval.
  3. The founders of a start-up would be forced to redo incorporation documentation, in case of rejection of name while using SPICe Form.

2.2 When should RUN and SPICe forms are used then?

  1. RUN form should be used when there is an ambiguity about the name because of its similarity to existing Private Limited Companies or Limited Liability Partnerships (LLPs).
  2. If the name is unique, a company can apply for the name directly with the SPICe form. This would save time and money for the applying company.

2.3 Features of the RUN web-based form for Name registration

  1. One name per RUN form - Application for reservation will now be done through RUN- a web-based form,  instead of the e-Form INC-1. The process is simple and swift now. From having to applying up to six names as a hit and trial method now only one name choice can be provided at a time.
  2. DIN/ DSC not required- RUN web-form does not require any prior DIN or DSC where the previous form required 2 DINs and at least one DSC.
  3. Fees- MCA Fees for name reservation using RUN web-form is Rs 1,000 per form submission – irrespective of the name being approved or not.
  4. Validity- An approved name is valid for a period of
    1. 20 days from the date of approval, in case of new company.
    2. 60 days from the date of approval, in case of existing company.
  5. Intimation of result of application - After applying for name reservation using the RUN form and the Company will be intimated of the approval by the MCA through email.

3. Director Identification Number (DIN)

DIN has to be obtained by every person looking to prospectively be a director in a company in India. For the procurement of DIN, there can be 2 scenarios-

  1. DIN for an existing company – When an existing company that has already been incorporated needs to give directorship to someone new then DIN can only be obtained through form DIR-3. This form has a provision for furnishing the Corporate Identity Number (CIN) of the company and a declaration that the DIN is being obtained for adding the aforementioned person as a director of the company.
  2. DIN for a company seeking incorporation- a new company can apply for DIN only through SPICe forms. The details of the directors need to be filled in the SPICe forms with the relevant proof of identity and address.

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