MAJOR REFORMS & INITIATIVES
i. The Ministry of Corporate Affairs took up a bold initiative in Government Process Re-engineering (GPR) and launched the Simplified Proforma for Incorporating Company Electronically (SPICe) e-Form, on the occasion of Gandhi Jayanti (2nd Oct) 2016. SPICe is a more versatile form than INC-29 and leverages on digital technology by eliminating the need for hard copies of physically signed documents being attached to an e-form. SPICe is now the Sole, Simplified & Versatile form available for incorporation of a company in India
ii. The fee for filing the incorporation form has been reduced from Rs.2000/- to Rs.500/-.
iii. Further, Ministry has also integrated the MCA21 System with the CBDT for issue of PAN and First TAN to a company incorporated using the Simplified Proforma for Incorporating Company Electronically (SPICe). Stakeholders submit applications for PAN and TAN at the time of submitting applications for incorporation. The PAN allotted by Income Tax Department is being affixed on the Certificate of Incorporation of the company w.e.f. 01-Feb-2017. This has resulted in reduction in the number of processes and time taken for Starting a Business in the country.”
iv. With reengineering in process and establishment of Central Registration Centre, incorporation of a company is completed in a single day. Allotment of Directors Identification Number (DIN), Permanent Account Number (PAN) and the first Tax Deduction Account Number (TAN) are subsumed in the incorporation process and, there is no separate process.
v. Common seal under Companies Act, 2013 has been made optional since 29.05.2015. Accordingly, all Banks have been advised by the Indian Bank Association (IBA) not to ask for affixation of either common seal on the application form for opening of Bank Accounts by companies.
vi. Deployment of common form for registration under labour related laws for EPFO and ESIC on the Shram Suvidha portal is being facilitated.
vii. Final registration for Delhi VAT and Maharashtra VAT is being done within a day, online.
viii. There is one single Registration Application Form for all the Acts administered by Maharashtra Sales Tax Dept. (MSTD) available on (www.mahavat.gov.in).
ix. Registration of Delhi Shops and Establishment Act, 1954 and Maharashtra Shops and Establishment Act, 1948 have been made fully online.
The Ministry of Corporate Affairs (MCA) brought about a transformational change in the company name reservation and incorporation processes by undertaking Government Process Re-engineering (GPR) and setting up the Central Registration Centre (CRC) for processing of Company “Name Availability” (INC-01) eForms and “Incorporation” (INC-02/INC-32 - SPICe).
The project to transform the processing of Company Incorporation e-Forms was undertaken with one clear objective – Applications for Name reservation and Incorporation of a company should be processed and completed within D+1 days (D=Date of Payment Confirmation) in line with Global best practices. The MCA rolled out the first phase of Central Registration Centre (CRC) on 25th January 2016 for processing Name Reservation applications and second phase of CRC for processing Incorporation applications on 28th March 2016.
The GPR exercise is in pursuance of the ministry’s objective of providing greater “Ease of Doing Business” to all stakeholders and has resulted in speedier processing of incorporation related applications, uniformity in application of rules, and eradicating discretion.
Outcome: The time taken for processing company incorporation applications being reduced drastically from between 5 to 15 working days in June 2014, to an average of 0.6 working days in March 2017. Similarly, the processing time for name availability applications has been brought down significantly from between 5 to 6 working days in June 2014, to an average of 0.4 days in March 2017.
In addition, more than 90% applications are being approved within 1 working day. This has resulted in speed, greater transparency, uniformity and eradication of discretion.
In the year 2016, Ministry has introduced a new e-form named INC-32 - SPICe (Simplified Proforma for Incorporating Company Electronically) in place of form INC-29, on the occasion of Gandhi Jayanti 2016, which provides more functionalities and deals with a single form for multiple services for incorporation of a company (except for Section 8 companies and Producer Companies). These are as follows: -
i. SPICe is a Simplified and Digital form for Company Incorporation.
ii. A Standardized format of e-Memorandum of Association and e-Articles of Association as per Companies Act, 2013 has been created in linked e-form.
iii. Provision to apply for Company Incorporation with a pre-approved Company Name (obtained by first filing INC-1 eform), which is not available in INC-29 eform.
iv. Mandatory DSCs of Subscribers and Witnesses (max 7+1) in SPICe MOA and SPICe AOA instead of Ink signed signatures being done manually in documents attached with INC-29 e-form.
v. Standardization and machine tracking of changes to standard format made by stakeholders.
Outcome: Machine readability of forms, speed in Back Office Processing and positive identification of subscribers due to introduction of digital signatures.
The Ministry has electronically integrated the MCA21 System with the CBDT for issue of PAN and First TAN to a company incorporated using the Simplified Proforma for Incorporating Company Electronically (SPICe). Stakeholders submit applications for PAN and TAN at the time of submitting applications for incorporation. The PAN allotted by Income Tax Department is being affixed on the Certificate of Incorporation of the company w.e.f. 01-Feb-2017.
Outcome: This has resulted in reduction in the number of processes and time taken for Starting a Business in the country.
i. Ministry vide notification no. GSR 309(E) dt 30.03.2017 has prescribed w.r.t. related party transactions, where the consideration is equal or more than 10% of assets of the company, the same shall be approved by the members of the company. This has increased the shareholder rights with regard to voting and disclosure of a related- party transactions.
2. National Company Law Tribunal Rules were notified on 01.06.2016 to replace the Company Law Board (CLB). NCLT is initially located at ten places across India, equipped with requisite infrastructure and support staff, including Delhi, Mumbai, Kolkata, Hyderabad and Chennai. NCLT is expected to be more effective platform for adjudication of disputes on corporate law matters through disposal of such cases in a time bound and speedy manner.
3. The Companies (Management and Administration) Rules, 2014 has been amended on 23.09.2016 to provide that shareholding position of promoters and top ten shareholders of the company representing increase or decrease by 2% or more of the paid-up share capital shall be reported within 15 days of such changes.
ii) Listed company with 1000 or more members will have to provide to its members the facility to cast their votes through electronic means.
The amendment in the rules will increase transparency and reporting of the changes in the shareholding pattern within short period of time.
REDUCTION IN PROCEDURES: Five procedures for Starting a Business are now integrated and can be done simultaneously in One step. Using the newly launched integrated e-Form SPICe, stakeholders now apply for Company Name, Company Incorporation, DIN of the directors, PAN and TAN for the newly incorporated company, and avail all FIVE services simultaneously. The requirement of a company seal has also been removed vide Company (Amendment) Act, 2015. Therefore, the reforms undertaken by the Ministry of Corporate Affairs have helped in reducing the procedures for starting a business in India and provide Ease of Doing Business.
REDUCTION IN COST/FEES: The fee for incorporation (of the integrated e-Form SPICe /INC-32) has been reduced from INR 2000 to INR 500. The cost incurred by a company for company seal is also eliminated, as the requirement for a company seal has been removed vide amendment to the Companies Act, 2013.
REDUCTION IN TIME: The time taken for processing company incorporation applications has been reduced drastically from between 5 to 15 working days in June 2014, to an average of 0.6 working days in March 2017. Similarly, the processing time for name availability applications has been brought down significantly from between 5 to 6 working days in June 2014, to an average of 0.4 days in March 2017. In addition, more than 90% applications are being approved within 1 working day. This has resulted in speed, greater transparency, uniformity and eradication of discretion.