174 FAQ’s on Companies Act, 2013 by ICAI

174 FAQ’s on Companies Act, 2013 by ICAI

Q1: What is SPICE?

A1:  SPICE refers to “Simplified Proforma for Incorporating Company Electronically”. It is a simplified integrated process for incorporating a company in Form No. INC-32 along with e-Memorandum of  Association in Form No. INC-33 and e-Articles of Association in Form No. INC-34. It has been introduced by the MCA and is effective from 1 October 2016.

Q2: In case the 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 can the DSC of such  a witness  be affixed?

A2:  In such cases, SPICe (INC-32) shall be filed along with the manually signed and duly attested MOA and AOA.

Q3: Whether every company is required to  follow the SPICE process for incorporation of a company?

A3:  As per Companies (Incorporation) Fifth Amendment Rules, 2016, all companies except Part I companies and a company having more than  7 subscribers/promoters are required to follow the SPICE process for incorporation with effect from 1 January 2017.

Q4: Can a company apply  for name  availability certificate  by  filing  Form INC-1 prior to filing of SPICE form?

A4:  A  company can apply for name availability by  filing for RUN  prior to  filing of SPICE Form.

An approved name is valid for a period of(i) 20 days from the date of approval (in case name is being reserved for a new company) or  (ii)  60 days from the date of approval (in case of change of name of an existing company).

Q5: Can a company be incorporated without a registered office?

A5:  As per the Companies Act 2013, a Company shall have its registered office within 30 days of its incorporation.

Q6: In case of an overseas subscriber and director, are the documents required to be notarised and apostilled for incorporation of a company?

A6:  The attestation requirements depend  on  the  country  in  which registered office/reside2nce of the overseas subscriber/director is situated. The documents are required to be attested as follows:

1. Residing in a country which is part of the Common Wealth, by a notary public of that country;
2. Residing in a country which is party to the Hague Apostille Convention, 1961, attested by a notary public  and  duly apostilled in accordance with the said Hague Convention; and
3. Residing in a country which is not party to said Hague Convention, 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) i.e. attested by Public Notary and authenticated by Indian Embassy in the country of residence.

Q7:  What is the due date to intimate the ROC for change in the  situation of registered office of the company?

A7:  As per Companies Act, 2013  every  change  in  the  situation  of registered office of the company is required to be given to the ROC within 30 days of the change.

Q8: What is OPC?

A8:        OPC means a company which has only one person as a member.

Q9: Can a non-resident become a member of an OPC?

A9: In terms of Rule 3 of the Companies (Incorporation) Rules, 2014, only  a natural person who is an Indian citizen and resident in India  is eligible to incorporate an OPC. Therefore, a non-resident cannot become a member or nominee of an OPC.

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.

Q10: How many OPCs can be incorporated  by  a  person  or  in  how many OPCs, he shall be eligible to be a nominee?

A10:  A  natural  person shall not be  member of more than an OPC at any  point of time and the said person shall not be a nominee of more than an OPC.

Q11: Can a company registered under Section 8 merge with another company with dissimilar objects?

A11: As per Section 8 (10)  of  CA,  2013, a  company  registered under the said Section can only merge with another Section 8 company which has similar objects.

Q12: Is a Section 8 company required to seek permission of Central Government (“RD”) for alteration of its articles of  association prior to getting the same approved by the members by means of special resolution in general meeting?

A12: Yes, as per Section 8 (4)(i) of CA, 2013,  Section  8  Company  is  required to obtain prior approval of Central Government (“RD”) for alteration of its articles. However, members may pass the resolution  for alteration of articles prior to the approval, but it shall be effective only post approval from the Central Government (“RD”).

Q13: How will the surplus be  treated in  case  of winding up of  Section  8 Company?

A13: As per Section 8 (9) of CA,  2013,  any  asset  remaining  after satisfaction of the debts will be transferred to another company registered under Section 8 having similar objects, subject to such conditions as the NCLT may impose, or the same may be sold and proceeds thereof shall be credited to  Insolvency  and  Bankruptcy Fund formed under Section 224 of the Insolvency and Bankruptcy Code, 2016.

Q14: What is Small Company?

A14: A Small Company, other than public  company,  means  a  company where the:

1. Paid-up share capital of the company does not exceed INR 50 Lakhs or such higher amount as may be prescribed which shall not be more than ten crore rupees; and
2. Turnover of which as per profit and loss account for the immediately preceding financial year does not  exceed  two  crores rupees or such higher amount as may be  prescribed  which shall not be more than hundred crore rupees.

Note: No higher amount has been prescribed as yet.

Further, holding company, subsidiary company, company registered under Section 8 or a company or body corporate governed by any special act will not be considered as a small company.

Q15: Is it  mandatory for the name of  the company to be indicative of  the nature of its business?

A15: No, it is not mandatory for the name to be indicative of the nature of   its business.

Q16: Can a company have multiple and varied objects under its MOA?

A16:   As per the Act, the Company may engage in any lawful act or activity   for the time being in force. In case, company proposes to pursue any specific objective, MOA shall state the said object for which company is incorporated.

Thus, as per the Act, the question on multiple object or varied object would not arise.

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