Incorporation Under section 7 of Companies Act 2013 | FORM SPICe+

Section 7 of the Companies Act is very important when it comes to starting a business because it sets the guidelines for how to start a company in India. This section defines the procedural and legal prerequisites that aspiring entrepreneurs and stakeholders must comply with in the process of establishing a new company. This blog post will describe the important steps and requirements set by the section 7 of companies act , which makes the process of incorporation under Section 7 of the Companies Act, 2013 clear and regulated within the legal framework.

Meaning of Incorporation of a Company

The process of incorporating a business entails the formal establishment of a new entity within the legal framework provided by the Companies Act. The process entails the formal registration of the company with pertinent regulatory bodies, as well as the establishment of its organizational structure, goals, and ownership.

According to Section 3(1), a company can be established for a legitimate purpose by meeting the following criteria:

• If the company to be formed is intended to be a public company, seven or more individuals must form it.
• If the company to be formed is intended to be a private company, two or more individuals must form it.
• If the company to be formed is intended to be a One Person Company, which is a type of private company, a single individual can form it. 
• Establish the company, the individual must subscribe their names to a memorandum and fulfil the registration requirements outlined in this Act.

Preliminary steps for Company Incorporation

The promoters must complete the following procedures before incorporating the proposed company:

• Under Sec. 4(2), a company cannot be registered with a name the Central Government deems undesirable. 
• The name shall not match or resemble a company registered under this Act or a previous company statute. 
• Promoters should apply in Form 1 A to check the availability of up to six names in their preferred order.
• The applicant proposing the company must pay Rs. 500 and sign the paperwork with their digital signature. 
• The user must apply for a new name on the same application if the proposed name is unavailable.
• The Registrar will reserve the approved name for 20 days. The applicant can file Forms 1, 18, and 32 to register the new company within this time.
• Before incorporating a company, promoters must hire chartered accountants, lawyers, etc. to prepare documentation.
• Have lawyers to draft the memorandum and articles of association, the Registrar of Companies vet them, and they print them.

Filing a request to Registrar of Companies

After preliminary work, the promoters must apply to the Registrar of the State in which the company’s registered office will be located with the below mentioned documents and information [Sec. 7(1)]:

• The company’s memorandum and articles signed by all subscribers in the authorized manner.
• A formal statement, as per the specified format, provided by a practicing advocate, CA, CS, who engages in the establishment of the company stating that company comply with all regulatory requirement
• Additionally, the statement is also provided by an individual mentioned in the articles as a director, manager, or secretary of the company stating that company comply with all regulatory requirement
• Each subscriber to the memorandum and the first directors, if applicable, must provide a declaration stating that they have not been convicted of any offense related to the promotion, formation, or management of any company, or any fraudulent activity, misconduct violation of duty towards any company under the current Act or any previous company legislation within the last five years. Additionally, they must confirm the accuracy of all documents submitted to the Registrar.
• Till the registered office get established the correspondence address.
• The name, surname, family name, residential address, nationality, and other details of each memorandum subscriber, along with proof of identity, and, if a subscriber is a body corporate, such details.
• The initial directors of the firm, their names, including surnames or family names, Director Identification Numbers, residence addresses, nationalities, and any other required information, including evidence of identity
• The interests of the initial directors listed in the articles in other enterprises or bodies corporate and their consent to serve as directors in the authorized manner

The ROC based onabove-mentioned information and documents issue the Certificate of Incorporation. The company will be allotted a corporate identity number that will reflect a unique identity of a company and will be written in the certificate.

Any person who provides false or incorrect information or suppresses material information in any company registration document filed with the Registrar is liable under section 447 of the Companies Act.

Certificate of Incorporation

A certificate of incorporation validates a company’s name and founding date under the Companies Act. The Registrar of Companies issues a certificate of incorporation in the prescribed form after receiving the required documents and information under the Companies Act.

Following are the features of Company incorporation

• The certificate of incorporation serves as the legal document that establishes the existence of a company, effective from the specified date indicated in the certificate.
• The provision confers legal identity upon the company, establishing its corporate life and ensuring its continuous succession.
• The Memorandum subscribers and other persons who may join the company from time to time form a body corporate with a distinct entity, perpetual succession, a common seal, and liability limited to the amount unpaid on their shares.
• The Memorandum and Articles of Association are legally enforceable upon both the members and the company, as if the company and each individual member had formally executed them.

Meaning & Benefits of SPICe+

In February 2020 saw the Ministry of Corporate Affairs launch SPICe+, an online application. It is an updated version of the 2016 SPICe (Simplified Proforma for Incorporating Company Electronically) form, which helped Indian companies’ incorporation.SPICe+ is a comprehensive and user-friendly web tool for entrepreneurs to  incorporate a company and has several more capabilities.In February 2020 saw the Ministry of Corporate Affairs launch SPICe+, an online application. It is an updated version of the 2016 SPICe (Simplified Proforma for Incorporating Company Electronically) form, which helped Indian companies’ incorporation.SPICe+ is a comprehensive and user-friendly web tool for entrepreneurs to  incorporate a company and has several more capabilities.

The Benefits of SPICe+ are:

• Single Integrated Form: SPICe+ integrates company registration processes and filings into one form. This streamlines the application process by reducing form filling.
• Saving time and effort: SPICe+ lets you apply for name reservation and company incorporation simultaneously.
• Reduced Paperwork: The form reduces paperwork and speeds up registration, supporting the government’s “Ease of Doing Business” strategy.
• Single Window for Approvals: SPICe+ lets you apply for PAN, TAN, GST, ESIC, and EPFO in one form.
• Reduced Documentation: The integrated form eliminates the need to attach MOA and AOA, simplifying the procedure.
• Real-time Processing: SPICe+ electronically processes applications, lowering processing time and delivering progress updates.
• Professional Certification: The form allows professional certification for correctness and legal compliance.
• Automatic Data Validation: The form reduces application mistakes and conflicts with data validation.
• Improved User Interface: SPICe+ has a more user-friendly interface than its predecessor.
• Cost Efficiency: SPICe+ may cut registration expenses by merging different applications and documentation into one form.
• Support for Multiple Stakeholders: The form supports startups, companies, professionals, and regulators.
• Digital Initiatives: SPICe+ supports government digitalization efforts to reduce paper and increase transparency.

What does SPICe+ Form- Registration Procedure integrates?

SPICe is introduced by the Ministry of Corporate Affairs. SPICe+ stands for Simplified Performa for Incorporating Company electronically Plus and is mostly used for Indian company registration. SPICe+ Company Registration integrates the following:

• Director Identification Number Allotment
• Approval of Name
• Certificate of Incorporation
• PAN
• TAN 
• Employees Provident Fund Organisation registration
• Employees State Insurance Corporation registration
• Bank Account of the company

Overview of process of SPICe+ for Company Registration

The SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form requires multiple procedures to register a company. Brief process overview:

• Get DSCs for directors and signatories. An electronic signature for online filings.
• Name Reservation: Use the MCA portal’s RUN (Reserve Unique Name) feature to reserve the firm name. Choose a unique, available company name.
• Fill SPICe+: Complete the SPICe+ form with director, shareholder, and other information.
• Memorandum and Articles of Association:  Write the memorandum and articles in the specified format and attach them to SPICe+.
• PAN& TAN: The integrated SPICe+ form can be used to apply for the company’s PAN and TAN.
• Additional Information: Provide GST (AGILE-PRO), ESIC, and EPFO registration data detail if applicable.
• Declaration: Directors and subscribers sign the form to verify the information.
• Certification: Chartered accountants, company secretaries, and cost accountants can certify the SPICe+ form, MOA, and AOA.
• Submission: Use the MCA portal to submit the SPICe+ form, documentation, and payments.
• Review and Approval: The RoC reviews the application. If all prerequisites are completed, RoC authorizes application.
• COI: After approval, you’ll obtain the Certificate of Incorporation (CoI), establishing the company’s legal existence.
• Bank Account: Open a bank account for the company with the CoI to facilitate financial transactions.

Conclusion

In summary, Section 7 of companies Act plays a fundamental role in facilitating the incorporation of companies by offering a well-defined framework that promotes principles such as transparency, legality, and accountability within the realm of corporate governance. This section establishes guidelines and requirements for the formation of new entities, ensuring compliance with regulatory norms. This promotes investor trust and creates a favourable business environment.