Category Archives: Chapter II – CA2013

INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO

Company Website


A company website is not a simple affair of contents, design, SEO and brand building. It is more about compliance. A company may choose not to have a website. Once, a company decide to have a website; it should comply essential requirement of laws.

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EASE AND CHAOS


Ministry of Corporate Affairs has issued many amendment rules and circulars during the month of September 2020 for the ease of doing business. Though one thing always remains – chaos. In this brief post, we will discuss these ease and remaining chaos briefly.  

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Utopia of Investment


During a call with a startup client, we heard the term investor Nth time. “What is a need for investor or investment? It is a self-sufficient business plan.” These days no promoters of startup interested in sales and services but on investment pouring in. They even do not have a plan of servicing of investment which may pour in.
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WHOLLY OWNED SUBSIDIARIES – SUMMARY OF THE ANTI-THESIS


The Concept of Wholly Owned Subsidiary is an anti-thesis of the concept of the company. At least two persons are required to form a company which is true for wholly-owned subsidiary – but in case of wholly-owned companies one or more registered shareholder declare that one or more beneficial interests in their shares are with a particular company or body corporate.

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NOMINEE OF HOLDING COMPANY!!


Corporate world every holding company having a wholly-owned subsidiary have one or more person as “nominee” shareholders to on record as a registered shareholder holding a nominal number shares in a wholly-owned subsidiary company to satisfy the requirement of the minimum number of members. Treating these registered shareholders as “nominee” is not the perspective of the Company Law but of the Contract Law as applicable to the contract between the company and these shareholders. Let us discuss.

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Wholly-owned Subsidiary


The concept of the wholly-owned subsidiary is best understood by layman than a young student of law – particularly of corporate law. The concept practically understood by professional dealing with a wholly-owned subsidiary. A student called me to understand this: “how possible?” I replied, “No, It is not possible in true sense.” Unless one understands it clearly that it is not possible in a true legal sense, only then,  you can understand it. Once understood, you will never believe that a wholly-owned subsidiary is not possible in a true legal sense.

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IMPORTANCE OF SUBSCRIBERS TO MEMORANDUM AND ARTICLES OF ASSOCIATION OF COMPANY


Subscribers of a company, particularly of a startup are ignorant tribe as far as company law is concerned. They need proper handholding. A subscriber to the memorandum of association and articles of association of a company is a neglected person though otherwise celebrated as member shareholder of a company.

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DIGITAL SIGNATURE


Digital Signature nowadays a most important but highly unprotected personal property of an individual just next to his figure prints and unprotected payment instruments – UPIs, credit or debit cards or cheque books. If no fraud has been committed misusing a Digital Signature in last 10 days it is because no fraudster know the true power of a Digital Signature or you have placed your digital signature certificate in a hand of a person of integrity.

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CORONA AMENDMENTS UNDER THE COMPANIES ACT, 2013


We firstly ignore negative news going to effects us. Secondly, we undermine the impact. Third, we start fighting. Humanity since 2017 knew and ignored about 73 corona viruses waiting to affect humanity. It is changing our life and law. I wrote a post on initial restrictions going to impact corporate compliances on 13th March 2020 which I considered now outdated. Here are measures the Ministry of Corporate Affairs announced:

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Now, Added SPICe Incorporation


The era of simple incorporation has already been over. We have SPICe since long which claimed to facilitate additional registrations at the option of the applicant. Now, This is over. The Government is now at the final stage of serving added SPICe. The menu name “SPICe+”

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SUBSCRIPTION SHEET


Foundations of all great buildings are usually a neglected construction but ensuring long life of the building. Subscription Sheet is one of the neglected areas of our discussions in corporate laws. With the introduction of eMemorandum of Association (SPICe MoA) and eArticles of Association (SPICe AoA), we usually consider it obsolete. No, it is actually not.

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Provisional Registration of Company


No. In this post, I am not discussing any existing law. This a proposal I received in form of a query on Quora about registration of a temporary company. I received another query, how India registered so many “paper companies”.

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Is Bank a Company?


I received an interesting query on Quora earlier this month. Another day, another reader asked on WhatsApp why Registrar of Companies or Serious Fraud Investigation Office is not taking action against “PMC Bank Limited”. The reader was ignorant of the word “co-operative” in the name of scam-hit banks. Last year, one member/shareholder of the State Bank of India queried about compliance by the bank under the Companies Act, 2013.

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Founder of a Company


The founder is not a legal term in relation to a company. General Public usually uses this term to refer to the original promoters of any company.

Interestingly, the definition of the term “promoter” also do not indicate directly to “founders” as the definition is drafted with the perspective of an existing company.

Now, I must subscribers to the Memorandum of Association (MoA), the founding or constituting documents of a company are first promoters. They satisfy two conditions of the definition of promoters also.

Subscribers of the MoA took initiatives to form a company and give a legal birth to it. Sometimes one of them actually leads and recognised by other subscribers as founder subscriber.

In short, the mind has a seed of the company in it may be called the founder of the company.

Notarised- Apostilled Documents


What documents should I notarize or apostilled for the purpose of incorporation of a company in India? This is one common question asked by a person with citizenship or resident outside India.

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LICENSE FOR PROPOSED COMPANIES WITH CHARITABLE OBJECT


With notification of the Companies (Incorporation) 6th Amendment Rules, 2019 on 7th June 2019 to come into force with effect from 15th August 2019, the Government of India further centralized incorporation and registration of new companies to Central Registration Centre, Manesar in Haryana. Let us discuss the law.

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Propaganda against Compliance Tools


Politics is claimed to be a dirty game of propaganda in India and the public already accepted it as a reality of life. Unfortunately, Indian professionals start using similar tools against compliance regime and compliance professionals. Role of the media is also come to under strong protest recently. This is evident that Indian media do no research and do not cross verify the facts. Recently published propaganda titled “FM Nirmala Sitharaman urged to waive e-form 22A for firms” published by Deccan Chronicle on 12th June 2019 and copied by few others seems to be published without cross-checking on law and facts.

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The Active Extension


Among practitioners and followers of corporate law in India, the year 2019 brought a surprise in the form of Form INC – 22A. This was claimed to be a form to identify active companies and checking inactive companies. Unlike earlier attempt aim to boost the image of the country and government, this form lost its shine within few hours of its introduction. Unlike earlier, this form had no mention in government communications of success.

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AGILE A COMPANY


This is another experiment to achieve ease of doing business. I always pointed out combining so many forms into one without cutting numbers of licences required may not actually help businesses. Form – INC – 35 names as AGILE by the Ministry of Corporate Affairs is another such step. Whether a company under incorporation want to apply GST or not, it is required to fill and file Form AGILE.  In this post, we will discuss the same.

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Drone delivery of Active Company Codes


Recently Ministry of Corporate Affairs has introduced a Form Active technically called Form INC – 22A. Noticeable features of this form are – (1) One time Form; (2) Requirement of latitude and longitude of Registered Office and (3) photograph of at least one director of the company. In this post, we will discuss the logic of this one time exercise and its logical future developments.

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