Category Archives: Chapter II – CA2013

INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO

An amendment with Wide Circulation


The recent amendment to the Companies (Incorporation) Rules, 2014 is of wide importance. The Companies (Incorporation) Second Amendment Rules, 2019 amended the Clause (a) of sub-rule (5) of Rule 30 of the Companies (Incorporation) Rules, 2014 on popular demand which certainly result in ease of doing business in India. (It may not affect the ease of doing business rating due to the structure of the rating procedure). We also earlier demanded such amendment in our earlier post, Shifting Registered Office to another state, here.

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Active Company Tagging Identities and Verification (ACTIVE)


According to old Indian saying – Daroga (Inspector) is the Supreme Sovereign. We, professionals, have a similar experience with Indian corporate law. Ministry of Corporate Affairs (MCA) notified a new rule 25A by way of the Company (Incorporation) Amendment Rules 2019 with effect from 25th February 2019. In this post, we will discuss Rule 25A and Form ACTIVE which technically is Form INC – 22A.

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REGISTERED OFFICE OF THE COMPANY


The government of India promulgated a temporary law called the Companies (Amendment) ordinance 2018 on 2nd November 2018 to by parachute landing of few more reform measure. To continue the law government later promulgated the Company(Amendment) Ordinance, 2019

Readers may read this post as a law applicable with effect from 2nd November 2018 till passing the law by the Parliament. These provisions may continue in force after parliamentary approval. In this post we will discuss, the laws related to registered office in brief post the companies (Amendment) Ordinance 2018 and 2019.

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CONVERSION OF PUBLIC COMPANY INTO PRIVATE COMPANY


Law stated in this post is as on 20th December 2018.

With effect from 18th December 2018, conversion of a public company into a private company requires approval from the Central Government. Earlier such conversion requires approval from the National Company Law Tribunal. This change was made by the Company Amendment (Ordinance) 2018 with effect from 2nd November 2018 and the Companies (Incorporation) 4th Amendment Rules, 2018 with effect from 18th December 2018.

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COMMENCEMENT OF BUSINESS


The Government of India promulgated a temporary law called the Companies (Amendment) ordinance 2018 on 2nd November 2018 to by parachute landing of few more reform measure. Constitution of India mandate that Government needs to get it approved by Parliament within 6 months.

Readers may read this post as a law applicable with effect from 2nd November 2018 till passing a law by the Parliament, a bill for which was introduced before Loksabha on 20th December 2018. These provisions may continue in force after parliamentary approval. In this post, we will discuss, the reintroduction of Commencement of Business.

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Starting of a company without capital


This was an interesting question which I received on Quora here. How can I start a company with no capital? We will have a detailed discussion here.

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Display of Registered Office Address and Information


Sub-section (3) of Section 12 of the Companies Act, 2013 is one of the most non-compliant sub-sections of section 12 if not of the Companies Act, 2013. It may be noticed that most medium and small size companies do not comply with this important provision.

A company shall display its name and other information in accordance with this subsection. This non-compliance may attract penalty up to one lakh rupees.

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REGISTERING COMPANIES AUTHORISED TO REGISTER


Part – I of Chapter XXI deals with companies authorizes to register under this Companies Act, 2013.

Any company formed under any law for the time being in force duly constituted according to law and consisting of two or more members may at any time register under this Act as a company. This registration shall not be invalid by reason only that it has taken place with a view to the companies being wound up. We have discussed these provisions of Section 366 of the Companies Act, 2013 as amended and updated earlier here.

The Companies (Authorised to Registered) Rules 2014 supplement the provisions of the Companies Act 2014. Till 5th July 2018 with effect from 15th August 2018 these rules had no provision of conversion of society and trust to the company as discussed earlier here.

In this series of posts, we will discuss these rules as amended by the Companies (Authorised to Registered) 2nd Amendment Rules, 2018.

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Option for Verification of Registered Office


What kind of lease deed should I make for a new private limited company before incorporation?

This is one of the practical question, promoters and professionals facing at the time of incorporation.

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Naming of a company – Running of RUN


Seemingly, ease of doing business become a childish target for the Government of India. There is a practical gap of only 60 days between the Companies (Incorporation) Amendment Rules, 2018  and the Companies (Incorporation) 2nd Amendment Rules, 2018. The hardship caused by the earlier amendment is not attempted to cure by this amendment. Once again, there is a half-hearted effort lacking full automation of name approval. We discuss Rule 9 of the Companies (Incorporation) Rules, 2014 amended twice in a single calendar quarter.

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Triggering Unlimited Liability for Members


The Companies Amendment Act, 2017 read with notification S. O. 630(E) dated 9th February 2018 reintroduced unlimited liability for members in certain cases. A  similar provision was there earlier in the companies Act, 1956.we have no intention to go into history, but to examine this provision in light of justice and equity.

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Associate Company


The Companies Amendment Act, 2017 proposed to amend the definition of Associate Company with effect from the date of notification of section 2(i) of the Amendment Act.

UPDATE: Notification S.O. 1833(E) dated 7th May notified this amendment with effect from 7th May 2018

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RUN SPICe for incorporation


Happy Republic Day 2018!!

From this Republic Day 2018, company secretaries will start using this headline day to day in reference to the incorporation of companies in India. The government of India these days works keeping ist both eyes on world banks’ ease of doing a business index. Ease of starting and closing businesses are the prime focus. The Companies (Amendment) Act, 2017 notified on 3rd January 2018 primly aims to ease the incorporation of companies among other objects. Now, three rules are amended to facilitate to make incorporation a “child’s play”.

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Conversion of Public Company to Private Company


Conversion from a private company to public company is not news and has no legal hurdle also. On the other hand, a decision to convert itself into a public company is always big news. According to the second proviso to subsection (1) of Section 14 of the Companies Act, 2013, “any alteration having the effect of conversion of a public company into a private company shall not take effect except with the approval of the Tribunal which shall make such order as it may deem fit.”

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Designation and Category of Directors


When an applicant files a form for incorporation of a company, we need to select the designation and category of first directors in incorporation Form 32 (popularly called Spice) or wherever company appoints a director. There are four different categories of directors. We will discuss confusion regarding these categories of directors.

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Unease of Name Approval


Before being launched a pilot project on 26th January 2016, central registration of companies was under consideration since long. However, The Central Government under the able leadership of Prime Minister Narendra Modi launched it silently and suddenly as a pilot project for the setting of Central Registry for Companies in India. Presently, central registry looks after only two functions: (a) Name Approval and (b) Company Incorporation.

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Shifting Registered Office to another state


[The law stated in this post is valid from 27th July 2017 with an update made in this post with effect from 6th March 2019]

On 27th July 2017, Ministry of Corporate Affairs published a notification in Official Gazette of India amending the rules relating to shifting of registered office of a company from jurisdiction of its present registrar of companies to another registrar of companies. The Companies (Incorporation) Second Amendment Rules, 2017 came into effect from the date of publication. In this post, we will discuss the shifting of registered office of a company to another state or the union territory.

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Shifting Registered Office to different Jurisdiction in same state


On 27th July 2017, Ministry of Corporate Affairs published a notification in Official Gazette of India amending the rules relating to shifting of registered office of a company from jurisdiction of its present registrar of companies to another registrar of companies. The Companies (Incorporation) Second Amendment Rules, 2017 came into effect from date of publication. In present post, we will discuss first aspect of such shifting of registered office – shifting within a state but from one registrar of companies to another registrar of companies.

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Limited vs Private Limited Company


 

I receive a question on Quora which may interest readers of this Blog. The question is –

What is the difference between limited company & private limited company?

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Limited in Limited Company??


I receive a question on Quora which may interest readers of this Blog. The question is –

What is limited in private limited company? I understand limited means limited liability but can someone explain with a detailed example about how this liability turns out to be limited. Please use numerical in the example. Lets consider 4 owners, each one has 25% stake in the company & the total investment is say 1 lac INR.”

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