Experts CornerGaurav Pingle and Associates

Generally, social entrepreneurs and professionals have a very basic concern w.r.t. the type of entity for engaging in activities relating to charity i.e. whether such activity should be in the form of a trust or society or a company with charitable objects. The decision is taken based on the nature of activities, persons involved in decision-making process, accounting aspects, taxation aspects, etc. This article focuses on incorporation of company with charitable objects.

According to the provisions of Section 8 of the Companies Act, 2013 (the Act), following are the 3 conditions or restrictions on its activities of such company:

(i) the company’s objective shall include activities for promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;

(ii) the company intends to apply its profits, if any, or other income in promoting its objects (as stated above); and

(iii) the company intends to prohibit the payment of any dividend to its members.

The Central Government issues a licence on such terms and conditions as it deems fit. Based on the licence, the company can be incorporated under Section 8 of the Act without addition to its name of the word “limited” or “private limited” as the case may be. This article provides a detailed compliance checklist for incorporation of companies with charitable objects (i.e. companies incorporated under Section 8 of the Act). The applicable provisions are Rules 8, 12 and 19 of the Companies (Incorporation) Rules, 2014 read with Section 8 of the Act. The entrepreneurs and professionals shall ensure compliance of the following provisions:

  1. Minimum number of directors.—If the company (under Section 8 of the Act) to be incorporated is a private company then minimum directors should be 2 and in case of public company, the minimum directors should be 3.
  2. Minimum number of members.—If the company (under Section 8 of the Act) to be incorporated is a private company then minimum members should be 2 and in case of public company, the minimum members should be 7. A partnership firm may be a member of company incorporated under Section 8 of the Act.
  3. Application for name.—The name of proposed company shall be considered undesirable, if: (i) it attracts the provisions of Section 3 of Emblems and Names (Prevention of Improper Use) Act, 1950; (ii) it includes the name of a trade mark registered or trade mark which is subject of an application for registration under Trade Marks Act, 1999 (unless the consent of owner or applicant for registration, of trade mark, as the case may be, has been obtained and produced by the promoters); (iii) it includes any word or words which are offensive to any section of the people; and (iv) it is identical with or too nearly resembles the name of LLP or company. Other provisions of Rule 8 of the Companies (Incorporation) Rules, 2014 shall also be complied with.

Under Rule 9 of the Companies (Incorporation) Rules, 2014, an application for reservation of name shall be made through RUN (Reserve Unique Name) web service (available at The name may either be approved or rejected, as the case may be, by the Registrar, Central Registration Centre after allowing resubmission of such application within 15 days for rectification of the defects, if any.

For the companies under Section 8 of the Act, the name shall include the words like foundation, forum, association, federation, chambers, confederation, council, electoral trust and the like, etc. [Rule 8(7) of the Companies (Incorporation) Rules, 2014].

The name including phrase “electoral trust” may be allowed for registration of companies to be formed under Section 8 of the Act, in accordance with the Electoral Trusts Scheme, 2013 notified by Central Board of Direct Taxes [Explanation to Rule 8(2)(b)(vi) of the  Companies (Incorporation) Rules, 2014].

  1. Validity of name approved.—Once approved, the name is valid for 20 days from the date of approval [Section 4(5)(i) of the Act].
  2. Application for licence under Section 8 of the Companies Act.—After the name is approved, the promoters of the company shall apply for licence under Section 8 of the Act. The licence provides certain terms and conditions to be followed during the lifetime of the company. Such application shall be made to the Registrar of Companies (in whose jurisdiction the registered office of the proposed company is to be situated). Such application shall be made in e-Form INC-12 [Rule 19 of the Companies (Incorporation) Rules, 2014]. Following documents that are to be submitted with the said e-form:

Draft memorandum and articles of association (format provided in Form INC-13):

(i)  declaration by practising profession that draft memorandum and articles of    association have been drawn up in conformity with the provisions of Section 8 of the Act and Rules made thereunder (in Form INC-14);

(ii) estimate of the future annual income and expenditure of the company for next 3 years, specifying the sources of the income and the objects of the expenditure;

(iii) grounds on which the application is made;

(iv) brief description of proposed activity;

(v) statement of assets and liabilities;

(vi) declaration by each of the persons making the application in Form INC-15 i.e. a declaration that draft memorandum and articles of association have been drawn up in conformity with the provisions of Section 8 of the Act and Rules made thereunder;

(vii) list of promoters (name, address, DIN or Income Tax PAN);

(viii) list of proposed directors (name, address, DIN or Income Tax PAN); and

(ix)   list of key managerial personnel (name, address, DIN or Income Tax PAN).

  1. Obtaining licence under Section 8 of the Companies Act.—The licence is granted by Central Government (powers delegated to the Registrar of Companies).
  2. Application for incorporation of company.— After obtaining licence under Section 8 of the Act, the promoters shall file an application for incorporation of the company in Form INC-32 (SPICe) along with following documents:

(i) memorandum and articles of association of the proposed company (incorporating the changes suggested by the Registrar of Companies at the time of issue of licence —as discussed above);

(ii) consent to act as a director (in Form DIR-2);

(iii) declaration by first director and subscribers of the proposed company (in Form INC-9);

(iv) declaration by practising professional (in Form INC-8);

(v) proof of registered office address [as provided in Rule 25 of the Companies (Incorporation) Rules, 2014];

(vi) indentify proof and residential proof of every subscribers of the proposed company;

(vii) pursuant to the recent amendment [i.e. Companies (Incorporation) Third Amendment Rules, 2019 dated 29-3-2019], the application for company incorporation shall be accompanied by e-Form Agile (INC-35) containing an application for registration of Goods and Services Tax Identification Number (Gstin), Employees’ State Insurance Corporation (ESIC) and Employees’ Provident Fund Organisation (EPFO).

  1. Certificate of Incorporation.— After review of e-form, information/proofs and documents, the Registrar, Central Registration Centre issues certificate of incorporation. Along with the certificate of incorporation, the Government also issues permanent account number (PAN) and tax deduction and collection account number (TAN) under the Income Tax Act.
  2. Opening of bank account and deposit of share subscription money.—The Board of Directors in their first meeting (or by circular resolution) shall decide to open the bank account of the company. The subscribers shall deposit the share subscription money in the company’s bank account (for the number of shares, we shall refer the subscription clause of the memorandum of association).
  3. Application for certificate of commencement of business.—A company (not being company limited by guarantee or unlimited company) shall not commence any business or exercise any borrowing powers unless a declaration is filed by director of the company within a period of 180 days of the date of incorporation of the company in e-Form INC 20-A with the Registrar of Companies. It is necessary to state that every subscriber to the memorandum of association has paid the value of the shares agreed to be taken by him on the date of making of such declaration. Section 10-A of the Act [as introduced by the Companies (Amendment) Ordinance, 2019]. Bank statement of the company shall be attached to the requisite e-form. The Registrar of Companies then issues certificate of commencement of business.

Generally, a company with charitable object (Section 8 company) is incorporated within 25 to 30 days. It is a time-bound process for incorporation of such company. After the name of such company is approved, there are 2 activities —application for licence under Section 8 and application for incorporation of the company. The company incorporation process also involves signing and execution of several documents at different stages.

* Gaurav N Pingle, Practising Company Secretary, Pune. He can be reached at

Hot Off The PressNews

Supreme Court: The bench of Ranjan Gogoi, CJ and Sanjiv Khanna, J has issued notice to the Centre in a writ petition challenging the Constitutional validity of Section 327 (7) of the Companies Act, 2013 qua Section 53 of the Insolvency and Bankruptcy code, to the extent that Section 327 (7) renders the meaning of the Explanation (II) to Section 53 of the Code meaningless.

The petition was filed by a group of workmen comprising the Moser Baer Karamchari Union. Swarnendu Chatterjee and Shriya Maini, the advocates appearing for the Union argued before the Court that since Section 327(7) bars the application of Section 326 and Section 327 Companies Act, 2013 to the proceedings under the Code, it denies the workmen their legitimate dues for the services rendered in the company for a long period of time, which runs contrary to the concept to Right to Livelihood enshrined under Article 21 of the Constitution of India.

The Union also submitted that the Legislation undertaken for the benefit of the labour or workmen cannot be so construed so as to prejudiced the right and welfare of the labour. It would be an illegitimate method of interpretation of a statute or any provision whose dominant purpose is to protect the workmen. The petition read,

“The present provision; Section 327 (7) of the Companies Act, 2013 creates an artificial embargo by ousting the application of Section 326 of Companies Act, 2013 to the proceedings under IBC, 2016 which results in exclusion of “Workmen Dues” which results in violation of Right to Livelihood as the statutory dues which are rights of every employee/workmen gets denied.”

It was argued that “by not defining “Workmen Dues” in the Code itself and also by debarring the application of companies Act by the impugned Section, a void has been created, with respect to the definition of workmen dues under the Insolvency and Bankruptcy Code, 2016.  On the other hand, by excluding the applicability of Companies Act, especially Sections 326 and 327 from the proceedings under the Code, it has created an ambiguity as it fails to define as to what will constitute “Workmen’s Dues” under the Code, being in stark violation of Article 21 of the Constitution.”

The petition stated,

“when Legislature in its wisdom has categorically mentioned that the definition of workmen dues will be taken/borrowed/shall have the same meaning as defined in Section 326 of the Companies Act, 2013, Section 327(7) frustrates the object and purpose of the explanation (II) which results in conflict between two central statutes and ultimately results in denial of statutory dues of the workmen such as gratuity, pension, provided fund and all other wages and salaries which have been guaranteed under Section 326 of the Companies Act, 2013, in effect rendering the Companies Act and its applicability to the Code to a level of a mere rubber stamp. Such denial in effect actually frustrates the social welfare aspect of the beneficial provision which results in denial of hard earned money and welfare rights of the workmen guaranteed under Article 21 of the Constitution.”

Case BriefsTribunals/Commissions/Regulatory Bodies

Securities Appellate Tribunal, Mumbai: The Coram of Tarun Agarwala, J., (Presiding Officer), Dr C.K.G. Nair, (Member), M.T. Joshi, J., (Judicial Member) dismissed the appeals which were filed against the order which imposed a penalty on the appellants for not following Regulation 7(2) (a) of the Securities and Exchange Board of India (Prohibition of Insider Trading (PIT) Regulations, 2015

The appellant was a promoter of a company incorporated under the Companies Act, 1956. As per Regulation 7(2)(a) of the PIT Regulations, 2015 every promoter, was required to disclose to the company the number of such shares acquired or disposed of within two trading days of such transaction if the value of the shares traded, whether in one transaction or a series of transactions over any calendar quarter, aggregated to a traded value in excess of 10 lakh rupees. The said Regulation was not followed by the appellant and accordingly a show cause notice was issued to him for having failed to make the relevant disclosure under the provisions of Regulation 7(2)(a) of the PIT Regulations. The Adjudicating Officer passed an order holding him guilty of violating the provision of Regulation 7(2)(a) of the PIT Regulations and accordingly imposed a penalty of Rs 5,00,000 under Section 15A(b) of SEBI Act. The said appellants being aggrieved by the imposition of penalty filed the appeal.

The Court found that no disproportionate gain or unfair advantage was made by the appellants while undertaking the transactions in the shares of the Company nor any loss was caused to the investors as a result of non-disclosure. Thus the violation was only technical in nature. The Court thus reduced the penalty by declaring it disproportionate and excessive. Further, it was held that imposition of higher penalty amounted to discrimination especially when it was the first offence made by them. The appellants had violated Regulation 7(2)(a) of the PIT Regulations and consequently, the minimum penalty was justifiable. These three appeals failed and were dismissed. [Nitin Agrawal v. SEBI, 2019 SCC OnLine SAT 18, decided on 25-03-2019]

Case BriefsSupreme Court

Supreme Court: The bench of Abhay Manohar Sapre and UU Lalit, JJ has held that Section 212 of the Companies Act, 2013 does not prescribe any period within which a report has to be submitted by Serious Fraud Investigation Office (SFIO) to the Central Government.

Lalit, J, writing for himself and Sapre, J listed down the ‘basic features’ that were considered while coming to this conclusion:

  1. Absolute transfer of investigation in terms of Section 212(2) of 2013 Act in favour of SFIO and upon such transfer all documents and records are required to be transferred to SFIO by every other Investigating Agency.
  2. For completion of investigation, sub-Section (12) of Section 212 does not contemplate any period.
  3. Under sub-Section (11) of Section 212 there could be interim reports as and when directed.

He said that in the face of these three salient features it cannot be said that the prescription of period within which a report is to be submitted by SFIO under sub-Section (3) of Section 212 is for completion of period of investigation and on the expiry of that period the mandate in favour of SFIO must come to an end. If it was to come to an end, the legislation would have contemplated it.

“In the absence of any clear stipulation, in our view, an interpretation that with the expiry of the period, the mandate in favour of SFIO must come to an end, will cause great violence to the scheme of legislation. If such interpretation is accepted, with the transfer of investigation in terms of sub Section (2) of Section 212 the original Investigating Agencies would be denuded of power to investigate and with the expiry of mandate SFIO would also be powerless which would lead to an incongruous situation that serious frauds would remain beyond investigation. That could never have been the idea.”

The Court hence concluded that the only construction which was, possible therefore, was that the prescription of period within which a report has to be submitted to the Central Government under sub-Section (3) of Section 212 is purely directory. It added:

“Even after the expiry of such stipulated period, the mandate in favour of the SFIO and the assignment of investigation under sub-Section (1) would not come to an end. The only logical end as contemplated is after completion of investigation when a final report or “investigation report” is submitted in terms of sub-Section (12) of Section 212.”

Sapre, J in his concurrent opinion said:

“If the submission of the learned counsel for the respondents (writ petitioners) that the compliance of sub-section (3) of Section 212 of the Act in relation to the submission of the report be held mandatory is accepted (which I am afraid, I cannot accept) in our view, the very purpose of enacting Section 212 of the Act would get defeated and will become nugatory.”

[Serious Fraud Investigation Office v. Rahul Modi, 2019 SCC OnLine SC 423, decided on 27.03.2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal (NCLAT): A two-member bench comprising of Justice S.J. Mukhopadhaya, Chairperson and Justice Bansi Lal Bhat, Member (Judicial) dismissed an appeal filed by the Corporate Debtor against the initiation of Insolvency Resolution Process.

The Financial Creditor had granted a loan of Rs 1.02 crores to the Corporate Debtor which they were unable to repay. The Financial Creditor took recourse to arbitration and an award was passed favouring the Financial Creditor. The Corporate Debtor failed to comply with the award. Consequently, the Financial Creditor triggered the Insolvency Resolution Process. The appellant – a shareholder of Corporate Debtor – assailed the initiation of the process on the ground that there was an internal dispute among the directors which was pending adjudication under Section 241 and 242 of the Companies Act, 2013 before National Company Law Tribunal, New Delhi.

The Appellate Tribunal perused the entire scheme of the Insolvency and Bankruptcy Code regarding the Insolvency Resolution Process. It was observed that internal dispute among directors of the Corporate Debtors does not construe a valid defence to triggering of the process. Furthermore, it could not be defeated by taking resort to pendency of matter before the NCLT under Companies Act. The Code is a special law having an overriding effect on any other law as mandated by Section 238. The factum of default and non-compliance with arbitral award was not disputed by the Corporate Debtor; and thus, the Financial Creditor was well within its right to initiate the process. The appeal was held to be frivilous and costs amounting to Rs 1 lakh were imposed. The appeal was, thus, dismissed. [Jagmohan Bajaj v. Shivam Fragrances (P) Ltd.,2018 SCC OnLine NCLAT 413, dated 14-08-2018]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Jayant Nath, J., admitted a petition filed for winding up of respondent company. The petition was filed under Section 433(e) and 434(a) of the Companies Act, 1956.

The petitioner company had business dealings with the respondent company. The respondent was indebted to pay outstanding dues to the petitioner which amounted to Rs 13,58,000. Proceedings under Section 138 of the Negotiable Instruments Act were also pending before the competent court. The respondent took a plea that the claim was time-barred.

The High Court, reading the provision of Section 19 of the Limitation Act into the facts of the present case, rejected the plea of the respondent. The said section provides that if there is a part payment on account of a debt before the expiry of the prescribed period of limitation, a fresh period is to be computed. In the present case, admittedly, there was a part payment by the respondent. Thus, the claim of the petitioner was well within time. The Court noted the fact that there was clearly an outstanding liability, and the respondent failed to raise any bona fide defence for non-payment of the said dues. In such circumstances, the High Court appointed the Official Liquidator attached to the Court as Provisional Liquidator for the respondent company. The petition filed by the petitioner under the Companies Act, 1956 was thus admitted. [Tigers Worldwide (P) Ltd. v. MAL Cargo (P) Ltd.,2018 SCC OnLine Del 10106, dated 17-07-2018]

Hot Off The PressNews

The Ministry of Corporate Affairs (MCA) has constituted a 10 Member Committee, headed by the Secretary of Ministry of Corporate Affairs, for review of the penal provisions in the Companies Act, 2013 may be setup to examine ‘de-criminalisation’ of certain offences. The MCA seeks to review offences under the Companies Act, 2013 as some of the offences may be required to be decriminalised and handled in an in-house mechanism, where a penalty could be levied in instances of default. This would also allow the trial courts to pay more attention on offences of serious nature. Consequently, it has been decided that the existing compoundable offences in the Companies Act, 2013 viz. offences punishable with fine only or punishable with fine or imprisonment or both may be examined and a decision may be taken as to whether any of such offences may be considered as ‘civil wrongs’ or ‘defaults’ where a penalty by an adjudicating officer may be imposed in the first place and only consequent to further non-compliance of the order of such authority will it be categorised as an offence triable by a special court.

It is also required to be seen as to whether any non-compoundable offences viz. offence punishable with imprisonment only, or punishable with imprisonment and also with fineunder the Companies Act, 2013 may be made compoundable. The Committee shall submit its report within thirty days to the Central Government for consideration of its recommendations.

The terms of reference of the Committee are as follows:

  1. To examine the nature of all ‘acts’ categorised as compoundable offences viz. offences punishable with fine only or punishable with fine or imprisonment or both under the CA-13 and recommend if any of such ‘acts’ may be re-categorised as ‘acts’ which attract civil liabilities wherein the company and its ‘officers in default’ are liable for penalty;
  2. To review the provisions relating to non-compoundable offences and recommend whether any such provisions need to be re-categorised as compoundable offence;
  3. To examine the existing mechanism of levy of penalty under the CA-13 and suggest any improvements thereon;
  4. To lay down the broad contours of an in-house adjudicatory mechanism where penalty may be levied in a MCA21 system driven manner so that discretion is minimised;
  5. To take necessary steps in formulation of draft changes in the law;
  6. Any other matter which may be relevant in this regard.

The Committee’s constitution, under the Chairmanship of Secretary, is the following:

(1) Secretary,  Ministry of Corporate Affairs Chairperson
(2) Shri T.K. Vishwanathan, Former Secretary General Lok Sabha and Chairman, BLRC Member
(3) Shri Uday Kotak, MD, Kotak Mahindra Bank Member
(4) Shri Shardul S Shroff, Executive  Chairman, Shardul Amarchand Mangaldas & Co. Member
(5) Shri Ajay Bahl, Founder Managing Partner, AZB & Partners Member
(6) Shri Amarjit Chopra, Senior Partner, GSA Associate Member
(7) Shri Arghya Sengupta, Vidhi Centre for Legal Policy Member
(8) Shri Sidharth Birla, Former President, FICCI Member
(9) Ms. Preeti Malhotra, Partner and Executive Director of Smart Group Member
(10) Joint Secretary (Policy), Ministry of Corporate Affairs Member-Secretary

Ministry of Corporate Affairs

Case BriefsHigh Courts

Delhi High Court: A Division Bench comprising of Gita Mittal, Actg, CJ and C. Hari Shankar, J., adjudicated upon and listed matters relating to the Companies Act, 2013 for further hearing on 24.07.2018.

The writ petitions adjudicated upon jointly were filed against notices dated 06.09.2017 and 12.09.2017 issued under Section 164(2)(a) of the Companies Act, 2013 disqualifying the petitioners from being directors in companies wheresoever they may be directors. The disqualification took place because of default in submitting returns which were statutorily required to be filed with the Registrar of Companies (hereinafter ROC) with regard to the affairs of the company in question, for a continuous period of three financial years. Additionally, some of the writ petitions also alleged misuse of powers under Section 248(1) of the Companies Act, 2013, claiming that the Registrar of Companies additionally struck off the name of the said companies from the register of companies. The writ petitioners claim that the disqualification of directors as well as the striking off the names of the companies was in gross violation of the principles of natural justice.

The Court, noted that the issues raised in the writ petitions before it required adjudication and were of grave importance as they raised questions about the working of, spirit, intention and object of Sections 164 and 248 of the Companies Act, 2013. Further, interim stay was granted in the cases of all writ petitioners. The Court also allowed the petitioners to avail cancellation of disqualification under the Condonation of Delay Scheme, 2018. [Atul Khosla v. Union of India, WP (C) 9439 of 2017, order dated 22.03.2018]

Amendments to existing lawsLegislation Updates

The government notified amendments to the Companies Act 2013, aimed at making the insolvency process more effective. The Companies (Amendments) Act 2017, which received Parliament’s nod in the just-concluded winter session, have put restrictions on managerial remuneration when a company has defaulted in its dues. Companies, which have defaulted on their dues to financial institutions, will now require the prior approval of these creditors, besides approval in a general meeting in case the payment of managerial remuneration exceeds 11% of the net profits.

Earlier, only the company’s prior approval in a general meeting was required. The amendments have also allowed issuance of shares at a discount to the creditors in cases where debt is converted into shares in pursuance of a resolution plan under the Insolvency or Bankruptcy Code or a debt restructuring scheme. The changes to the Act also bar a registered valuer from undertaking valuation of any asset in which he has direct or indirect interest for a period of three years before or after his appointment. These changes are a part of the government’s efforts to remove or change laws that are impeding the effective resolution of bankrupt companies.

The income tax department said that the rules around levy of minimum alternate tax (MAT) will be eased for insolvent companies and also that the companies against whom insolvency proceedings have been initiated will be allowed to reduce the entire amount of loss brought forward, including unabsorbed depreciation from the book profit for calculation of MAT. It was also added that legislative changes will be made to make this more effective.

Source: Livemint

Case BriefsHigh Courts

Hyderabad High Court: While deciding the instant appeal under Section 483 of the Companies Act, 1956 read with Clause 15 of the Letters Patent against the admission of Company Petition No. 231 of 2015, filed for its winding-up under Section 433(e) read with Sections 434(1)(a) and 439 of the Companies Act, 1956, the Division Bench of Sanjay Kumar and Uma Devi, JJ., observed that it would not be true to say that a person who commits a breach of the contract incurs any pecuniary liability, nor would it be true to say that the other party to the contract who complains of the breach has any amount due to him from the other party. Thus no pecuniary liability arises till the Court has determined that the party complaining of the breach is entitled to damages.

The appellant company was awarded a contract by Surana Ventures Limited to set up a 35 MW per annum capacity photo-voltaic cell manufacturing plant at Fab City, Hyderabad. In turn, the appellant company engaged services of several sub-contractors and suppliers for discharging this contractual obligation. The respondent company was one of the sub contractors upon whom a Purchase Order dated 15.04.2011 was placed by the appellant company to manufacture and supply of certain water and waste-water plant components for use in the proposed manufacturing plant. The Purchase Order contained the terms and conditions of the contract as it contemplated that time was the essence of the work and all deliveries/works had to be completed. However Surana Ventures shelved the project in August, 2011 and the contract was frustrated thereafter. As a result the appellant company claimed that it could not proceed further thereafter, in so far as Purchase Order. The respondent company stated that it had invested its entire monies into the project and kept the plant ready and was at the disposal of the appellant company and thus requested them to pay the balance amount. With the appellant denying the liability to pay, the company petition for winding-up the appellant company was presented by the respondent on 01.05.2015. The Company Judge admitted the winding up petition stating that the appellant company’s defense of Surana Ventures shelving the project is unsustainable and did not make any observation on the issue as to whether there was breach of contract by the appellant company in respect of its obligation under the Purchase Order.

The Court observed that the Company Judge lost sight of such an important issue as to the presence of a breach of contract by the appellant company as this was a crucial aspect which was raised by way of a bonafide dispute by the appellant company and required to be addressed at the threshold to assess as to whether the respondent made out a prima facie case for admission of the winding-up petition. The Court also observed that when damages are assessed the Court in the firstly must decide that the defendant is liable and then it proceeds to assess what that liability is. But till that determination there is no liability at all upon the defendant. Noticing the existence of several debatable issues raised by the appellant which were ignored by the Company Judge, the Court thus set aside the order of admission dated 25.10.2017 and dismissed Company Petition No. 231 of 2015. [MW High Tech Projects India Pvt. Ltd. v. M/s. Grauer & Weil (India) Ltd., 2017 SCC OnLine Hyd 409, decided on 06.12.2017]

Amendments to existing lawsLegislation Updates

G.S.R… (E)- In exercise of the powers conferred by sub-sections (1) and (2) of Section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Incorporation) Rules, 2014, namely:

1. (1) These rules may be called the Companies (Incorporation) Amendment Rules, 2018.

(2) They shall come into force from the 26th day of January, 2018.

2. In the Companies (Incorporation) Rules, 2014 (hereinafter referred to as the principal rules), for Rule 9, the following rule shall be substituted, namely:-

9. Reservation of name.- An application for reservation of name shall be made through the web service available at by using RUN (Reserve Unique Name) along with fee as provided in the Companies (Registration offices and fees) Rules, 2014, which may either be approved or rejected, as the case may be, by the Registrar, Central Registration Centre”.

3. In the Principal rules, in Rule 10, the words, letters and figure “Form No.INC-7” shall be omitted.

4. In the principal rules, for Rule 12, the following rule shall be substituted, namely:-

12. Application for incorporation of companies.- An application for registration of a company shall be filed, with the Registrar within whose jurisdiction the registered office of the company is proposed to be situated, in Form No. INC-32 (SPICe) along with the fee as provided under the Companies (Registration offices and fees) Rules, 2014:

Provided that in case pursuing of any of the objects of a company requires registration or approval from sectoral regulators such as the Reserve Bank of India, the Securities and Exchange Board, registration or approval, as the case may be, from such regulator shall be obtained by the proposed company before pursuing such objects and a declaration in this behalf shall be submitted at the stage of incorporation of the company”.

5. In the principal rules, in sub-rule (1) of Rule 38, the following proviso shall be inserted.

(i) in sub-rule (1), after the proviso, the following proviso shall be inserted, namely:-

“provided further that in case of incorporation of a company having more than seven subscribers or where any of the subscriber to the MOA/AOA is signing at a place outside India, MOA/AOA shall be filed with INC-32 (SPICe) in the respective formats as specified in Table A to 3 in Schedule I without filing form INC-33 and INC-34”;

(ii.) In sub-rule (2), after the proviso, the following proviso shall be inserted, namely:-

‘Provided further that in case of companies incorporated, with effect from the 26th day of January, 2018, with a nominal capital of less than or equal to rupees ten lakhs or in respect of companies not having a share capital whose number of members as stated in the articles of association does not exceed twenty, fee on INC-32 (SPICe) shall not be applicable”.

6. In the annexure to the principal rules,-

(i) for Form No. INC-1, the following form shall be substituted, namely:-

RUN- Reserve Unique Name

***** ***** *****

(ii) for Form No. INC-3, the following form shall be substituted, namely:-

FORM NO. INC-3- One Person Company –Nominee Consent Form

***** ***** *****

(iii) for Form No. INC-7 shall be omitted;

(iv) for Form No. INC-12, the following form shall be substituted, namely:-

FORM No. INC-12- Application for grant of License under Section 8

***** ***** *****

(v) for Form No. INC-22, the following form shall be substituted, namely:-

FORM NO. INC-22– Notice of situation or change of situation of registered office

***** ***** *****

(vi) for Form No. INC-24, the following form shall be substituted, namely:-

Form No. INC-24– Application for Approval of Central Government for Change of Name

***** ***** *****

(vii) for Form No. INC-32, the following form shall be substituted, namely:-

SPICe- (Simplified Proforma for Incorporating Company Electronically)

***** ***** *****

(viii) in form No. INC-33 and in Form No. INC-34, for the words and figures ‘INC-1’the word ‘RUN’ shall be substituted.

[F. No. 1/13/2013 CL-V, Part-I, Vol. II]

Note: The principal notification was published in the Gazette of India, Extraordinary Part II, Section 3, sub-section (i) vide number G.S.R. 250(E) dated 31st March, 2014 and subsequently amended vide the following notifications:-

Serial Number Notification Number Notification Date
1. G.S.R. 349 (E) 01-05-2015
2. G.S.R. 442 (E) 29-05-2015
3. G.S.R. 99 (E) 22-01-2016
4. G. S.R.336(E) 23-03-2016
5. G.S.R.743(E) 27-07-2016
6. G. S.R.936(E) 01-10-2016
7. G.S.R.1184 (E) 29-12-2016
8. G.S.R. 70 (E) 25-01-2017
9. G.S.R. 955 (E) 27-07-2017