SPICe – One Day Company Registration
SPICe – One Day Company Registration
Ministry of Corporate Affairs (MCA) has recently introduced new version of SPICe (one day – one step) Company Registration. SPICe, which stands for Simplified Per forma for Incorporating Company electronically. The new SPICe form takes advantage of re-engineering of the existing process and establishment of Central Registration Centre to complete government processing of incorporation application of a company in a single day. SPICe integrates the allotment of Directors Identification Number (DIN), name approval, incorporation certificate, Permanent Account Number (PAN) and Tax Deduction Account Number (TAN) allotment under a single process, single form. In this article, we look at the new SPICe form in detail.
INC-29 – A Precursor to SPICe
Prior to the introduction of SPICe, Form INC-29 was introduced by the MCA in May, 2015 to simplify the process for incorporation of a company in one step. Under INC-29, the process for obtaining DIN, name approval and incorporation was streamlined into a single process. However, INC-29 was not without drawbacks and the approval for the form was still given by the concerned Registrar of Companies, leading to delays. Further, since the INC-29 form had name reservation and incorporation combined in one step, if the name of the company was rejected by the Registrar of Companies, the incorporation documents had to be redone completely.
Consolidation under Central Registration Centre
In March, 2016, the MCA introduced the Central Registration Centre at Guargaon, consolidating all name approval and incorporation processing under one centre. With consolidation of all name approval and incorporation application under one Centre, the time taken for name approval, incorporation, etc., was completely streamlined and the processing time significantly reduced. The following two charts show the average processing time with Central Registration Centre, proving the effectiveness and efficiency of the Central Registration Centre. Moreover, the consolidation of incorporation and name approval under the Central Registration Centre laid the foundation for the newly introduced SPICe form, delivering 5 different steps in one process.
SPICe with eMOA & eAOA
In October, 2016, the MCA introduce the first SPICe form with the provisions for filing eMOA and eMOA. While incorporating a company, preparation of Memorandum of Association and Articles of Association takes significant time for a Professional. To simplify this and standardise the charters of all companies registered in India, the SPICe form with eMOA and eAOA was launched.
After introduction of SPICe, all the previous forms for incorporation of a company were also discontinued, making SPICe form the only route for company registration. The present SPICe form however can be used only for name, incorporation and PAN allotment. Its not possible to get DIN using the SPICe form. Hence, DIN and TAN application had to be separately made.
New SPICe Form – One Day Company Incorporation
In April, 2017, the MCA has announced the following SPICe features on its website through an advertisement. The new SPICe form would combine the process for obtaining DIN, Name Reservation, Incorporation, PAN and TAN in a single step – fully consolidating the incorporation process of a company into one step. The new SPICe form integrates the process of getting DIN and TAN also into the same step, reducing the number of forms filed. Finally, the form also states that incorporation fee would also be reduced from Rs.2000 to Rs.500.
Reading Between the Lines – Is One Day Company Registration Possible?
Yes and no, incorporation of a company involves drafting and submission of various documents to the MCA. The Government has assured processing of all SPICe forms within 1 day and its a commendable step and will certainly be fulfilled by the Government at its Central Registration Centre as the Central Registration Centre already provides incorporation application processing within 1 day.
However, the number of document that have to be submitted for incorporation of a company are still fairly extensive and Digital Signature Certificate has to be procured which easily takes about 1 – 2 days in most cases. Under the new SPICe and eMOA, DSC is required for all Directors, Shareholders and the MOA/AOA witness.
Hence, even if a SPICe form is used and if incorporation documents are drafted by a professional within 1 day, it would take about 4 – 5 working days for incorporation of a company. (1 Day for Document Preparation, 1 Day for Signing Documents, 1 Day for DSC Processing and 1 Day for Incorporation Processing).
Drawbacks in Using SPICe
Like the INC-29 form, SPICe also has a major drawback in that if the name of the company is not approved, then all the incorporation documents have to be newly submitted. Considering that incorporation document drafting and signing takes a bulk of the time for a Professional in filing for incorporation, its advisable to obtain name approval and then submit the incorporation application.
Hence, until the process for approving name is more streamlined or company name availability check is automated by the MCA, Professionals will continue to use the old form of incorporation, wherein DIN is obtained separately, then name approval and then incorporation application is filed along with PAN and TAN. Since, DIN and name applications are still approved within a day, most professionals would value the confirmed name over speed of incorporation.
Advantages in Using SPICe
For Professionals / Entrepreneurs who choose to start a company with very unique name, SPICe form would certainly be a major game changer. If the Professional with certainty is able to file the SPICe form that the name is very unique, then majority of the steps of incorporation of a company would be combined, providing the Professional with a DIN, name approval, Incorporation Certificate, PAN and TAN in the same week.
Overview of Processes Combined under SPICe
Private Limited Company, One Person Company and Limited Company can be incorporated using the SPICe form. The following is an overview of the steps combined under SPICe:
Director Identification Number
Digital Signature Certificate (DSC) in the name of DIN applicant must be obtained prior to applying for DIN number. Digital Signature Certificate can be obtained through IndiaFilings. Digital Signature Certificates are issued in the form of a USB token with a validity of one or two years.
DIN numbers do not have an expiry date and no further compliance formalities are required for maintaining the validity of a DIN number.DIN numbers are allotted by the way of intimation through DIN allotment letter and no other documents are issued.
Name Reservation
Name reservation must be made to the MCA. If the proposed name of the company is accepted, name reservation is provided to the application for a period of 60 days. To obtain name reservation, a minimum of two DIN is required.
The advantages of using the traditional name reservation methodology is that at any time, upto 6 names can be submitted for MCA perusal. If any of the name is not available, the next suggested name is checked by the MCA officer. Along with resubmission, a total of upto 18 names can be checked while applying for name reservation before rejection of the form by the MCA.
Incorporation
Company is incorporated if there are no defects in the incorporation documents and the name is reserved for the applicant. If the name is not reserved, then name is checked by the MCA officer. Under the new SPICe form, if the name is available, then incorporation is provided. If not is not available, then form is asked to be resubmitted. In case of re submission all the incorporation documents would have to be resigned by the Directors/Shareholders, which could potentially take a long-time.
PAN Application
On incorporation of a company, PAN is already allotted automatically under SPICe form and mentioned on the incorporation certificate. PAN card is later dispatched to the registered office address of the company.
TAN number
TAN number is required for deducting tax at source. TAN application is usually made after obtaining PAN. Under the new SPICe form, TAN would be allocated along with the PAN. Allocating TAN with PAN would reduce another compliance related registration a company has to obtain at a later date and ensure that all companies are ready to deduct & remit tax collected at source from day one.