Company Incorporation to Become Simplified
Company Incorporation to Become Simplified
To provide recommendations on improvement of issues arising from the implementation of Companies Act, 2013, the Companies Law Committee was setup by the Government. The Companies Law Committee had recently released a report with recommendations on procedural changes to the incorporation process to make the registration process simplified. In this article, we look at some of the main changes processed by the Companies Law Committee to make the process for company incorporation easy.
Generic Object Clause in MOA
The Companies Act, 2013 requires the memorandum of association of a company to state the objects of the company for which it is proposed to be incorporated or any matter considered necessary for its operation. The Companies Law Committee has proposed to allow companies the additional option to have a generic object clause, i.e., “to engage in any lawful act or activity or business as per the law for the time being in force” in the MOA. This change proposed by the Companies Law Committee will ensure that companies can be easily incorporated and be allowed to undertake a wide variety of lawful activity to do business without any restrictions.
Name Reservation Period
As per the Companies Act, 2013, a name approval is valid for a period of sixty days from the date of the application. The Companies Law Committee has proposed for name reservation to be valid for a period of twenty days from the date of approval. This change proposed by the Companies Law Committee will ensure that the companies are being incorporated quickly in India.
Incorporation Affidavits
Currently to incorporate a comapny, an affidavit from each of the subscribers and from persons named as the first directors,must be submitted to the ROC. The affidavit must specify that he/she is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief.
The Company Law Committee has proposed that instead of an affidavit, self declaration from each of the subscribers and from persons named as the first directors, be submitted for incorporation. Obtaining an affidavit in India is a very tough process and doing away with the affidavit requirement will make company registration process simpler.
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