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Comparison between incorporation of company by new and old process

CS Divesh Goyal 
Updated on 05 July 2016

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According to the latest World Bank report, India stands at the 142th position in terms of ease of doing business globally. No wonder, there have always been clamour and concern for bureaucratic hurdles which prevent the business to run efficiently and smoothly. One such hurdle was the bureaucratic procedure as to the incorporation of a new company.

However, welcome step has been taken by the Narendra Modi government to make the procedure more simple and user-friendly by introducing an integrated e-form INC-29 for incorporating a company in India. ‘EASE OF DOING BUSINESS’.

With the introduction of the INC-29, the Ministry of Corporate Affairs (MCA) has begun to make good on its promise to improve India’s ranking on the World Bank’s Ease of Starting a Business Index to inside the top 50 from the current 158. 

The new concept of FAST TRACK INCORPORATION was given effect by the MCA in the form of the new form INC 29. The form INC 29 facilitates the incorporation of the company in a single form (i.e) as soon as form INC 29 is filed with the ROC the company will come into existence legally. The concept behind this new form is just to encourage the new entrepreneurs to begin a company without any hindrance while incorporating the company legally with the ROC. The introduction of this form has reduced the complexity which was present in the previous method of incorporating a new company and further reduces the cost when compared to the previous method.

The corporate affairs ministry will from May 1, 2015 have an integrated company incorporation form to make compliance and reporting easier and convenient for Corporate.

Particular

Integrated Incorporation Process

Normal Incorporation Process

Both the options are available with Companies for Incorporation.

Purposes

5-in-1 form

N. A.

No. of Form Filing

1 (ONE)

5 (FIVE)

Steps of Incorporation

Single Step of Incorporation

Three Step Incorporation

Form Filing Requirement

Only one Form INC-29.

DIR-3- Application for DIN

INC-1 – Application for Name Approval

INC-7 – Incorporation of Company

DIR-12 – Appointment of First Directors

INC-22 – Situation of Registered Office

Digital Signature

Only One DSC required.

DSC of both Subscribers Required.

Incorporation of Section 8
Company

Section 8 Company can’t incorporate by this process.

Section 8 Company can incorporate by this process.

Din Allotment

Maximum 3 Person can apply DIN through this process.

Separate DIR-3 will be file for each person.

Verification of specimen signature and the latest photographs in INC-10

No need Verification of specimen signature and the latest photographs of the promoters, first directors of the company by the banker or notary.

it is sufficient that the signature and photographs be self-attested by such promoters or first-directors
 

Need of Verification of specimen signature and the latest photographs of the promoters, first directors of the company by the banker or notary

Narrower Name Proposal

Person can give only ONE Name for Approval. 

Person has option to give alternate SIX Names.

Name Keeping

While applying name applicant has to undertake necessary diligence regarding the name keeping, considering the guidelines issued by MCA for Name approval.

Drawback: Be sure for the proposed name, only one name can be given this the major drawback of this e-form.

Person has option to give maximum SIX names. Therefore, comparatively less diligence requires.

Time frame

There approval of DIN, Name and Incorporation will be altogether.

Generally it will take 4-5 days.

First DIN form will approve generally it takes 1 day. Second Name will Approve, generally it takes 7-10 days. Third Incorporation will Approve, generally it takes 7- 10 days. Generally Incorporation of Company takes 20-25 days.

  • Apply for DIN in DIR 3: It is a STP form DIN is generated in e-form Challan.
  • INC 1 takes 7-10 days for approval, maximum re-submission cases are there.
  • INC 7 takes 10-15 days for approval.
  • DIR 12 takes 1-2 days to get approved.
  • INC 22 gets approved in 2-3 days.

In total 21-30 days.

Plus whenever any of the above form comes in re-submission a separate costing to visit concerned ROC and loss of time.

If we calculate all of above incorporation of a Company under process can consume a month or more.

Attachment of ID Proof

In case of Director/Shareholders have DIN, then no need to attach separate Address Proof/ ID Proof.

Even Director/Shareholders have DIN, then also need to attach separate Address Proof/ ID Proof.

Approval Process

The form will be assisted by a separate team at ROC back office. Therefore, approval may be quick

The approval of e-form will take comparatively more time

Professional Certification

INC-29 requires Professional Certification.

No need of professional Certification in e-form INC-7.

Resubmission

Only single resubmission is allowed

Two resubmission is allowed.

Refund of MONEY

In case of rejection of form, company can apply for refund of money by refund form.

No refund allowed.

No Tracking System

Here applying for 3 approvals, If any one fails all other also fails Exp. If there is issue in DIN application, then the entire application will reject.

Here applying in separate-2 forms. If one fails then other are safe.

Consolidation of Fees

Fee Structure will be like This:

INC-29 – 300/-

Fee Structure will be like This:

  1. DIN- 500/-
  2. INC-7- 300/-
  3. INC-22- 300/-
  4. DIR-12- 300/-

Stamp Duty on MOA

If paid up share Capital 100,000/-. Then Rs. 300/-

Same as INC-29

Stamp Duty on AOA

0.15% of Authorized Share Capital of the Company

Same as INC

PAN & TAN

Both can Apply along with incorporation.

Same as INC

Attachment

All most same in both processes.

All most same in both processes.


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