New guidelines for incorporation of company

Last updated: 06 June 2022

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The Ministry of Corporate Affairs (MCA) has introduced new guidelines affecting company incorporation in India, particularly for entities from countries sharing a land border with India. These amendments, effective from May 20, 2022, update the Companies (Incorporation) Second Amendment Rules, 2022. Key changes include revised formats for the INC-9 declaration by the first subscriber and the DIR-2 declaration by the first director, requiring specific statements regarding government approval for share subscriptions and security clearance from the Ministry of Home Affairs.

SHORT SUMMARY

In this article, the author shall discuss the latest amendment made by the Ministry of Corporate Affairs (MCA) in respect to the Incorporation of Company with a person/ company belong to a country sharing land border with India like China, Pakistan, Bhutan, Myanmar, Nepal and Bangladesh.

MCA has amended Companies (Incorporation) Second Amendment Rules, 2022 w.e.f. May 20, 2022.

New Company Incorporation Rules: India s Land Bordering Countries

These amendments have been made by:

Form 9 in Companies (Incorporation) Second Amendment Rules, 2022 has been substituted with new formats
Amendment has been made in DIR-2 (Consent of Directors).

A. AMENDMENT IN FORMAT OF INC-9

Declaration by First Subscriber

W.e.f. June 01, 2022 if you are incorporating any Company in India you are required to use the "New INC-9" form. In the new form following clauses has been added:

I am required to obtain the Government Approval under the Foreign Exchange Management (Non-Debt Instrument) Rules, 2019 prior to subscription of shares and the same has been obtained and is enclosed herewith; Or

I am not required to obtain the Government Approval under the Foreign Exchange Management (Non-Debt Instrument) Rules, 2019 prior to subscription of shares

B. AMENDMENT IN FORMAT OF DIR-2

Declaration by First Director

W.e.f. June 01, 2022 if you are incorporating any Company in India you are required to use the "New DIR-2" form. In the new form following clauses has been added:

I further declare that,

I am not required to obtain the security clearance from the Ministry of Home Affairs, Government of India before seeking appointment as director; or
I am required to obtain the security clearance from the Ministry of Home Affairs, Government of India before seeking appointment as director and the same has been obtained and is attached.

C. AMENDMENT IN FORMAT OF DIR-3: If Applying for DIN

Declaration While Applying DIN

I am not required to obtain the security clearance from the Ministry of Home Affairs, Government of India under sub-rule (1) of rule 10 before applying for director identification number; or
I am required to obtain the security clearance from the Ministry of Home Affairs, Government of India under sub-rule (1) of rule 10 before applying for director identification number and the same has been obtained and is attached.

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About the Author

CS Divesh Goyal

Practicing Compnay Secretary

CAREER PROFILE He is a Fellow Member of the Institute of Companies Secretaries of India having intense expertise in Corporate Law for the last 8 years. He is a young and progressive Practicing Company Secretary with zeal to dig deep into the nuances of Corporate Laws. Being a researcher at heart, he has done ... Read more

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