India has secured the 63rd rank on the World Bank’s Doing Business, 2020 survey, out of 190 countries. Doing Business, 2020 has also acknowledged the 10 economies that improved the most on the ease of doing business (EODB) after implementing regulatory reforms where India is one of them. What is more commendable is that India has made a substantial leap upward, raising its EODB ranking from 130 rank in Doing Business 2016 to 63 rank in Doing Business 2020.
Ease of starting a Business has always been one of the measures to position the economies in the World Bank survey. On the subsisting motto of EODB, the Ministry of Corporate Affairs has deployed a new web form christened ‘SPICe+’ (pronounced ‘SPICe Plus’) replacing the existing SPICe form and replacing the web linked Form AGILe with Form ‘AGILe-PRO’. These web linked forms (AGILe-PRO) are for other useful registrations which are bundled with company incorporation and some of them are pre-requisites to commence business. We have explained all this herein below. These new forms have been made applicable for all new company incorporations w.e.f. 23rd February, 2020.
Now, the interest lies on what “plus (+)” is being offered in this updated version of the forms. In addition to the previous services that were offered by form SPICe i.e. Name Reservation, Incorporation, DIN application, PAN/TAN application, GSTIN allotment, ESIC/EPFO registration the following two services are added in form SPICe+:
|Sr. No||Services offered in addition to previous services|
|+||Mandatory opening of Bank Account for the Company|
|+||Mandatory issue of Profession Tax registration (for the state of Maharashtra)|
Along with the above addition in services, the following difference can be noted through introduction of new form:
|Name of Service||Form SPICe||Form SPICe+|
|Application for Employee Provident Fund (EPFO) registration of the Company||Optional||Mandatory|
|Application for Employee State Insurance Corporation (ESIC) registration of the Company||Optional||Mandatory|
As we can notice that the new Form SPICe+ is catering to an umbrella of services, involving the following Ministries:
If we capture the motive behind deploying the form SPICe+, it could be noticed that this Form efforts to cover majority of the registrations which a new company might seek at the time of its incorporation. Nonetheless, each change is countered by a challenge, therefore, let’s have a squint on below:
India being a huge market, has surely attracted the Foreign nationals for Foreign Direct Investment (FDI) over years. Thus, below mentioned are the key points that cover major areas which might be of keen interest for the Foreign Nationals:
An Indian bank account is to be mandatorily opened while incorporating a company through form SPICe+. If we talk about practical difficulty that was largely faced especially in case for Foreign Residents was opening of bank account in India for remitting the subscription money by the non-resident subscribers. Further, the delay in remitting of funds in India caused delay in MCA compliances and FEMA reporting. This mandatory Bank Account opening will result in preventing avoidable contraventions.
Currently, few banks are integrated with the bank account services that are ICICI, Punjab National Bank (PNB), Kotak Mahindra Bank , Bank of Baroda, State Bank of India , HDFC Bank , IndusInd Bank , Union Bank of India , and Axis Bank (16 banks are expected to be integrated in total.)
What if one wants to open or function through another bank?
There is no restriction/ prohibition to open another bank account. Nonetheless, even the first bank account that was mandatorily opened at the time of incorporation can be closed.
The schemes run by EPFO and ESIC provide social cover to the formal sector workers in the country. The EPFO runs three social security schemes i.e. Employees Provident Fund Scheme, 1952, Employees’ Pension Scheme, 1995, and Employees Deposit Linked Insurance Scheme, 1976. Similarly, ESIC provides mandatory health cover to formal sector workers and facility of cashless health treatments. The companies with 20 or more employees are required to register with EPFO while this ceiling is 10 or more in the case of ESIC.
Initially, the new companies used to apply for such registration when they reached the threshold limits mentioned in relevant Acts. Thus, necessary paperwork was to be done with respective authorities. However, with effect from 15.02.2020 such registration is to be mandatorily sought through SPICe+ for all the new companies.
We may not reach the threshold limit of even 10 employees which is when the social registrations were required. It’ll be a burden, isn’t it? We will have to do the file the returns, etc under EPFO and ESIC?
The new companies obtaining the EPFO/ESI numbers will have to file statutory returns only when they cross the thresholds as prescribed under the relevant Acts. So, it will not be a botheration at all.
As we are aware that a person is to be appointed as the Authorised Signatory while applying for GSTIN/EPFO/ ESIC registration/ opening a Bank Account. The new form brings below key changes in the said matter:
Only a proposed Director who is Resident in India holding a valid PAN can be appointed as the Authorised Signatory.
Such Director / Primary Owners cum Authorised signatory should have valid Indian mobile number and email Id should be mentioned in the Form for OTP verification.
This seems like a restrictive clause but this situation is only relevant and applicable at the time of incorporation. The company can always modify the authorised person at any point of time later.
What if a Company wants to have other foreign Director or person other than a Resident Director as the Authorised Signatory?
At this point, there is no such option from the Ministry. This point is being looked into. However, please note that an Authorised Signatory can always be changed subsequently.
The Ministry of Corporate Affairs in the FAQs on SPICe+ have mentioned below answer to question that whether DSC is to be obtained for all subscribers/proposed Director:
“In case number of subscribers and/or directors to eMOA and eAOA is upto 20 and all such subscribers and/or directors have DIN/PAN, it shall be mandatory for each one of them to obtain a DSC.”
The Government is trying hard to provide a seamless and fast procedure of incorporating a company and subsequent helpful registrations which previously involved months of toil and labour. Further, it is doing an extensive use of technology to meet its target of reaching the 50th spot in the Doing Business rankings by the World Bank. The Government has definitely streamlined the incorporation process by providing a single window to various registrations as discussed above but it is too early to comment on the practical difficulties that might be faced.