24 September 2021
i got this objection: If the proposed company is doing the business of chit fund, money changers, insurance, forex, micro-finance, housing finance, venture capital, asset management, investment advisor etc. activities, then declaration as per the proviso to rule 12 of the Companies (Incorporation) Rules, 2014 is to be given and it should be signed by all the subscribers. kindly help to resolve the same?
10 July 2024
The declaration as per the proviso to Rule 12 of the Companies (Incorporation) Rules, 2014, applies to companies engaged in certain specified businesses or activities, such as chit fund, money changers, insurance, forex, micro-finance, housing finance, venture capital, asset management, investment advisor, etc. This declaration is required to be given by all the subscribers (first shareholders) of the proposed company at the time of incorporation. Here’s how you can address this requirement:
### Steps to Resolve:
1. **Understanding the Proviso to Rule 12:** - The Companies (Incorporation) Rules, 2014, under Rule 12, require a declaration to be made by subscribers to the memorandum who are involved in certain specified activities. This declaration ensures compliance and transparency regarding the nature of the proposed business.
2. **Content of the Declaration:** - The declaration should state that each subscriber: - Is not convicted of any offence in connection with the promotion, formation, or management of any company. - Has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under the Companies Act, 2013 or any previous company law during the preceding five years. - Does not have any other disqualification under the Companies Act, 2013. - It should specifically mention the nature of the business or activities proposed to be undertaken by the company, such as chit fund, money changers, insurance, forex, micro-finance, housing finance, venture capital, asset management, investment advisor, etc.
3. **Signing the Declaration:** - Each subscriber (individual or entity) to the memorandum of association must sign this declaration. This typically includes all initial shareholders who are subscribing to shares of the company during incorporation.
4. **Incorporation Process:** - Prepare the memorandum of association and articles of association of the company as per the specific requirements for the activities involved. - Ensure that the declaration as per the proviso to Rule 12 is included and signed by all subscribers. - Submit the incorporation documents, including the declaration, to the Registrar of Companies (RoC) through the MCA (Ministry of Corporate Affairs) portal.
5. **Consultation and Legal Advice:** - If you are unsure about drafting the declaration or ensuring compliance with all regulatory requirements, it is advisable to seek assistance from a company secretary, legal advisor, or a professional consultant specializing in company law and incorporation procedures.
### Conclusion:
By adhering to the requirements of the proviso to Rule 12 of the Companies (Incorporation) Rules, 2014, and ensuring that the declaration is accurately drafted and signed by all subscribers, you can proceed with the incorporation of your company engaged in the specified business activities. This declaration plays a crucial role in establishing compliance with regulatory norms and transparency in business operations from the outset.
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