SHORT SUMMARY
MCA has come with New Section 10A inserted after Section 10 by Companies (Amendment) Ordinance, 2018 dated 02.11.2018 and the same has been inserted in Companies (Amendment) Act, 2019.
This section is stated about 'Filing of declaration of Commencement of Business' within 180 days of Incorporation of the Company. If Company fails to file such then there are a lot of penalties and restrictions on the Company.
In this editorial, the author shall discuss one of all those provisions i.e. 'Whether Companies can file e-form STK-2 for strike off without filing of e-form INC 20A' in case the company has not conducted business since Incorporation etc.
A. EXTRACT OF LAW
As per 10A, a company having Share Capital incorporated after ordinance i.e., after 02.11.2018 shall not commence its business or exercise any borrowing powers unless,
A declaration is filed by the directors in e-form Form No. INC-20A within 180 days from date of incorporation of company with ROC that ‘every subscriber to the MOA has paid the value of the shares agreed to be Taken by him'.
B. WHETHER STK-2 FOR STRIKE OFF OF COMPANIES CAN BE FILE BEFORE FILING OF INC 20A?
i. Situation Company may go for strike off just after Incorporation
If a company incorporated with certain objects. But after incorporation promoters feel that they want to continue the Company as they have not conducted the business and they want to go for strike off the Company.
As company has not received the subscription money, not filed declaration of commencement of business, not started any business.
ii. Analysis of Section 10A
However, it is not where mentioned under Section 10A, but as per practical system of MCA, their system don’t allow to file any form before filing of declaration of commencement of Business i.e. INC 20A.
Like:
• If company want to appoint or resign any director after Incorporation they are not allow to do the same till filing of INC-20A.
• If Company want to increase the capital after incorporation, they are not allow to do the same till filing of INC-20A.
As per provisions of Section 10A, form 20A required to file with in 180 days from date of Incorporation. However, many time due to many issues company doesn’t file the INC20A within 180 days. They are allow to file the same after 180 days with additional fees and penalty.
iii. Answer
As per Practical understanding of MCA System and intent of INC 20A, it seems that until company file INC 20A it is not allowed to file any form, including STK-2.
Therefore, it is very clear that no company can file e-form STK-2 for strike off before filing of INC 20A.
C. GENERAL PROVISION
i. Section 153
Every individual intending to be appointed as director of a company shall make an application for allotment of Director Identification Number to the Central Government in such form and manner and along with such fees as may be prescribed.
ii. Rule 9(1)
Every applicant, who intends to be appointed as director of an existing company shall make an application electronically in Form DIR-3, to the central Government for allotment of a Director Identification Number (DIN) along with such fees as provided under the companies (Registration offices and Fees) Rules, 2014.
Provided that in case of proposed directors not having approved DIN, the particulars of maximum three directors shall be mentioned in Form No.INC-32 (spice) and DIN may be allotted to maximum three proposed directors through Form INC-32 (spice).
D. WAYS TO OBTAIN DIN
There are two way to get DIN
i. In case individual incorporating New Company, he can apply DIN with Incorporation Form.
Condition: Only three DIN can get apply with Incorporation form.
ii. In case individual getting appointment in existing Company.
Condition: Such company pass a board resolution for application for DIN of such Individual and such Resolution needs to attach in e-form DIR-3.
E. POINT OF ANALYSIS
There can be following Situations:
i. Promoters wants to incorporate Company with more than three directors and all directors no having DIN. In such case how to obtain DIN?
ii. A person wants to obtain DIN but don’t want to get appointment in any Company as on date.
F. ANALYSIS
Situation 1: Incorporation with more than 3 Directors (not having DIN)
As per Section 153 read with Rule 9(1) Companies (Appointment and Qualification of Directors) Rules, 2014, the particulars of maximum Three Directors shall be mentioned in Form No.INC-32 (spice) and DIN may be allotted to Maximum Three Proposed Directors through Form INC-32 (spice).
It is clear from the legal provisions, that at time of incorporation maximum 3 Din can apply. If more than 3 person (not having DIN) want to incorporation Company in such case:
• First, they have to incorporate Company with three Directors, and
• Then appoint fourth director after Incorporation with Board Resolution of Company
Note: Only issue in above process is that, name of fourth person shall not be appear in Article of Association as first director of the Company.
Situation 2: Application for DIN without Board Resolution of any existing Company/ LLP
As per Section 153 read with Rule 9(1) Companies (Appointment and Qualification of Directors) Rules, 2014, Every applicant, who intends to be appointed as director of an existing company shall make an application electronically in Form DIR-3, to the central Government for allotment of a Director Identification Number (DIN) along with copy of board resolution proposing his appointment as director in an existing company.
It is clear from the legal provisions, that DIN can not be allot a person without
• Copy of Board Resolution of his appointment as director in an existing Company.
• DSC of Director of Existing Company on form DIR-3
Conclusion
After reading above mentioned provisions and situations one can opine that, As on date there are only two option to get DIN. One with incorporation form and second with Copy of board Resolution of existing Company. If a person doesn’t comply with any of above provision, he cant get DIN from the ministry.
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