Faq on Practical aspects of companies act 2013

1. FAQ’s* based on the queries received at the various sessions of the
Quest Assist - ICSI
Incorporation of Company
Q.1- How to appoint an authorised representative in a Foreign Company whose
place of business is in India?
Ans- The authorised representative to be appointed shall be resident of India.
He/she can be authorised through issuing power of attorney (which shall require
stamping) or can be appointed through a Board Resolution.
Q.2 How the subscriber sheet should be signed in case of foreign subscribers.
Ans: In case of the foreign subscriber, the subscriber sheet needs to be physically
signed and appostiled/consolised there at the place of signing. The complete MOA
and AOA along with the subscriber sheet should be attached with the Spice e-form
INC-32.
Q.3 How to file Spice (INC-32) in case of Foreign Subscriber and Foreign Body
Corporate?
Ans. In such case, the physical copy of MOA & AOA need to be attached with
Spice e-form INC-32, as Spice e-form 33 & 34 will not be applicable in the case
Incorporation having foreign subscribers.
If foreign individual has DIN and valid business visa then DSC will work on e-MOA
& e-AOA but in case of body corporate - physical signing of MOA and AOA is
required.
Q.4 What is the meaning of the term “Entrenchment”?
Ans. The term “Entrenchment” is not defined in the Act.
Section 5(3) provides that the Articles may contain provisions for entrenchment to
the effect that specified provisions of the Articles may be altered only if conditions
or procedures as that are more restrictive than those applicable in the cases of
special resolution are met or complied with.
For example – The Company may specify some of its Articles as ‘Entrenched’
meaning thereby such entrenched articles can only be modified subject to some
more restrictive procedures than only ‘special resolution’ for ex. Unanimous
approval.
Q.5 Spice (INC-32) is allowing limit of only 75 characters for writing proposed
name. If the proposed name is of 78 characters. Then, please guide as to how to
proceed.
Ans- Maximum limit for the Name column as per Spice is 75 characters and you
cannot go beyond that. In case of more than 75 characters in the proposed name,
you can file form INC-1 which allows up to 100 characters in name.

2. Q. 6 - How to file Spice if only DIN available in case of Foreign Subscriber?
Answer - According to Rule 13, In case of Foreign Subscriber, if both DIN and
valid business visa are available, then Spice, e-MOA& e- AOA is sufficient. But if
there is no valid business visa, then physical MOA and AOA will be required to be
signed outside and duly Apostiled / Consolised as per the rule.
Q. 7- A Company Secretary has to give Declaration that he has personally visited
the Registered Office, can he delegate and authorise for the same any other
person on his behalf and take his affidavit for the same?
Ans- No, the visit shall be conducted by the Company Secretary himself/herself as
this task cannot be delegated as the Declaration in such forms is given by the
Company Secretary in his/her name only.
Q. 8- What is the procedure to get the Refund in case Form INC-32 is rejected?
Ans- File Form Refund on MCA.
Q. 9- Whether interest in a sole proprietorship firm or a partnership firm or an LLP
should be specified in the “Interest of Directors” by the Director of a Company?
What should be specified in registration no. for such firms?
Ans- Yes, each and every interest of a Director of any Company, being in a sole
proprietorship firm or a partnership firm or an LLP should be specified in the
'Interest of Directors'. PAN for partnership firms and sole proprietorship firms
shall be specified in respect of the registration no.
Q. 10 - MOA and AOA drafted according to Companies Act, 1956. Is it compulsory
to change MOA & AOA as per the Companies Act, 2013? Is it necessary to file MGT
14 if we change it as per 2013 Act?
Answer - It is not mandatory to adopt MOA & AOA as per the Companies Act,
2013, untill any alteration in the same is done. It is necessary to pass a special
resolution and file MGT 14 if you change MOA & AOA as per 2013 Act.
Q.11 - Spice eMOA does not have Other Object like earlier provided in the Act,
Can we incorporate the other objects in eMOA?
Ans – The Companies Act, 2013 has deleted Other Objects. Now only Main Objects
& Ancillary Objects are required to be mentioned.
Q. 12 - Which form is to be filed for alteration of MOA & AOA? Do we need to file
Spice 33 & 34 in case of alteration?
Ans - The Spice forms 33 & 34 are available for only fresh incorporation and not
available for alteration of MOA and AOA .
The filling of necessary forms depends on the nature of alteration you are making.
Such as for alteration of –
 Object Clause - MGT - 14,
 Capital Clause - SH 7

3.  Conversion of Public company to private company and vice versa - INC 27,
and MGT - 14.
 Name clause - MGT 14, INC – 1 & INC - 24
 Registered Office Clause – MGT- 14, INC – 23,28,22 & GNL - 2
Q. 13 - Do I need to attach physical MOA & AOA with MGT - 14 if a company
incorporated through Spice form wants to alter MOA & AOA?
Ans. - Physical MOA & AOA needs to be attached while filing MGT - 14 for
authentication of alteration. eform 33 & 34 are only for new Incorporation.
Q.14 - Difficulty in attaching DSC, it takes too much time when attaching with the
new forms and showing Error.
Ans. - Try changing the PDF setting. MCA has prescribed settings for reduction of
the Size of PDF Documents which is available on the MCA – Forms & Downloads.
Issue and allotment of Securities
Q.15- Proviso 3 of Sub-rule 2, of Rule 14 of The Companies (Prospectus and
Allotment of Securities) Rules, 2014 requires the Company to pass special
resolution in case of an offer or invitation for non-convertible debentures within
six months of commencement of Companies Act, 2013.
Ans- No relevance of the above Proviso as six months from commencement of Act
has already been elapsed.
Q. 16- How to file Balance Sheet if Subscription Money is not received?
Ans- Subscription money to be paid is the liability of the Subscriber thus if
subscription money is not received by the Company then the Balance Sheet shall
show the same amount of such capital not received as "Recoverable” from
Subscriber" on the "Assets" side.
Q. 17- If a Company has been incorporated but the Subscribers have not paid
subscription money, whether it is necessary to issue share certificates within two
months as per the provisions in Companies Act, 2013?
Ans- As per the definition in Section 2(64), "Paid up Share Capital" or "share
capital paid-up" means such aggregate amount of money credited as paid-up as is
equivalent to the amount received as paid-up in respect of shares issued and also
includes any amount credited as paid-up in respect of shares of the company, but
does not include any other amount received in respect of such shares, by
whatever name called;
Thus, Paid up Share Capital includes amount which is not paid but is due to be
paid in future. Therefore, share certificates shall be issued within two months of
incorporation as per the provisions of Section 56 of Companies Act, 2013 to avoid
non-compliance.
Q. 18 – Whether the maintenance of PAS – 5 is mandatory for all companies?

4. Ans - Yes, every company making private placement shall maintain a complete
record of private placement offers in Form PAS-5.
Q. 19 - Whether to file Form PAS-4 and PAS-5 in separate Form GNL-2, if offer is
being made to existing shareholders?
Ans - Exemption has been granted in case of private placement offer is being
made to existing shareholders, thus no requirement of filing Form PAS-4 and
Form PAS-5 in Form GNL-2 and attach a copy with Form PAS-3.
Q. 20- Whether the amount of unsecured loans can be adjusted against Share
Application Money.
Ans- The amount of unsecured loans can be adjusted against the Share
Application money, subject to the execution of documents viz. letter from
borrower to adjust their outstanding unsecured loan into share application money
and Share Application form.
Q. 21 Whether in the above case, Section 62(3) shall be applicable.
Ans- The compliance of Section 62(3) is applicable only when there is pre-existing
condition for conversion of debentures or loans into equity shares at the time of
issue of Debentures or borrowing of loan and the adjustment of unsecured loans
into shares shall not be covered under Section 62(3).
Q. 22 In case of adjustment of the amount of unsecured loans into Share
Application Money, whether the same shall be treated as Issue of Shares for a
consideration other than cash.
Ans- In case of the adjustment of the amount of unsecured loans into Share
Application on the request of the borrower, the issue of shares shall not be treated
as for consideration other than shares.
Alteration of MOA & AOA
Q. 23 - Whether adoption of new set of MOA and AOA is mandatory?
Ans- As per the provisions of Section 4, Section 5, Section 6 and Section 13, and
Section 14 adoption of new set of Memorandum of Association and Articles of
Articles is not mandatory. But if the objects are being altered in MOA then either
the new set of MOA needs to be adopted or the 'Ancillary’ Objects" and "Other
Objects" shall be deleted and "MATTERS WHICH ARE NECESSARY FOR
FURTHERANCE OF THE MAIN OBJECTS" shall be added to the MOA.
Further, as per the provisions of Section 6, where the provisions of the articles
become inconsistent with the provisions of the Company, the Companies Act,
2013 will prevail and it will be advisable to adopt new set of AOA.
Q. 24- What shall be the procedure of Alteration of Memorandum, if the same has
been filed through SPICe form?
Ans- Company shall pass Special Resolution to alter Memorandum of Association
and file Form MGT-14 within 30 days of passing the special resolution, with the
copy of altered MOA in pdf file.

5. Q. 25- Can we change Main Objects of the Company without changing the name
of the Company?
Ans- Yes, Main Objects of the Company can be changed without changing name of
the Company.
Q. 26- Can Subscriber List be altered?
Ans- Subscriber Sheet is a life time document of a Company, thus Subscriber List
shall never be altered for a Company.
Q. 27- Can a Company start business in an activity specified in Other Objects?
Ans- No, the Company cannot start business in an activity specified in Other
Objects as these activities are out of the purview of main objects. Once these
activities are incorporated in the “Main Objects” or "matters which are necessary
for furtherance of the main objects" as per the Companies Act 2013, the Company
can commence business in these activities as well.
Q. 28 - We have not adopted new AOA as per 2013 Act and there is no power in
our AOA for dematerialisation of equity shares. Should we amend our AOA or
adopt new AOA as per 2013 act?
Ans- Adopt new AOA as per the 2013 act and add the new clause related to
dematerialisation of shares. The registrar may refuse the MGT- 14 and will enforce
you to adopt new AOA if you try to amend your existing AOA by adding
dematerialisation clause.
*The FAQs were developed on the basis of the answer given by the experts while addressing the
queries and would not in any way represent the views of the ICSI.