India will soon join an elite group of countries where starting a business will take less than a day. The Ministry of Corporate Affairs (MCA) has simplified the procedures for incorporation to enable promoters to get their companies incorporated within 24 hours.
The new procedure to issue online certificate of incorporation will be implemented from August 11. Earlier, officials at the Registrar of Companies used to go through the available list of names and approve all documents manually. Incorporation took anywhere between four days to two weeks, depending upon individual issues.
Under the new procedure, the promoters need to get the application and other relevant documents certified by a practising professional and the applications will be processed electronically.
“In case the e-forms 1, 18, 32 and e-form for Memorandum of Association and Articles of Association have been certified by the practising professional regarding the correctness of the information and declarations given by the subscribers, the application shall be processed electronically and the digital certificate of incorporation shall be issued online immediately by the Registrar of Companies,” the ministry said in a circular dated July 23.
Starting business is the first of the 10 sub-indices that form the Ease of Doing Business Index of the World Bank. India has consistently been placed at around 130 among the 183 countries ranked.
According to the Doing Business 2010 report, New Zealand, Canada and Australia bagged the top three rankings on the first sub-index, ‘Starting a business’. For example, in Australia, there are two procedures required to start a business which take on average two days to complete. The official cost is 0.8 per cent of the gross national income per capita. There is no minimum capital requirement. By contrast, in Guinea-Bissau which ranked among the worst (183rd) on the same sub-index, there are 16 procedures required to start a business, taking 213 days to complete. The official cost is 323 per cent of the gross national income per capita. A minimum capital investment of 1,006.6 per cent of the gross national income per capita is required.
Pawan K Vijay, CEO, Corporate Professionals Pvt Ltd, said the move would go a long way in improving India’s rankings in ease of doing business globally. “It is very positive. Earlier, it used to take 8-10 days. Getting it down to 24 hours will be a big boost.” While fewer and simpler regulations often imply higher rankings, putting adequate safeguards is also crucial, feel experts. “While the ministry officials used to intrepret rules conservatively, professionals may take risk. Therefore, it is important for the ministry to explain the guidelines more explicitly,” said Vijay.
