INC-9: What Is It, and Why Is It Mandatory for Company Incorporation?

When setting up a new company in India, entrepreneurs often find themselves drowning in a sea of compliance requirements and legal jargon. One form that frequently pops up is INC-9, leaving many founders scratching their heads. What exactly is this document, and why is it compulsory? In this post, we'll demystify INC-9 and shed light on its significance in the company incorporation process.

Understanding INC-9

INC-9, also known as the "Affidavit of Subscription and Qualification of First Directors," is a declaration signed by individuals who have agreed to become the first directors of a proposed company. It is a mandatory form that must be filed along with the SPICe+ incorporation application.

In simpler terms, think of INC-9 as a formal commitment by the initial directors to take on the responsibilities and liabilities that come with their role. It's a way for them to affirm that they meet the necessary qualifications and are willing to steer the company in compliance with the law.

The Purpose of INC-9

At first glance, INC-9 might seem like just another bureaucratic hoop to jump through. However, it serves a crucial purpose in promoting transparency and accountability in corporate governance.

Let's break it down:

1. Verifying Director Eligibility:

   
   

   Through INC-9, prospective directors declare that they are not disqualified from holding the position under the Companies Act, 2013. This includes criteria such as being of sound mind, not being an undischarged bankrupt, and not having been convicted of certain offenses. By weeding out ineligible candidates upfront, INC-9 helps ensure that only qualified individuals become directors.

   
   

2. Curbing Malpractices:

   
   

   The affidavit acts as a deterrent against dummy directors and corporate fraud. By personally attesting to their qualification and consent to take on directorship, individuals are less likely to lend their names to sham companies or act as fronts for unscrupulous promoters. INC-9 thus helps safeguard the integrity of the corporate ecosystem.

   
   

3. Establishing Accountability:

   
   

   Signing INC-9 is not just a formality; it carries legal weight. Directors are held accountable for the declarations made in the affidavit. False or misleading statements can attract penalties and even prosecution. This accountability promotes diligence and responsibility among directors right from the start.

   
   

Key Contents of INC-9

The INC-9 affidavit typically includes the following information for each proposed director:

• Full name, DIN, and address

• Date of birth and nationality

• Educational qualifications and experience

• Number of shares subscribed in the company (if any)

• Declaration of eligibility and consent to act as director

• Affirmation of compliance with director qualifications as per Companies Act

• Signature of the person making the affidavit

  
  

While the format of INC-9 is standardized, it's crucial to ensure that all details are filled accurately and completely. Even minor discrepancies can lead to rejection of the incorporation application.

Filing INC-9: Tips and Best Practices

• Timing: INC-9 should be filed along with SPICe+ and other incorporation documents. Ensure that all proposed directors sign the affidavit prior to filing.

  
  

• Accuracy: Double-check all information provided in INC-9, especially DINs, addresses, and educational qualifications. Inconsistencies between INC-9 and other documents like SPICe+ or MoA/AoA can raise red flags.

  
  

• Completeness: Make sure no fields are left blank. If a particular detail is not applicable, mention "N/A" instead of leaving it empty.

  
  

• Attachments: INC-9 needs to be accompanied by proof of identity and address for each director. Acceptable documents include PAN card, passport, voter ID, etc. Ensure that these attachments are clear, legible, and valid.

  
  

• Professional Help: Given the critical nature of INC-9, it's advisable to seek expert assistance in preparing and filing the affidavit. Professionals like chartered accountants or company secretaries can help ensure compliance and avoid costly errors.

  
  

How Fiscal Flow Can Assist

At Fiscal Flow, we specialize in providing end-to-end support for company incorporation and regulatory compliance. Our team of experienced chartered accountants and legal experts can guide you through the entire process of setting up your business, including filing INC-9 and other necessary documents.

We understand that legal formalities can be daunting for entrepreneurs eager to kickstart their ventures. That's why we take care of the paperwork and compliance, so you can focus on what matters most – growing your business. Our services include:

• Preparing and filing incorporation documents like SPICe+, INC-9, MoA, AoA, etc.

• Advising on director qualifications and disqualifications

• Obtaining DIN for proposed directors

• Ensuring compliance with Companies Act and other relevant laws

• Representing before regulatory authorities in case of queries or clarifications

  • Providing post-incorporation support like GST registration, tax filings, etc.

    
    

If you're looking to start a company in India, Fiscal Flow can be your trusted partner in navigating the legal landscape. Reach out to us today to learn more about how we can help turn your entrepreneurial dreams into a thriving reality!