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Steps to Incorporating a Company

Steps to Incorporating a Company 

Types of Companies

  1. PRIVATE Company

As per Section 3 of the Act “ Private Company ” means a Company which, by its article

  • Restricts the right of transfer of its shares,
  • Limits the number of its members between 2 to 200 members
  • Prohibits any invitation to the public to subscribe for any shares or debentures of the company.
  • Minimum 2 Directors required and minimum paid-up capital of Rs. 1 Lac
  1. PUBLIC Company

A “Public Company” means a company, which is not a Private company.

  • The shares of the Company are fully transferable.
  • The minimum number of members required in public company is seven (Maximum, no limit).
  • Minimum 3 Directors required and minimum paid-up capital of Rs. 5 Lac.

Company can invite the general public for the subscription of its shares and debentures.

  1. FOREIGN COMPANY

Foreign Company means any company or body corporate incorporated outside India

  • has a place of business in India whether by itself or through an agent, physically or through electronic mode; and
  • conducts any business activity in India in any other manner.
  1. GOVERNMENT COMPANY

“Government Company” means any company in which not less than fifty one per cent of the paid–up share capital is held by the Central Government or  by any State Government or Governments or partly by the Central Government and partly by one or more State Government and includes a company which is a subsidiary  of such Government Company

Steps to Incorporating a Company

Pan Card – Each of the first shareholders and directors of the new company needs to get a Permanent Identification Number (PAN) from Income Tax Department of Government of India.

DIN Number – Each of the first directors of the new company needs to get Director Identification Number (DIN) from Ministry of Corporate Affairs (MCA).

DIGITAL SIGNATURE – At least one of the promoters must have a digital signature.

LOCATION – Decide the state in which the registered office of the company will be located.

AUTHORISED CAPITAL – Decide the Authorized Capital of the proposed company.

MAIN OBJECT – Decide whether the company will be a private limited company or public limited company. Decide the main objects of the company

PROPOSED NAME – Select, in order of preference, at least one suitable name up to a maximum of six names, indicative of the main objects of the company

Steps to Incorporating a Company

Filing of forms with Register of companies(ROC)

Form 1 A – Apply to the concerned Registrar of Companies (RoC) to ascertain the availability of

name in eForm 1A by logging in to the MCA portal using a registered Login id and Password.

A fee of Rs. 500/- has to be paid alongside and the digital signature of the applicant proposing the company has to be attached in the form.

Select, in order of preference, at least one suitable name up to a maximum of six names, indicative

of the main objects of the company.

Ensure that the name does not resemble the name of any other already registered company and

also does not violate the provisions of emblems and names (Prevention of Improper Use Act, 1950)

by availing the services of checking name availability on the MCA portal.

If proposed name is not available, the user has to re-apply with a fresh name on the same

application.

After the name approval the applicant can apply for registration of the new company

by filing the required forms (that is Form 1, 18 and 32) within 60 days of name approval.

Steps to Incorporating a Company

Preparation of the Memorandum of Association (MOA) and Articles of Association (AOA)

Drafting of the Memorandum and Articles of Association, vetting of the same by the Registrar of the Companies and printing of the same is the step subsequent to the name availability by the Registrar.

It should be noted that the main objects should match with the objects shown in eForm 1A.  These

two documents are basically the charter and internal rules and regulations of the company. Therefore, it must be drafted with utmost care and with the advice of the experts like Chartered Accountant or Company Secretary and the other object clause should be drafted in a very broader sense.

Arrange for stamping of the Memorandum and Articles of Association as per instructions of Registrar of Companies. The Stamp Duty to be paid will be calculated on the basis of the Authorized Capital of the Company. The MoA & AoA should be dated on a date after the date of stamping.

Get the Memorandum and Articles of Association (MoA & AoA) signed by Directors, and each shall

also write in his own hand his name, father’s name, occupation and address and number of shares subscribed for, and duly witnessed by at least one person who shall also write in his own hand his name, father’s name, occupation and address.

In case the Memorandum and Articles is to be signed by any of the promoters outside India, then

the signing should be done in the presence of Consul of India at the Indian Consulate.

Steps to Incorporating a Company

Form 1 – Apply the form using the Service Request Number (SRN) of Form 1A by logging in to the MCA portal using a registered Login id and Password.

E-Form 1 has to be submitted with following enclosures:

  • Memorandum of Association (MoA) and Article of Association (AoA) of the company

[Not required for a company licensed under section 25]

  • Annexure containing Details of Subscribers to MoA, AoA
  • Power of Attorney/Authority letter given by the Subscribers/Promoters/Directors

to the Professional i.e. Chartered Accountant or Company Secretary (in whole-time practice)

for formation of a company

Form 1 8

Form 18 is to be filed with the Registrar in regard to the location of the Registered Office of the Company with the digital signatures of the Director or Managing Director or Manager or Secretary

of the Company. Form 18 shall also be certified by the Company Secretary or Chartered Accountant or Cost Accountant in whole-time practice.

Form 32

Form 32 is required to be filed for giving the particulars of the Directors, Managing Director,

Manager or Secretary of the Company  digitally signed by the  Director or Managing Director or Manager or Secretary of the Company.

Steps to Incorporating a Company

Certificate of Incorporation

On the satisfaction of the Registrar that the requirements specified have been complied with

by the company, he shall issue a Certificate of Incorporation

Commencement of Business

In case of Private Limited Companies, they can commence business immediately on receipt of the

Certificates of Incorporation from the Registrar of Companies.

However, a Public Limited Company is also required to obtain a Separate Certificate of Commencement of business to start the business.

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