Company Formation in India
In India companies are governed by Companies Act, 2013. It is the most preferred form of business entity and every year the number of companies are increasing by a substantial number. A company has separate legal entity that is different from that of its owners. It offers limited liability which means shareholders are liable to incur loss up to the amount of shares they hold. A company works on the principle of perpetual succession which means it stays in existence even if one or more of its shareholders, directors or promoters die. Company Formation in India, All these features make company the ideal form of entity to run a business.
A company can accept loans and deposits. It can lend money in its own name. Moreover, it can enter into contracts in its own name. It is also empowered to sue or get sued in its name. The procedure of company formation in India is done as per provisions mentioned in Companies Act, 2013 and rules mentioned in Companies (Incorporation) Rules, 2014. The process of company incorporation is quite easy and straightforward.
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The procedure for Company formation is similar for all states so whether it is company formation in Delhi or Bangalore or Mumbai etc. The Fees however may differ in different cases.
Minimum requirements for company formation
Minimum requirements to Incorporate a company are:
- Minimum 2 shareholders for a private limited company and minimum 7 for a public limited company.
- Minimum 2 directors for a private limited company where 3 for a public limited entity. Shareholders and directors can be the same persons.
- Minimum paid up capital of Rs. 1 lac and Rs 5 lacs for private and public limited company respectively.
Obtain Director Identification Number (DIN)
The first step to company formation is application to obtain DIN for all the directors. The application is made electronically in Form DIR-3. The directors must affix their photo along with copy of PAN Card, ID proof and address proof. The documents must be verified and counter-signed by a company secretary, chartered accountant or cost and work accountant.
Apply for Digital Signal Certificate (DSC)
The second step is to apply for DSC for all the directors. It is mandatory to obtain digital signatures as all filings are done electronically and they are used to authenticate them. You also need to register a director’s name who will be authorizing all the filings and submissions.
Reservation of Name
The next step of incorporation process involves reservation of name of the company. For that you need to first propose 6 names as per Rule 9 of Companies (Incorporation) Rules, 2014 and section 4(4) of Companies Act, 2013. Before proposing the name to the Registrar you must check their availability at the MCA (Ministry of Corporate Affairs) website. If you are sure that the names are available, submit them in the order of preference in e-Form INC-1. The application must be digitally signed by authorized directors.
Along with the application you need to submit Object clause of the MOA (Memorandum of Association) and copy of Board resolution in which names are finalized and signatory authority is decided. Upon submission of application the ROC will deliberate within the next 60 days and approve it if it considers it to be appropriate. The name remains reserved for a maximum period of 60 days.
Draft MOA and AOA
Upon finalization of name by Registrar of Companies (ROC), you must draft your Memorandum of Association and Articles of Association (AOA) as per format prescribed by Companies Act, 2013. For instance, if your company is one that is limited by shares then it must follow Table-A as provided in Schedule-1 of the Act. The MOA and AOA must be signed by all the subscribers of the company.
File for incorporation
As per the Act and Incorporation Rules the application of incorporation must be filed in INC-7 accompanied with INC-22 and DIR-2 new forms Spice 32, Form 33 and Form 34 have been introduced. The forms must be submitted with the ROC under whose jurisdiction the registered office of the company is situated. The forms must be filed within 60 days of reservation of name. The forms must be digitally signed and applicable fees must be paid along with copies of MOA, AOA, PAN Card and address proof.
The ROC upon deliberation will issue certificate of incorporation in Form INC-1 post which you must apply for certificate of commencement of business in e-Form INC-21.
Clients availing the services of Company formation in Delhi can now open their Bank Account with or Partner banks.
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