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Company Formation

COMPANY FORMATION - Incorporation of a company in India under the companies Act, 2013

Introduction

In India, companies are broadly classified as private limited companies and public limited companies. The general characteristics of the two are as follows:

    PRIVATE LIMITED COMPANY

  • Number of members: Minimum 2 and maximum 200
  • Minimum capital: No statutory requirement of minimum paid up capital. It is recommended to start with at least INR 100,000/-
  • Directors:Minimum 2 maximum 15
  • Comparatively less compliances
  • Restricts public subscription and transferability of shares

    PUBLIC LIMITED COMPANY

  • Number of members:Minimum 7
  • Minimum capital:INR 500,000/-
  • Directors: minimum 3 and maximum 15
  • More regulated than private limited companies
  • Shares are freely transferable

KEY POINTS FOR INCORPORATION

Directors

At least one director should be resident in India (stayed in India for at least 182 days in the previous year). Maximum of 15 directors can be appointed in a company. More than 15 can be appointed by passing special resolution.

Incorporation Charters:

Under section 5(3), provision for entrenchment of articles has been provided. The articles of the company 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 case of a special resolution are met or complied with.

The previous Act provided for division of object clause into main object and other objects, However, the new Act makes it mandatory to state the objects and any other matter considered necessary in furtherance.

    Procedure for Incorporation

    The proposed Directors should possess a Director Identification Number (DIN) which is mandatory for becoming a director in the company. If not then an application must be made to Registrar of Companies (RoC) for DIN. For applying for DIN it is necessary that the proposed Directors possess digital Signatures.

    At least one of the proposed directors should possess a digital Signature so as to sign the relevant forms.

    An application has to be made to the Registrar of Companies (RoC) for reservation of name of the proposed company. The name for the Company can be reserved in two ways:

    If not sure about the Unique Name- Apply through RUN (Reserve Unique Name) Web Form for Rs 1000 per form giving one name. The name will be checked by MCA and the availability of name will be communicated. Two resubmission are allowed in this system.
    An approved name is valid for a period of:

    • i) 20 days from the date of approval (in case name is being reserved for a new company) or
    • ii) 60 days from the date of approval (in case of change of name of an existing company)

    b) If you are sure the name you are choosing is Unique by searching on MCA Name search, you can directly move ahead with the filing of Spice Form INC-32 i.e. Simplified Proforma for Incorporating Company Electronically. In that form itself you can give the proposed name of the Company. You need to apply for DIN through that form by mentioning details like PAN or Passport Detail. On incorporation of the company DIN will be allotted to those directors who don’t have DIN. Form DIR 3 is now applicable only for existing companies who want to add new director.

    Following forms are required to be filed on MCA Website for Incorporation of a Company:

NC 33 - eMemorandum of Association (SPICe MoA) and INC 34- eArticles of Association (SPICe AoA)

Form DIR 2- Consent to act as a director.

INC 9- Declaration by directors that they are not convicted of any offence.

INC 10- Form for verifying the signatures of the applicants.

MBP 1- Notice of Interest by Director.

Rent Agreement

NOC

Declaration of Deposit