What is incorporation?
It is a process of getting a business registered with a statutory registering authority as a separate legal entity in due compliance with applicable laws. In India, incorporation means registering a company under the companies act, 1956 with the registrar of Companies (ROC), Ministry of Corporate Affairs (MCA).
Is Incorporation necessary?
It is optional for a business owner to choose the form of business organization he wants to own and run. However if he opts to create an association of persons for business comprising of more than 10 persons for normal business other than banking or 20 persons in case of banking business, it mandatory for him to get his business incorporated under the companies act in India as either a private or public limited company.
What are the benefits of Incorporation?
The biggest benefit is the separate legal entity. Additionally limited liability of the members, free transferability of shares, liquidity, better corporate image and bankability amongst the bankers, statutory authorities are other advantages.
Where to Go for Incorporation?
We need to make applications to the Registrar of Companies (ROC), Ministry of Corporate Affairs (MCA) of the concerned state.
Who can incorporate Company?
Minimum two or more individuals/companies or juristic persons can create company in India.
What are pre-requisites for incorporation?
- Two or more persons as Promoter
- Two or more persons as Directors with validly issued and approved Director’s identification Number (DIN)
- One validly issued Digital Signature of Class II A
- Requisite fund to meet the cost of incorporation and investment based on the business model.
- A name for the company as made available by the Registrar of Companies.
What is the cost of incorporation?
There are two components of the cost of incorporation:
- The statutory cost, which is widely dependant on the amount of authorised/nominal capital decided by the promoters. Under the statutory cost, cost of filing documents with ROC is major and the cost of stamp duties is relatively minor cost.
- Professional fee- if you hire the services of any professional, it varies from professional to professional and the quality of service they provide.
Are there any agencies to help us get the company incorporated?
Apart from MCA (ROC) offices who give general guidance to prospective promoters, one may approach any established practicing firm of Company Secretaries (CS)/Chartered accountants (CA)/Cost and Works accountants (CWA)/lawyers for availing the professional services.
Is there any check list for incorporation?
Yes, below is the check list provided for incorporation of a Private Company: For Public Limited Company, one more step is involved after getting the company incorporated (see checklist for commencement of Business)
Check and answer these questions:
- Who are the promoters? Get their details in the following formats in Annexure A – use separate sheet for each promoter.
- Who are the proposed directors? Get the details in Annexure B.
- What are the probable names for the company? Give in order of preference in Annexure C
- Is there any trade mark registered? If yes take proof and if it belongs to others, take no objection certificate in form as given in Annexure D.
- DO the promoters have Digital signatures of class IIa? If not take their application in the attached forms Annexure E with requisite fee and documents. (Ask the rate of digital signature to Alacrity)
- Take consent letter from prospective directors in the format attached in Annexure F. separate for each individual.
- Take signature pages from promoters for MOA and AOA in Annexure G & H respectively. Additional columns may be created if promoters are more than 3.
- Take power of Attorney in form attached in Annexure I.
Annexure A
List of promoters
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Particulars
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Input (fill in the place)
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Verification (yes/no)
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Name
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Father
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Date of Birth
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Full Permanent Address
(PIN is must)
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Full Present Address
(PIN is must)
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*PAN
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*Driving license
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*Passport
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*Any other address proof
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Photo ( 3 color passport size)
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Digital signature obtained? (yes/no)
If NO apply for fresh Digital signature for at least 1 promoter.
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- (give no. in the blank space and attach a copy duly self signed) in case of foreign nationals, get the attestation done by their country’s consulate office or notary. If the language of the documents is other than English, get a certified copy of the translated version duly attested by public notary of that country.
Annexure B
List of Directors
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Particulars
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Input (fill in the place)
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Verification (yes/no)
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#Name
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#Father
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#Date of Birth
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#Full Permanent Address
(PIN is must)
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#Full Present Address
(PIN is must)
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#*PAN
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#*Driving license
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#*Passport
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#*Any other address proof
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#Photo ( 3 color passport size)
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#Digital signature obtained? (yes/no)
If NO apply for fresh Digital signature for at least 1 promoter.
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DIN
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Details of other companies/firm in which interest held
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CIN
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Name
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Position
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* ((give no. in the blank space and attach a copy duly self signed) in case of foreign nationals, get the attestation done by their country’s consulate office or notary. If the language of the documents is other than English, get a certified copy of the translated version duly attested by public notary of that country
#(NOT TO BE OBTAINED SEPRATELY IF PROMOTERS AND DIRECTORS ARE THE SAME).
Annexure C
Main objects of the company: write a few lines
Type: Private or Public
Authorised capital: Rs. …………………………….. (Specify)
Class of shares desired: Equity /preference/both, if both, please indicate the ratio of Equity and preference shares:
Face value per share: Equity: Rs.
Preference: Rs.
Proposed names for the company.
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Preference No.
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Name
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Relevance of name
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1
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2
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3
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4
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5
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6
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Ratio of shareholding:
Promoter 1---
Promoter 2---
Promoter 3---
Promoter 4---
Promoter 5---
Annexure E
Consent letter
I, the undersigned having consented to act as Director of the company ………………… …………………………. ………………………………………..*(name of the company) pursuant to section 264 (2)/266(1) (a) of the Companies Act 1956 certify that I have not been disqualified to act as director under section 267 and/or section 274 of the Companies Act, 1956.
(Signature)
*(……………………………………………….… (name))
*S/o- ……………………………………………. (father’s Name)
Address: …………………………………………… ,
…………………………………………………
………………………………………………….
*Distt.- ………………………., *P.S. ………………………………………
*State- ……………………………………………..
*PIN: …………………………….
* the details are to be given in CAPITAL LETTERS and are mandatory.
We the several persons, whose name and addresses are subscribed hereunder, are desirous of being form into a company in pursuance of this Memorandum of Association and we respectively agree to take the number of equity shares in the capital of the company set opposite to our respective names:-
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Sl No
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Name, Address, Occupation &Description of the Subscribers
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By
Pranav Kumar, FCS,
pranav@pranavkumar.com |
