DEFINITION OF THE TERM ‘COMPANY’
Company is defined under section 2(20) of the Companies Act, 2013, which means ‘A Company is registered under any provisions of Companies Act 2013 or any previous Company Law’.
Following types of Companies are registered in India:
- Private Limited Company
- Public Limited Company
- One Person Company (OPC)
- Limited Liability Partnership (LLP)
WHO IS PROMOTER?
Incorporation of A Private Company has to be started with defining promoters as they are the person who does the preliminary work which is necessary and incidental for the formation of a company such as, promotion incorporation, flotation and they try to obtain investments in the company in the form of subscribers.
Promoters are defined under Section 2(69) of the Companies Act, 2013 as an individual who:-
- Is named as a promoter in the prospectus
- Control affairs of a company
- Advice and/or direct the Board of Directors.
In nutshell, we can say promoters are the person who originally had an idea of forming a company and they are the sole reasons for which the company is incorporated.
REGISTRATION OF PRIVATE LIMITED COMPANY
Incorporation of a Private Company is governed under section 4,7,12, 152 & 153 of Companies Act 2013 read with rules made there under.
- Section 4 of Companies Act, 2013:- MEMORANDUM
Memorandum of the Company also known as Memorandum of Association (MoA) contains the basic details about the Company such as Capital, Shareholding, Registered Office, etc.
Memorandum of the Company shall state the following details:
- Name of the Company: Name of the Company in case of private limited should be registered with the last word “Private Limited”;
- State of registered office: Full address with the state in which registered office has to be situated should be mentioned;
- Objects: Objects for which the Company is being registered should be mentioned. Maximum Four Main Objects are allowable. There can be other objects also which are necessary for other matters also which is also termed as ancillary objects;
- Liability of the members should also be stated;
- Share Capital: The amount of capital with which the company has to be registered should be mentioned. Also, a number of shares subscribed by each promoter have to be mentioned in a subscriber sheet.
♦ Section 7 of Companies Act, 2013:- INCORPORATION OF A COMPANY
Application for registration of the Company shall be filed with Registrar of Companies (RoC) within whose jurisdiction the Registered Office has to be situated.
A Private Limited Company can be formed Online through the Ministry Of Corporate Affairs (MCA) portal nowadays by submitting necessary documents and by paying online Stamp Duty (which applies as per State to State). Following forms are filled in the form of “Linked Forms” online through MCA portal:
- SPICE MOA
- SPICE AOA
Necessary information and/or documents are needed to be submitted online through these forms stated above are:
- Memorandum of Association (MoA) & Article of Association (AoA) with brief details of the Company Name, Capital, Registered Office signed by all the subscribers or promoters.
- A duly signed declaration that has to be given by an advocate, Chartered Accountant, Cost Accountant or Company Secretary in Practice.
- An affidavit in form INC-9 which is a declaration by subscribers and first directors which state no- conviction of any offense and/or they are not found guilty of any fraud/ misfeasance/or any breach of duty.
- Address of its registered office where it has to be situated
- Complete details of each subscribers and first directors such as Full Name, Fathers Name, DIN number (If already allotted to them), Date of Birth, Present Address, Permanent Address along with Address proof such as Electricity Bill, Bank Statement, or any Mobile bill (Any One amongst these three), and Identity Proof such as Voter ID, Passport or Driving License (Any One amongst these three).
- If any of the directors already hold directorship in any other company apart from the Proposed Company in which being appointed, such interest in other entities has to be attached as a declaration.
♦ Section 12 of Companies Act, 2013:- REGISTERED OFFICE OF THE COMPANY
- If at the time of incorporating a Company no proof of registered office such as Rent agreement or owned registry is attached then a newly registered Company shall within 30 (Thirty) days of its registration and receiving its Company Identification Number (CIN) No. by registrar shall furnish the verification of its registered office to registrar in form INC- 22. Not required if the company has furnished the details of the registered office in the incorporation SPICe Forms.
- Also, the company shall have its registered office situated at such a place for receiving any form of legal and/or corporate documents and acknowledgments within 15 days of its incorporation.
- Section 12 states that every company shall paint or affix the name of the company and address of its registered office on the outside of an office in one of the general language or the most widely used language of the particular state in which registered office is situated. For Example, a Registered office in Kolkata should be affixed with Bengali.
- Any change in registered office after incorporation shall be intimated to the registrar within 15 days of such change.
- In case of any default is made in complying the above-stated provisions, company and officer in charge shall be liable for a penalty of one thousand rupees for every day of continued default not exceeding one lakh rupees.
♦ Section 152 of Companies Act, 2013:- APPOINTMENT OF DIRECTORS
- The directors named in the Memorandum as a subscriber of the Company are deemed to be the first directors of the Company until and unless the contrary is referred in an article to the provisions for the appointment of first directors.
- For being appointed as a director in a Company, DIN is mandatory.
- Consent of directors to act as a director is mandatory at the time of appointment.
♦ Section 153 of Companies Act, 2013:- APPLICATION FOR THE ALLOTMENT OF DIRECTOR IDENTIFICATION NUMBER (DIN)
- Every director who intends to be appointed as a director in any Company is required to first obtain unique Director Identification Number (DIN) from Registrar of Companies.
- For allotment of DIN, online application is made to the Central Government in the form of DIR-3 with necessary documents properly scanned as an attachment. Following documents are required to be submitted:
- Passport size Photograph
- Identity Proof
- Address Proof
- Provided, in case proposed directors don’t have DIN number and it’s their first company as a director which is being incorporated, those directors can apply for DIN in Form No. INC-32 (SPICe) at the time of the Incorporation of a Company directly. Maximum three directors can apply for DIN through SPICe forms.
- As per RULE 12B directors are required to file e-form ACTIVE for all the companies with the date of Incorporation before 31.12.2017, failing which DIN allotted shall be marked as “Director of ACTIVE non-compliant company”
STEP-BY STEP PROCESS FOR APPLYING ONLINE FOR INCORPORATING PRIVATE LIMITED COMPANY
- Rule 9 of Companies(Incorporation) Rule, 2014: Reservation Of Name
- The first and foremost step for the incorporation of a Private Limited Company is started by applying a suitable name for the Company. Name can be applied online in such form accompanied by such fees as may be prescribed. Any name as proposed by directors and/or promoter should be checked online through MCA portal for its availability. A company is not allowed to be registered with the name:
- Which too nearly resemble or is similar to the name already registered as a Company, LLP or registered under Trademark Act.
- Such words or symbols which are prohibited by Central Government from time to time
Name can be applied online through web service available at www.mca.gov.in by using Reserve Unique Name (RUN) service by signing in through workspace service.
- After receipt of an application by the registrar, if all the information and documents furnished are correct and accurate, the registrar may accept an application and reserve a name for 60 days. That means after the name is being approved, the Name Approval Letter is allotted to the applicant with name reserved for 60 days.
- If the name is not as per the condition stated above, it can be rejected by the registrar giving two chances for re-applying the name i.e., ‘Resubmission of a new name’ that has to be done within the time prescribed.
- If after the reservation of name, it is found that applicant furnishes wrong or incorrect information, such reserved name :
- If Company is not Incorporated: reserved name will be canceled
- If Company is incorporated: as per the further orders of Registrar.
♦ Rule 12 of Companies(Incorporation) Rule, 2014: Application for Incorporation
Further after name approval, the next step is to apply for registration of a company. Application for incorporation has to be made online through the MCA portal using three linked forms with the necessary attached documents stated above. It’s a simplified method for incorporating a company electronically (SPICe):
- Form INC-32 (SPICe)
- Form INC-33 (SPICe MoA)
- Form INC-32 (SPICe AoA)
♦ Rule 13 of Companies(Incorporation) Rule, 2014: MoA and AoA
- MoA & AoA should be signed by each subscriber with full details such as name, address, occupation. In case of illiterate same should be affixed by thumb impression.
- In the case of subscribers being Body Corporate, the same shall be signed by the director/officer in charge duly authorized on behalf of Body Corporate.
- Memorandum of the Company shall be as per the format specified in Table A, B, C, D, E of Schedule I as per its category of the Private Company.
- Article of the Company shall be as per the format specified in Table F, G, H, I, J of Schedule I as per its category of the Private Company.
♦ Rule 14 of Companies(Incorporation) Rule, 2014: Professional Declaration
- Declaration by Advocate, Chartered Accountant, Cost Accountant or Company Secretary in Practice should be given in Form-8.
♦ Rule 15 of Companies(Incorporation) Rule, 2014: Subscribers and first Directors Declaration
- Declaration by each subscriber and first directors shall be given in Form-9 stating that they have not convicted any offense and/or they are not guilty of any fraud/ misfeasance/or any breach of duty.
♦ Rule 18 of Companies(Incorporation) Rule, 2014: Certificate of Incorporation
- On and from the date of receipt of the application, Registrar based on information and documents provided will scrutinize the forms. After that registrar will provide a Certificate of Incorporation (CoI) if all the necessary details are accurate.
- COI shall mention the Date of Incorporation as well as Permanent Account Number (PAN).
- After the incorporation company is expected to keep and maintain copies of all the necessary documents in a registered office.
NEW SECTION-10 (DECLARATION BEFORE COMMENCEMENT OF BUSINESS)
- Companies incorporated after the commencement of companies (amendment) ordinance, 2018 and having a share capital has to file form INC-20A online for the verification of registered office. This section says those companies incorporated on or after the 2nd day of November 2018 (02.11.2018) has to file a declaration by its directors within one eighty days (180) days of incorporation in Form- INC-20A.
- This declaration is filed to obtain a certificate of commencement of business.
- Bank Statement having all credit entries has to be attached to the form as a supporting document.
- If there is any default in filing this form within due date, the following penalty is revealed
- Company: Rs.50,000/-
- Director in default: Rs. 10,000/- per day up to Rs.1,00,000/-
- For how long is name approval letter is valid?
For new companies, names approved under RUN are valid for 20 days from approval that is 20 days from the date of name approval letter.
- How many Names & DIN can be applied in SPICe form?
One name can be applied in SPICe form although 2 names can be applied at a time using RUN
Maximum 3 DIN can be applied for new directors in SPICe
- Can the first directors be named in AOA (Article)
Yes, Article can be amended modified as per the requirement as form INC-34 (SPICe AoA) has a facility for the same.
- In how many days Company is approved by ROC?
Answer of this question depends upon case to case basis. ROC takes maximum 2-3 days from submission of application. It can put an application for resubmission in case of discrepancies
- Can LLP be formed using SPICe forms?
No, SPICe forms can be used only for incorporating only companies (Private/Public/OPC).