(Human is a natural person, whereas company is a legal person)
1. What is a company?
Company is nothing but simply a type of business organization to conduct business /trade/ commerce. Company has its origin from two Latin words (com) means together and (pany) means bread, that is to say “come together and earn bread”. Company can sue others and can be sued by others and also ability to acquire, hold, dispose of and alienates property/assets. Company as a business organization is mostly preferable because of its incomparable advantages
2. Advantages of company
*Separate legal entity–company and its owners are altogether different persons; neither the company nor the members are liable for each other at all. No acts of the company bounds the members, vice versa.
*incorporated association-company is not a natural person; it starts to exist from the day of its incorporation.
*limited liability–It is the main advantage of company which attracts the investors towards itself. Members of the company are only liable for the amount unpaid on the shares held by them, irrespective of the amount of debt and dues of the company.
*Flexibility in conversion-a company is allowed to convert in other form of business organization subject to the provisions of applicable laws, rules and regulations.
*minimum requirements-one can incorporate a private limited company with even only two people. It is also pertinent to note that, there is no minimum capital requirement to incorporate a company which enables the promoters to proceed according to their needs, requirements and availability
*perpetual succession-life of company will not be disturbed due to death, demise or health of its members unlike in the case of proprietorship , partnership
*transferability of ownership-ownership of the company depends on shares, so, one can become the owner of company by mere purchase of shares and get register his name as the owner of the shares in register of member of the company.
3. Disadvantages of company
*entry and exit-incorporation of a company is a time consuming and complex process which makes it difficult to take entry. Since the business under company form of business organization are mostly operates on big scale, showing interest of large number of stakeholders which makes it difficult to take exit.
*Misuse of separate legal entity-this concept is often misused by owners of the company; they used to do illegal and unlawful activities and use the company as veil to protect themselves from the consequences.
*Multiple laws, rules and regulations– In order to ensure best corporate governance government of India has enacted a plethora of laws rules and `regulations.
4. Incorporation of a company.
MCA (Ministry of corporate affairs) Government of India in its continuing endeavor has introduced a new web based form SPICE+ (Simplified Performa For Incorporating a Company Electronically Plus). Introduction of SPICE+ is a most welcome step which makes incorporation of company very efficient and effective. It is worth to note that India has comes 13 places up in ease of doing business index after introduction of SPICE+. So, we can now incorporate a company using SPICE+ service on MCA portal in more effective manner.
5. STEPS to incorporate a company
6. Documents requirement for incorporation of company:
|a. For name reservation
i) Unique name
ii) NOC from trademark owner
iii) Detailed objects
iv) Board resolution of holding company in case of incorporation of subsidiary company
|b .for DSC application
ii) Email id & phone no.
iii) Aadhar card
iv) Passport size photo
|c. for DIN
ii) Id proof
iii) Address proof
iv) Place of birth
v) Occupation and educational qualification duration of stay on current address
d.for company incorporation
i) Address and id proof of subscribers/promoters/shareholders
ii) Detailed objects of company
iii) Authorized capital and proportion of shareholders
iv) Utility bill of registered address office(not older than 2 months)
v) Following information of directors
*address proof and id proof
*passport size photograph
*mobile & email Id
*DIN & DSC
Article by: Aman – Team Complianceship