Gurminder Dhami
Introduction- There are various forms to do Business. The selection of a business structure depends upon the needs and expectations of the entrepreneur. Doing Business in Corporate form gives various advantages such as limited liability, perpetual succession, access to external finance, enhanced Credibility, management expertise and many more.
In this article, unless otherwise expressly provided all sections referred to are of Companies Act, 2013 and rules referred to are of Companies (Incorporation) rules, 2014.
Procedure
The procedure for Incorporation of is as follows:-
1. Obtain Digital Signature– The Subscriber applying for availability of name and the proposed Directors need to have DSC. AS per Ministry of Corporate Affairs Class-II DSC is required for e-Filings under MCA21.
2. Obtain DIN– As envisaged under section 153 an individual intending to become Director needs to obtain DIN. For obtaining DIN e-form DIR-3 has to be filed which has to be certified by a practicing professional.
3. Apply for name – As per section 4(4) read with rule 9 application is to be made in e-form INC-1 for reserving the name agreed to by the Promoters (Six proposed names can be given). It has to also be ensured that the name being sought for is available and it is lawful.
The name if approved then will be available for 60 days as per section 4(5).
4. Preparation of MOA & AOA: – Now the next step is finalization of MOA & AOA. The drafting of MOA mainly requires decision on the objects for which the company is being formed and quantum of authorized Capital. It has to be ensured the main object stated in e-form INC-1 while applying for name is included in MOA.
Article of Association contains the internal regulations of the Company so care should be taken while drafting it. The model articles are given under table F of Schedule I. Now under Companies Act, 2013 requirement for making alteration to certain clauses of AOA can be made more stringent by way of inserting entrenchment provision.
Also ensure that the MOA & AOA are not ultra-vires the law (Section 6).
5. Obtain following Documents/information from Subscribers: –
| S. NO. | PROVISION | PARTICULARS | REMARKS |
| A. | Section 7(1)(e)+Rule 16 | ID Proof (PAN + Voter ID/Passport/Driving License/Aadhar Card) | For foreign nationals and NRI only passport will suffice |
| Address Proof both permanent & present (Electricity/Telephone/ Mobile Bill/ Bank Statement) | The proofs should not be 2 months old | ||
| Proof of nationality (Applicable only to foreign nationals) | Although all subscribers can be foreigners but at least 1 director should be resident (section 149(3)) | ||
| Disclosure of Directorship/promotership in other companies | Refer definition of promoter (Sec. 2(69)) | ||
| Specimen signature with photo duly verified by notary/Banker in INC-10 | |||
| B. | Section 7(1)(c)+Rule 15 | Affidavit in form INC-9 | |
| C. | MCA Circular 11/2013 | Affidavit for non-acceptance of deposits | |
| D. | Section 7(1)(e)+Rule 16 | In case subscriber is a Body Corporate: -· Board Resolution for subscribing shares, making investment & Authorizing a person to subscribe & Sign MOA· For person authorized, documents required in point A to C shall also be required. | · In case Body Corporate is LLP the resolution should be approved by all partners.· In case of a foreign Body Corporate, copy of registration & proof of registered address is also required.· Authorized person cant become subscriber to MOA & AOA in individual capacity at the same time(Proviso to rule13(4)) |
| E. | Section 7(1)(e)+Rule 16 | Following information is also required from subscriber: -· Place of Birth(District & State)· Educational Qualification· Occupation
· Duration of stay at present address, if less than 1 year then previous address · Email ID & phone no. |
Address, e-mail id & phone no. should be of subscriber only and not professional. |
6. Obtain following Documents/information from Directors: –
| S. NO. | PROVISION | PARTICULARS |
| A. | Section 7(1)(c)+Rule 15 | Affidavit in form INC-9 |
| B. | MCA Circular 11/2013 | Affidavit for non-acceptance of deposits |
| C. | Section 7(1)(g)+Rule 17 | · Consent to act as Director in DIR-2 along with ID & Address proof· Interest in other firms & entities (reg. No, name, amt. & percentage of investment, Designation) |
| D. | Form DIR-2 | Following information is also required from subscriber: -· Email ID & mobile no.· Occupation· PAN no.
· No. companies in which acting as director including name of Companies in which acting as MD/WTD/CEO/CFO/CS/ manager · Particulars of membership & CP no., in case member of professional institute |
Note: – All Declaration/Affidavits duly notarized needs to be taken on stamp paper of value as per respective state stamp law (rates given as annexure-B).
7. Signing of MOA & AOA: – The MOA & AOA should be signed by Subscribers(Section7(1)(a)), who shall add their photo, name, address, occupation in presence of at least 1 witness who shall also sign the same and state that “I witness to subscribers, who have subscribed and signed in my presence (date and place to be given); further I have verified their Identity Details (ID) for their identification and satisfied myself of their identification particulars as filled in”
8 . Situation of Registered Office: – The address of registered office may be intimated by the Promoters at the time of Incorporation or as per section 12 within maximum 30 days of Incorporation. In case address of registered office is not decided then address for correspondence needs to be given. The documents/information required in case the address of registered office is to be intimated at the time of Incorporation are: –
| S. NO. | PARTICULARS |
| A. | Complete address of Police station in whose jurisdiction the registered office is situated |
| B. | Utility Bill, not older than 2 months old(electricity/gas/telephone/mobile bill) |
| C. | Proof of registered office address(Conveyance/lease deed/rent agreement along with rent receipts) |
| D. | No objection certificate in case registered office is not taken on lease |
9. Declaration by Professional: – A declaration in form INC-8 by a professional who is engaged in the formation of the company that all the requirements of the Act and the rules made thereunder in respect of registration and matters precedent or incidental thereto have been complied with.
10. Filing of form with ROC: – After all above documents are ready application should be made within 60 days of name availability. Application is to be made in e-form INC-7 along with e-form DIR-12 and INC-22. A synopsis of documents that need to be filed with these forms is given in annexure A.
11. The ROC after being satisfied shall issue Certificate of Incorporation. As per section 7(4) copies of all documents filed shall be preserved at the registered office till dissolution.
Caution to be taken by professionals
1. Obtain engagement letter from subscriber: – As per certification in e-form DIR-12 & INC-22, a professional declares that he has been engaged for the purpose of certification Therefore it is advisable to obtain an engagement letter.
2. Verification of original records pertaining to registered office: – As per certification in e-form INC-22, a professional declares that he has verified all the particulars(including attachments) from original records.
3. Ensure all attachments are clear enough to read: – As per certification in e-form DIR-12 & INC-22, a professional declares that all attachments are completely and legibly attached.
4. Ensure registered office of the company is functioning for the business purposes of the company: – – As per certification in e-form INC-22, a professional declares that he has personally visited the registered office.
5. Take a declaration to the effect that all the original documents have been handed over after incorporation. Since as per section 7(4) copies all documents/information as originally filed should be preserved at the registered office of the company, therefore a professional should take a declaration while handing over the incorporation documents.
6. MCA Circular 10/2014: – According to this circular ROC/RD in case of omission of material fact or submission of false/incomplete/ misleading information can after giving opportunity to explain refer the matter toe-governance division of MCA, which in turn may initiate proceedings under section 447 and/or ask the respective professional institute to take requisite disciplinary action.
Circular issued by MCA
| Circular No. & Date | Clarification |
| 12/2014 dated 22.05.2014+16/2014 dated 10.06.2014 | It is not mandatory for a foreign national becoming subscriber to possess PAN. In case he does not possess PAN he has to furnish a declaration to the effect that:-1. He is not required to possess PAN2. He does not possess PAN3. He will intimate to ROC as and when he obtains PAN |
Annexure – A
| Form | Attachments | |
| INC-7 | 1. Memorandum of Association2. Articles of Association3. Affidavit from Subscribers in INC-9
4. Specimen signature in INC-10 5. Declaration by professional INC-8 6. Copy of PAN Card 7. Copy of ID proofs 8. Copy of Address Proofs 9. Affidavit for non-acceptance of deposits 10. Directorship/Promotership in other companies(if more than 3) |
MANDATORY |
| 11. Board Resolution (Body corporate subscriber)12. Certificate of Incorporation & proof of registered office(Foreign Body corporate subscriber)13. Entrenched Articles
14. Proof of Nationality(In case of foreign national) 15. Declaration by foreigner if he does not possess PAN (as per MCA circular 16/2014) 16. NOC in case there is change in the promoters 17. Principal approval taken from RBI for carrying NBFC activity |
AD-HOC | |
| DIR-12 | 1. Consent in DIR-2 along with ID& Address proof2. Affidavit from Directors in INC-9 | |
| INC-22 | 1. Utility Bill, not older than 2 months old2. Proof of registered office address3. No objection certificate in case registered office is not taken on lease | |
Annexure – B
| S. No. | Particulars | Amt. | S. No. | Particulars | Amt. |
| 1 | Andhra Pradesh | 10/- | 19 | Nagaland | 10/- |
| 2 | Arunachal Pradesh | 10/- | 20 | Orissa | 10/- |
| 3 | Assam | 15/- | 21 | Punjab | 15/- |
| 4 | Bihar | 20/- | 22 | Rajasthan | 20/- |
| 5 | Chhattisgarh | 5/- | 23 | Sikkim | 1/- |
| 6 | Goa | 50/- | 24 | Tamil Nadu | 20/- |
| 7 | Gujarat | 20/- | 25 | Telangana* | 10/- |
| 8 | Haryana | 10/- | 26 | Tripura | 1/- |
| 9 | Himachal Pradesh | 3/- | 27 | Uttar Pradesh | 10/- |
| 10 | Jammu and Kashmir | 10/- | 28 | Uttarakhand | 10/- |
| 11 | Jharkhand | 20/- | 29 | West Bengal | 10/- |
| 12 | Karnataka | 20/- | 30 | Andaman & Nicobar | 1/- |
| 13 | Kerala | 10/- | 31 | Chandigarh** | 15/- |
| 14 | Madhya Pradesh | 50/- | 32 | Dadra & Nagar Haveli | 1/- |
| 15 | Maharashtra | 100/- | 33 | Daman & Diu*** | 50/- |
| 16 | Manipur | 15/- | 34 | Lakshadweep | 1/- |
| 17 | Meghalaya | 7/- | 35 | NCT of Delhi | 10/- |
| 18 | Mizoram | 7/- | 36 | Puducherry | 1/- |
* As per section 100 & 101 of Telangana Reorganization Act, 2014 the rate of stamp duty will be same as in Andhra Pradesh.
** Under the provision of Punjab Re-Organization Act, 1966 Act, the laws in force in the erstwhile State of Punjab prior to November 1, 1966, continue to be applicable to the Union Territory of Chandigarh.
*** The rate of stamp duty is as per Indian Stamp (Goa, Daman and Diu Amendment) Act, 1968.
Disclaimer: The entire contents of this article have been prepared on the basis of relevant provisions and information existing at the time of preparation. Though utmost effort has been made to provide authentic information, it is suggested to kindly cross check the relevant provisions for better understanding. The observations of the author are personal view and the author does not take any responsibility of the same and this cannot be quoted without the written consent of the author.
Author Bio
Can A non Subscriber to MOA can become a director of company ?
Thanks Sir
its very use full imforamation for me, thanks sir
PAN card is also an ID than why seperate ID needed???
@ B. Chakrapani Ji,
1. Decleration for non acceptance of deposits is still asked for by certain roc offices. In delhi roc it is required.
2. Reg. rate of stamp duty of kerela kindly please mail me the relevant schedule to the stamp law applicable at csgurminderdhami@gmail.com.
@ Bhavesh Ji
Yes residential proof is required only for present add. As pee the e-form. But in case where both permanent and present address differ, it would be a better practice to take proofs of both as we are authenticating each and every information.
@ Sankaran Ji
I will inculcate this habit from now onwards.
Thanx to all giaving your valuable suggestions
When you first mention an abbreviation( for example; DIN) you have to put its expanded form in the brackets. A good attempt indeed! Thank You.
@ B Chackrapani,
about the first issue, depends from RoC to RoC. mumbai RoC still requires that affidavit for non acceptance of deposits while I think other RoC may not require it.
@Gurminder Dhami,
You have mentioned that proofs are required for both permanent and present address but as far as I understand, proof is required only for present address. Can you please reconfirm the same?
Dhami Ji
Thanks for the writing. Pl note my observation given below.
1. Seems declaration as per circular 11/2013 is not applicable for incorporation under Companies Act,2013.
2. Stamp duty in Kerala for Declaration/affidavit is Rs.25/- and not Rs.10/-as you said.
NICE…!!