CS Kanika Kumar
“Company” is derived from the Latin word “com” which means together and “panis” means Bread, in short it means eating a meal together”.
In General Sense, A company is an association or collection of individuals, whether natural persons, legal persons, or a mixture of both, where members share a common purpose and unite in order to focus their various talents and organize their collectively available skills or resources to achieve specific, declared or desired goals.
Company is a legal entity, allowed by legislation, which permits a group of people, as shareholders, to apply to the government for an independent organization to be created, which can then focus on pursuing set objectives, and empowered with legal rights which are usually only reserved for individuals, such as to sue and be sued, own property, hire employees or loan and borrow money.
Now, In Accordance with the Companies Act, 2013, Company is defined under Section 2(20) of the above named act which means Company incorporated under this act or under any previous company law.
COMPANY’S ARE OF VARIOUS TYPES, BUT HERE WE ARE DISCUSSING WHAT A PRIVATE COMPANY IS??
What is a Private Company?
Section 2 Sub section (68) of the Companies Act, 2013, defines the Private Company. The “private company” means a company which by its articles,—
a) Restricts – the right to transfer its shares, if any
b) Limits – the number of its members to two hundred, except in case of One Person Company
Provided further that—
- persons who are in the employment of the company; and
- persons who having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased,
shall not be included in the number of members for the purpose of aforesaid Point (b)
Note: where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member.
c) Prohibits- any invitation to the public to subscribe for any securities of the company
NOW HERE-UNDER COMES THE PROCESS TO INCORPORATE A PRIVATE COMPANY
Requirements for the Incorporation of a Private Company:
- Minimum 2 Members and Maximum 200 Members
- Minimum 2 Directors and Maximum 15 but may appoint more than 15 by passing Special Resolution as per Section 149 of the Companies Act, 2013 (The directors and shareholders can be same person)
- DSC (Digital Signature Certificate) for all the Directors (for applying of DIN)
- DIN (Director Identification Number) for all the Directors
Note: Now there is no limit for the minimum capital to form a private company as per Companies (Amendment) Act, 2015.
Steps/ Checklist to Private Company Incorporation:
- Obtain Digital Signature Certificate from DSC issuing authority
- Obtain Director Identification Number.
- Register DSC in the name of Director on MCA Portal.
- Apply for Reservation of Name
- Drafting of MOA and AOA
- Filing of E-Forms with ROC
- Payment of ROC Fees and Stamp Duty
- Verification of Documents/ Forms by ROC
- Issue of Certificate of Incorporation by ROC
Following here under are the applicable laws related to Incorporation of a Private Company:
|Section 7||Incorporation of Company|
|Section 12||Registered Office of The Company|
|Section 152||Appointment of Directors|
|Section 153||Director Identification Number|
|Rules||1. Companies (Incorporation Rules), 2014|
Detailed Process For the Incorporation of a Private Company
1. Firstly, Check the availability of the DIN of the proposed director in the company, if the proposed director does not already have a DIN, then he/she must obtain the DIN before incorporation as per Section 153 of the Companies Act, 2013 and the same can be obtained by making an application in Form DIR-3.
Following are the documents required for DIN application
- Self Attested Copy of PAN Card is mandatory and it must attested by notary or any practicing Professional in case of Indian National and in case of Foreign Citizen, Passport is mandatory and must be attested by notary outside India.
- Self Attested Copy of Passport/ Election/ Voter Id or Ration card or Driving License or Aadhar card or Electricity/Telephone Bill in the name of applicant and it shall not be older than 2 months and in case of Foreign Citizen, it shall not be older than 1 year.
- Passport size Photograph
- Current Occupation
- Email-address of the Applicant
- Mobile Number
- Copy of verification by the applicant as per E-Form No. DIR-4.
Note: In case of a Married women, Photocopy of Marriage Certificate is required if DIN needs to be in the changed name.
Following are the reasons due to which DIN may not be allotted:
- Any mismatch in Name, including spelling mistake, may lead to rejection of application.
- Prefixes like Mr./Ms./Kumari/ Shri etc used in the applicant’s name.
- Resident proof like Bank statements, electricity bill, telephone bill, utility bills etc submitted are older than 2 months of submitting the application for verification OR such documents are in the name of some other person, for e.g. father or spouse.
- If the seal/stamp does not contain membership/ practicing certificate number
2. As all the filings done by the companies are required to be filed with the use of Digital Signature, so check whether DSC is available of that proposed director or not, if not available then acquire Digital Signature Certificate.
Documents required for obtaining DSC:
- Digital Signature Certificate application Form (Duly Signed by an applicant).
- Self attested copy of Pan Card as ID Proof and Self attested copy of Aadhar card or voter id or DL or Passport as Address Proof and it should also be attested by either Gazetted officer or bank manager or post master.
3. Check the availability of the proposed name, Promoters may propose upto 6 names in order of their preference and ensure that the proposed name is not available on the MCA website and the name proposed must not be same as in accordance to the trademark act rules.
4. After giving the proposed names make an application to Central Registration Centre (Earlier with Registrar of Companies, ROC) in Form INC-1 and while applying name, Rule 8 of the Companies (Incorporation) Rules, 2014 must be applied.
5. Upon Receipt of name application, name is reserved for a period of 60 days from the date of name application.
6. After name approval, draft MOA and AOA. The MOA of the Company shall be in Table A, B, C,D and E in Schedule I as per Section 4(6) of the Companies Act, 2013, and the AOA of the Company shall be in Table F,G,H,I and J in Schedule I as per Section 5(6) of the Companies Act, 2013.
Note: These two documents are basically the charter and internal rules and regulations of the company. Therefore, it must be drafted with utmost care and with the advice of the experts and the other object clause should be drafted in a very broader sense.
7. File following E-Forms with ROC to initiate the process of Incorporation:
- Form INC-7 – For application of Incorporation of the Company.
Mandatory attachments for Form INC-7 are as follows;
- Memorandum of Association along with its Signed Subscriber Sheet
- Articles of Association along with its Signed Subscriber Sheet.
- Declaration by Professional (An Advocate, a Chartered Accountant, Cost Accountant or Company Secretary in Practice) that all the rules and requirements under the companies act, 2013, have been complied with in Form – INC-8.
- Affidavit from the First subscriber to the Memorandum and First Directors named in the articles that they are not convicted or have not been found any guilty under the Companies Act, 2013 during last five years in Form INC-9
- Proof of Residential address which should not be older than 2 months either Telephone Bill/ Gas bill/ Bank Statement/ Mobile Bill/Electricity Bill which must be Self attested and attested by any professional.
- Proof of Identity (Voter Id/ D.L/Passport/Aadhar Card which must be Self attested and attested by any professional.
- Verification of Signature of Subscribers in Form INC-10
- Entrenched AOA, if articles are entrenched
- Affidavit cum Declaration for non-acceptance of Deposits
Important Points to be kept in mind
- INC-8, INC-9, Affidavits must be on stamp paper as per Stamp act acc to state wise and duly notarized by Notary Public.
- Subscriber Sheet must contain name, father’s name, address, occupation, if any, along with their Photograph in the presence of at least one witness who shall attest the signature and shall likewise sign and add his name, address, father’s name and occupation and Signature of each of the Subscriber.
Note: All above named which is to be mentioned in the subscriber sheet must be in Subscriber’s and witnesses own handwriting.
Optional Attachments are as follows:
- NOC, if there is any change in promoters
- Proof of nationality in case the subscriber is a foreign national
- PAN Card ( in case of Indian National)
- Power of Attorney
- Name approval Letter
♣ As Per Rule 17 of the Companies (Incorporation) Rules, 2014, the details of First Directors as per articles, their Interest in other entities shall be filed in E-Form DIR-12 which is for appointment of Directors and KMP in the Proposed Company
♣ Mandatory attachments for Form DIR-12 are as follows;
- Declaration by the Directors in Form DIR-2
- Declaration by the First Directors in Form INC-9
- Interest in other entities of director, it is mandatory to attach in case no. of entities entered is more than one.
Note: – DIR-12 will be filed simultaneously after Filing of Form INC-7 and In Case when address for the correspondence is the address of the registered office of the Company then File Form-INC-22 along with Form- INC-7
8. After filing above named forms, make payment of ROC fees and Stamp duty in respect of the states, which is to be done electronically through MCA Portal.
9. Verification of Documents/ Forms by ROC, if any deficiency is there in any of the documents or forms, Registrar will send an electronic communication about the deficiencies and after the same is removed, the Registrar will register the company.
10. After following all the above steps and if ROC is satisfied with the documents filed, Certificate of Incorporation is issued in the name of Company in Form-INC-11 as directed by Rule 11 of the Companies (Incorporation) Rules, 2014 and it will be considered as date of incorporation.
11. The Company have to file Form INC-22 (In Case when address for the correspondence is not the address of the registered office of the Company) with Registrar in accordance with Section 12 read with Rule 25 of the Companies (Incorporation) Rules, 2014, for the verification of Registered of the Company within a period of 30 days of its incorporation
Following are the attachments for the above named form:
- Proof of Registered office address (Conveyance/Lease Deed/Rent Agreement along with its rent receipts) etc
- Copies of the utility bills ( Proof of evidence of any utility service like telephone, gas, electricity etc depicting the address of the premises not older than 2 months is required to be attached
- NOC (No Objection Certificate) or permission to use
Important Note: All the abovementioned Process of Incorporation i.e. from Name Approval to Company’s Incorporation has now been Centralised. Earlier all the forms related thereto incorporation are made to ROC, Now it will be send to Centralised Registration Centre.
As soon as a company is incorporated, whether public or private limited, it becomes a juristic person. It has its own name and property. It is a separate legal entity distinct from its members who incorporate it. So, Directors are required to care of the Company and its members both legally and socially. Once the Company is incorporated, it is the responsibility of every individual linked with the company to take company to its peak.