Company is a 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.
Incorporation / Formation of company involve a number of steps. We have tried to simplify the procedure to the maximum extent possible.
Minimum Requirement of a Private Company:
Minimum Requirement of a Public Company:
Brief of procedure / steps to company incorporation:
|1||Obtain Digital Signature Certificate (DSC)||Obtain a Digital Signature Certificate from authorized DSC issuing authority.|
|2||Obtain Director Identification No. (DIN) [S.153]||Make Application in Form DIR-3 [Rule 9 of Chapter XI Rules]|
|3||Register DSC in the name of Director on MCA portal|
|4||Apply for Reservation of Name [S.4(4)]||Application in Form No. INC.1 [Rule 9]. The same shall be reserved for a period of 60 days|
|5||Drafting and Printing of Memorandum and Articles of Asociation|
|Filing of INC -7, DIR 12 & INC 22Adoption of Memorandum of Association [S.4(6)]Adoption of Articles of Association [S.5(6)]||Discussed Later
|7||Commencement of business [S.11]||Mandatory to file Declaration with ROC in Form No. INC.21 [Rule 24]|
|8||Registered Office [S.12]||A company shall have a registered office within 15 days of Incorporation and it shall file Form No.INC.22 [Rule 25] to verify the same|
Step 1: DSC
The basic step to company incorporation is to get DSC made of all directors.
The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically. This is the only secure and authentic way that a document can be submitted electronically. As such, all filings done by the companies under MCA21 e-Governance programme are required to be filed with the use of Digital Signatures by the person authorised to sign the documents.
Names of Certification Agency (CA) from where DSC can be acquired are MTNL CA, TCS, IDBRT, SAFESCRYPT (SATYAM), nCODE Solutions, NIC, Central Excise & Customs (Does not issue DSCs to person other than those from the Department), e-Mudhra (3i Infotech Consumer Services Limited).
Step 2: Acquire Director Identification Number
The concept of a Director Identification Number (DIN) has been introduced for the first time with the insertion of Sections 266A to 266G of Companies (Amendment) Act, 2006. As such, all the existing and intending Directors have to obtain DIN within the prescribed time-frame as notified.
INCOME TAX PAN IS MANDATORY, so before applying of DIN a person must have his PAN number. Details on PAN and DIN must be same.
Step by step Process
Step by step process to be followed by the applicant is as under:
As per the revised procedure for DIN Allotment, any person intending to apply for DIN shall have to make an application in eForm DIR 3 and should follow the following procedure:
eForm DIR -3 has to follow the offline eFiling process i.e. the form can be downloaded from MCA 21 portal and thereafter be filled up without internet connection. The connection is required only for validating the form.
Attach the photograph and scanned copy of supporting documents i.e. proof of identity, and proof of residence as per the guidelines. Physical documents are not required to submit at DIN cell.
Passport, Election (voter identity) card, and Ration card, driving license, electricity bill, telephone bill or aadhaar
All Documents should be verified by CA/CS/CMA.
Name of person proposed to be the directors, address of directors and other details should be correctly filed.
Issue which arises is that details of Directors as given in DIN should match with that which is filled in INC 7 but it is not necessary that the address in address proof as sent for DSC is same in address proof as required in INC 7. So, here is an analysis:
Address Proof as required:
|PAN Application||DIR 3||Inc 7|
|Aadhaar Card issued by the Unique Identification Authority of India||Passport||Bank Statement|
|Elector’s photo identity card||Election (voter identity) card||Electricity Bill|
|Driving License||Ration card||Telephone Bill|
|Passport||Driving License||Mobile Bill|
|Passport of the spouse||Electricity Bill|
|Post office passbook having address of the applicant||Telephone Bill|
|Latest property tax assessment order||Aadhaar|
|Domicile certificate issued by the Government|
|Allotment letter of accommodation issued by Central or State Government of not more than three years old|
|Property Registration Document|
|Copy of following documents of not more than three months oldElectricity BillLandline Telephone or Broadband connection bill
Consumer gas connection card or book or piped gas bill
Bank account statement or as per note 2
Depository account statement
Credit card statement
|Certificate of Address in Original signed by a Member of Parliament or Member of Legislative Assembly or Municipal Councilor or a Gazetted officer, as the case may be (in prescribed format)|
|Employer certificate in original (in prescribed format).|
So, plan accordingly that address required for each of the forms should be the same in atleast one of document required.
These documents should not be more than 2 months old. In bank statement, passbook print of transactions in last two months is to be attached.
The eForm shall have to be digitally signed and shall be uploaded on MCA21 portal.
Upon upload, Pay the fees for DIR 3 eForm. Only electronic payment of the fees shall be allowed (i.e. Netbanking / Credit Card). No challan payment will be accepted under revised procedure of DIN allotment.
The applicant is required to get himself/herself registered on the MCA21 Portal to obtain login id, which is necessary for payment of the fees. After obtaining the login-id, Login to the MCA21 portal and click on ‘eForm upload’ link available under the ‘eForms’ tab for uploading the eForm DIR 3. eForm DIR -3 will be processed only after the DIN application fee is paid.
Upon upload and successful payment,
Processing of e Form DIR 3
In case, DIR-3 gets certified by the professional ( i.e. CA/ CS/ CWA in whole time practice), the DIN will be approved by the system immediately online(in case it is not potential duplicate). In case of signing by any other signatory (i.e. director/ Managing Director/ secretary of the company with which applicant is to be associated), the MCA DIN cell will examine the e Form DIR-3 and same shall be disposed of within one or two days.
After the DIN getting approved, Approval Letter must be downloaded from MCA21.
It may be a person has already DIN number, but it mismatches with the Income Tax PAN. If PAN detail is wrong, correct the details by applying to Income Tax Authorities or if details of DIN is wrong, file DIR -6
Director is required to download and fill up eForm DIR-6 for such changes and follow the same process for uploading the same as mentioned for eForm DIR-3. The requested change is taken into the system on verification of the proof enclosed with the application for change request. In the case of change in applicant’s name, gazette notification is must with form DIR-6. Married women, who are having Id proof with their maiden name, can submit marriage certificate along with application. Verification as per Form DIR-7 of Companies Act 2013 also needs to be attached to Form DIR-6 as it is a mandatory attachment now. All documents are to be verified by the professional.
There is no fees charged for DIR 6. Form is accepted by STP mode if name, father’s name or date of birth is changed, for other cases, potential duplicacy arises and the form is processed by MCA officials.
But, to file DIN -6 for change in DIN particulars, DIFFERENT ADDRESS PROOF IS REQUIRED unlike DIR 3 for application of DIN number.
Step 3: Register DSC
Third step is to register DSC of the person authorized to sign E-forms on MCA21 or click on the link http://www.mca.gov.in/DCAPortalWeb/dca/MyMCALogin.do?method=setDefaultProperty&mode=36
Step 4: Apply for Reservation of Name [S.4(4)]
As per section 4(4) of Companies Act, 2013 read with rule 9 of Companies Incorporation Rules, 2014, application is to be made to registrar for reservation of name. 6 names can be proposed after checking its availability at MCA21 and as per guidelines given in the said rules
While applying for a name in the Form INC -1, using Digital Signature Certificate (DSC), the applicant shall be required to verify that:
Following documents have to be attached to INC – 1:
Validity of Name approved by ROC: As per section 4(5), maximum time for which name will be available has been prescribed in the law itself under section 4(5). The name will be valid for a period of 60 Days from the date on which the application for Reservation was made.
Where after reservation of name, it is found that name was applied by furnishing wrong or incorrect information, then, –
Object of company incorporation should be mentioned carefully as the same should be the first object of memorandum of association; or else eform INC 7 will be rejected on this ground of mis-match.
Step 5: Drafting and Printing of Memorandum and Articles of Association
After ascertaining name availability from the Registrar of Companies steps should be taken to get the memorandum and articles of association for the proposed company drafted and printed. The memorandum of a company limited by shares shall be in Tables – A in Schedule – I of the Companies Act, 2013.
A public company limited by shares may adopt all or any of the regulations contained in model articles of association registered along with its memorandum of association.
The model articles of a company shall be in Tables – F in Schedule – I of the Companies Act, 2013 as may be applicable to the company. A company may adopt all or any of the regulations contained in the model articles applicable to such company. There is no concept of “other objects” now. Main object can be at maximum 4 (not given in law but practically followed); where first object should be clearly the same as mentioned in eform INC 1.
The memorandum and articles shall be in conformity with the provisions of Section 4 and 5 of the Companies Act 2013.
If the promoters plan to get the securities of the proposed company listed with one or more designated stock exchanges, it is advisable to send the draft of the memorandum and articles of association to those stock exchanges for their scrutiny and suggestion to the effect whether they would like to have certain articles incorporated therein in compliance with the provisions of the Listing Agreements of the stock exchanges.
In subscriber’s page:
Name, Fathers name, Address, Designation and Occupation along with number of Equity shares proposed to be subscribed is to be given.
In Witness Column:
“I witness to subscribers who have subscribed and signed in my presence. Further I have verified their Identity Details for their identification and satisfied myself of their identification particulars as filled in”
Membership No. ………
Occupation: Chartered Accountant
Step 6: Filing of Company Incorporation form – eform INC 7, DIR 12 & INC 22
As per Rule-12 of Companies (Incorporation) Rules, 2014, application for incorporation of a private and Public company, with the Registrar, within whose jurisdiction the registered office of the company is proposed to be situated, shall be filed in Form no. INC 7 [Rule 12 to 18] along with Form no. INC.22 for situation of registered office of the Company, (as the case selected in form no. INC 7) and DIR -12.
In point 3(c.) of INC 7, i.e. Whether the address for correspondence will be the address for Registered of the company should be given YES, otherwise NO.
According to Section 7 of the Companies Act, 2013 al document related to incorporation shall be filed be filed before the registrar, in whose jurisdiction registered office of a company is proposed to be situated. A Registrar may have jurisdiction over several states or only a part of a state.
INC 7 is for registering a company. Here details of work to be done by a company, promoter, directors, number of shares to be subscribed, etc is to be filed along with many documents.
As per Rule-16(1) of Companies (Incorporation) Rules, 2014, Particulars of every subscriber to be filed with the Registrar at the time of incorporation:
For Indian Nationals:
For Foreign nationals and Non Resident Indians
Provided that Bank statement Electricity bill, Telephone or Mobile bill shall not be more than two months old.
Documents required to be filed:
1. Memorandum of Association as per Table A of schedule I
2. Articles of association as per Table F of Schedule I
(As per Rule-14 of Companies (Incorporation) Rules, 2014, Pursuant to section 7(1) (b) and rule 14 of the Companies (Incorporation) Rules, 2014:
Require to take a Declaration from Professionals Like: ( CS-CA-CWA), Giving declaration that, all the requirements of Companies Act, 2013 and the rules made there-under relating to registration of the company under the Act and matters precedent or incidental thereto have been complied with. On Stamp Paper, Value of Stamp Paper as per the State stamp Act (State: Where register office of Company will be situated). Instead of Stamp Paper, Stamp Tickets can also be used.
Professional will sign the declaration and will mention Date, Place and Membership No.
Declaration is that:
INC 9 must be on Stamp Paper, Value of Stamp Paper as per the State stamp Act.
Declaration should be signed, Dated and Place.
5. Proof of residential address
7. NOC in case there is change in the promoters (first subscribers to Memorandum of Association)
8. Proof of Identity (the particulars of name, including surname or family name, residential address, nationality and such other particulars of every subscriber to the memorandum and the particulars of the persons mentioned in the articles as the first directors of the company along with proof of identity, as may be prescribed, and in the case of a subscriber being a body corporate, such particulars as may be prescribed;)
9. Entrenched Articles of Association, if any.
Note: Where the articles contain the provisions for entrenchment, the company shall give notice to the Registrar of such provisions in Form No. INC.7, as the case may be, along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 at the time of incorporation of the company.
10. PAN Card (in case of Indian national)
Shapatpatra can be sent where signature is made by Director/ Promoter in Hindi.
DIR 12 for giving details of Directors:
As per Rule-17 of Companies (Incorporation) Rules, 2014, the particulars of each person mentioned in the articles as first director of the company and his interest in other firms or bodies corporate along with his consent to act as director of the company shall be filed in Form No.DIR-12 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014. Along with the above details in the Form no.INC.7, Form no.DIR 12 to be filed with the following attachments:
INC 22 for giving details of Registered Office:
As per Rule 25 of Companies (Incorporation) Rules, 2014, verification of registered office shall be filed in Form No.INC.22 along with the fee.
Section 12(2) of the Companies Act, 2013 states that the Company shall furnish to the Registrar verification of its registered office within a period of thirty days of its incorporation in such manner as may be prescribed.
Section 12(4) of the Companies Act, 2013 states that Notice of every change of the situation of the registered office, verified in the manner prescribed, after the date of incorporation of the company, shall be given to the Registrar within fifteen days of the change, who shall record the same.
1. Proof of Registered Office address (Conveyance/Lease deed/Rent Agreement along with the rent receipts) etc.; or
(the notarized copy of lease / rent agreement in the name of the company along with a copy of rent paid receipt not older than one month; or the authorization from the owner or authorized occupant of the premises along with proof of ownership or occupancy authorization, to use the premises by the company as its registered office); and
MOA Registration Fes
|Nominal Share capital||Other than OPCs and Small Companies||OPCs and Small Companies|
|Fixed||For every 10, 00 or part thereof||Fixed||For every 10, 00 or part thereof|
|Up to 1,00,000||5,000||NA||2,000||N/A|
|More than 1,00,000 up to 5,00,000||5,000 +||400||2,000||N/A|
|More than 5,00,000 up to 10,00,000||21,000 +||300||2,000||N/A|
|More than 10,00,000 up to 50,00,000||36,000 +||300||2,00 0+||200|
|More than 50,00,000 up to 1,00,00,000||1,56,000 +||100||N/A||N/A|
|More than 1,00,00,000||2,06,000 +||75||N/A||N/A|
On receipt of the aforementioned documents, the office of the Registrar of Companies will scrutinize them and if they are found complete in al respects, the Registrar will register the company and generate a CIN. If the Registrar finds any defect or deficiency in any of the documents or forms, the Registrar will send an electronic communication pointing out he defects and after the deficiencies are removed, the Registrar will register the company.
After the registration of the company, the Registrar will issue under his hand and seal of his office, the Certificate of Incorporation in the name of the company and send it electronically. One may also take printout of the Certificate of Incorporation generated online. The date mentioned by the Registrar in the Certificate of Incorporation shall be the date of incorporation of the company, on which date the company will be considered to have come into existence as a legal entity separate from its subscribers.
The Certificate of Incorporation shall be in From INC – 1 of the Companies (Incorporation) Rules, 2014.
Now comes the last step.
Step 7: Filing of Commencement of Business – eform INC 21
On registration, a company cannot commence business or exercise any borrowing powers until it files a declaration by directors in Form INC – 21 to the effect hat every subscriber to the memorandum has paid the value of the shares agreed to be taken by them as specified in section 1(1)(a).
E-form INC.21 is required to be filed with concerned Registrar of Companies for obtaining approval for commencement of Business and exercise of borrowing powers. This E-form is required to be filed by all companies incorporated under Companies Act 2013.
Procedure for commencement of Business under Companies Act, 2013
A promoter must pay its subscription money in cash or through bank account for the number of shares as mentioned in eform INC 7 / MOA after which this form will be filed.
Following documents required to be filed as an attachment of form INC.21:
“This E- Stamp paper is for E-Form INC.21 (Declaration prior to the commencement of business or exercising borrowing powers) of __________ Private Limited.”
Note: Rs. 20 as stamp duty or as the case may be can be paid online or offline as payment of stamp duty of above Rs. 100 is mandated for taking online route. Name of vendor, serial number of stamp paper and registration number of vendor is mandatory to enter if the amount of stamp duty is more than or equal to Rs 50/-
ROC processes the e-form INC.21 filed by the Company if it finds all the necessary attachments and related compliance proper.
Status of the form can be checked at MCA.
After this approval, THE COMPANY IS READY TO RUN & PROSPER.
Copyright: This write up is the property of Sagar Gupta, CEO & Founder – www.onlinelawsolutions.com, and no part of it can be copied, reproduced or distributed in any manner
Disclaimer: This write up is intended to initiate academic debate on a pertinent question. It is not intended to be a professional advice and should not be relied upon for real life facts.
(Author ‘Sagar Gupta’ is an innovative leader in delivering corporate advisory & solutions and can be reached at firstname.lastname@example.org. On Request Author may provide all or any draft related to above.)