CS Divesh Goyal
Moving from the Companies Act 1956 to the Companies Act 2013 is like shifting from your old house to a new one. In the old house, where you have stayed for years, everything would have found its own place – the shoes, the clothes, umbrella, first aid, brooms, and whatever else you need in your household. Your legs can find their own way, even in pitch dark of night – they know the way to the bathroom, to the stairs, they even know where the stairs end.
As you move into the new house, first, there is a huge process of “getting used to” – which is anyway usual for any such shifting. But the biggest issue is – we get to realise several shortcomings that we did not realize until we shifted. This might include silly things such as an electric point that we missed, or a water outlet that is not working, and so on. In case of the new house, all these are our own follies, or those of the architect – so we go ahead and get them fixed. In case of the new Act – the fixing process is the long trail of amending the law, and in the meantime, you have the 6-months-in-jail staring at you all the time!
This Article is for those people, applying for Company Incorporation after 1st April, 2014. Form INC-22 and form INC-7 are being rejected by the ROC Authorities, as many people are using the same old AOA formats for incorporating company.
The first thing to take care of under the new Companies Act, 2013 is to follow a changed procedure for giving birth to a Company. This article speaks of only Public and Private Limited Companies and does not cover One Person Companies.
Various methods of forming a Private Limited Company:
A: There are three methods Section 3(1) (a,b,c) in which a Private Limited Company could be formed
a. A Company limited by shares; or
b. A Company limited by guarantee; or
c. An Unlimited company.
Step Wise Formalities for Formation of A New Company:
Persons desirous of forming a company must adhere to the step by step procedure as discussed below:—
I. Selection of type of the company.
II. Selection of name for the proposed company.
III. Apply for Directors Identification Number and Digital Signatures, if does not have
IV. Drafting of Memorandum and Articles of Association.
V. Stamping, digitally signing and e-filing of various documents with the Registrar.
VI. Payment of Fees.
VII. Obtaining Certificate of Incorporation.
VIII. Obtaining Certificate of Commencement of business (in case of public limited Companies).
WHAT DOES THE ACT SAY REGARDING PRE-INCORPORATION AND POST INCORPORATION?
♣ At Least 2 Promoters: Promoters who will promote/ incorporate the company. Promoters may be individual or body corporate.
♣ At Least 2 Directors: Directors should be individual only. No Body corporate/ HUF or Partnership Firm can be appointed as Directors.
♣ Generally, in most of the cases, Promoters and Directors are the same in Private Limited Companies.
♣ Directors must have DIN (Directors Identification Number)- Process Given at Below link :
♣ One of such two directors must have DIGITAL SIGNATURE who can apply with any of DSC Vender i.e. E Mudra/ Siffy/ TCS etc.
After this Process:
Process for Name Approval
♣ The promoters should apply for the name of the company to be approved with the concerned ROC of the State where the company has to be formed in E Form- INC- 1 by payment of Rs. 1000 through Credit Card or Net Banking.
♣ One of the Promoters should fill up e-form INC-1, digitally sign by Promoter and Professional and then upload the e-Form on the MCA21 Portal. Before doing so, the following three points have to be complied with:
a. All the Promoters should have their DIN No.
b. Atleast one Promoter should have the DSC. (Class 2 Digital Signature)
c. The proposed names selected should fall in guidelines prescribed.
♣ Info. Require to give in form INC-1 (Describing the Capital of Company, Main Objects, State In Which The Company is to be Incorporated and to Affix the Digital of Applicant.
♣ The reservation by the Registrar of name applied for is valid for 60 days from the date of application. Hence if a company is proposed to be registered with the said name referred to above, the promoters shall produce the documents to the Registrar for registration with in a period of 60 days from the date of application for name. If Promoters fail to file all the relevant form for incorporation within 60 days, then name will not be Available for you, Promoter have to file form INC-1 again for approval of Name.
After Name approval Process:
Process – Pre Incorporation:
Once Name is approved by ROC, following are the Pre-Incorporation Steps:
Application for incorporation of company-rule 13 of the companies (Incorporation Rules, 2014):
Drafting For the purpose of Sub-section (1) of Section 7, an application shall be filed, with the Registrar within whose jurisdiction the registered office of the company is proposed to be situated in form No. INC-7 along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 for registration of company.
Drafting of Memorandum of Association (MOA) and Article of Association (AOA) is generally a step subsequent to the availability of name made by the registrar It should be noted that the main objects should match with the objects shown in e-Form INC-1 and must reflect in the name of company (Name should be like that a lay man can estimate the objects of company by Name of Company).
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 professional. The Directors/ promoters with the help of professional draft MOA and AOA.
AOA (Draft Attached at the end):
AOA should be followed by the tables F,G,H,I & J prescribed in SCHEDULE- Ito be signed by subscribers in Articles all the bye laws of the company corresponding to Companies Act, 2013 have to be considered. The names of First Director are mandatory to be given in AOA.
MOA (Draft Attached at the end)
MOA should be followed by the tables A,B,C,D & E prescribed in SCHEDULE- I to be signed by subscribers –
There are 5 clause mainly i.e.
One person who will act as witness and will sign in the witness column and mention:
“I hereby witnessed that subscribers signed in my presence on Date____________, at ___________ further I have verified their identity details (Through ID)for their identification satisfy myself of their identification particular as filled in”
Below this witness must mention:
Subscriber sheet must be mentioned Date & Place at the end. The word subscribers here used is because of the reason that these subscribers will subscribe for the shares in the company at time of incorporation and will invest the minimum capital i.e. Rs. 1, 00, 000. They will contribute the amount by way of cash or cheque when the company gets incorporated and shares will be allotted to them followed by the share certificates.
DECLARATION BY PROFESSIONALS IN INC- 8
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 situate). In DELHI value of Stamp paper is Rs.10 /-.
Professional will sign the declaration and will mention Date, Place and Membership No.
AFFIDAVIT FROM SUBSCRIBERS AND FIRST DIRECTORS IN INC 9
[Pursuant to section 7(1)(c) of the Companies Act, 2013 and rule 15 of the Companies (Incorporation) Rules, 2014:
Requires to take affidavit from Subscribers and First Directors of Company. Giving Declaration That,
– I have not been convicted of any offence in connection with the promotion, formation or management of any company during the preceding five years; and
– I have not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years; and
– All the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of my knowledge and belief.
On Stamp Paper, Value of Stamp Paper as per the State stamp Act (State: Where register office of Company will be situated). In DELHI value of Stamp paper is Rs.10 /-.
Declaration should be signed, Dated and Place.
FORM FOR VERIFICATION OF SIGNATURE OF SUBSCRIBERS IN INC-10
The Specimen signature and latest photograph duly verified by the Banker or Notary shall be in form INC-10.
PURSUANT TO RULE16 (1) (Q) OF COMPANIES (INCORPORATION) RULES, 2014:
Documents Require From First Director:
♣ As per section 152 Rule (8) of Chapter XI- Every person before appointment furnish to the company a consent in writing to act as such in form – DIR-2.
♣ As per Section 164 rule 14 of Chapter XI- Director will inform to company in Form DIR-8 at the time of appointment and re-appointment.
♣ As per Section 184(1) rule 9 of Chapter XII-Director will disclose his/ her interest in any company, companies or bodies corporate (Including Shareholding Interest), firms or other associates of individuals , by giving a notice in writing in form MBP-1.
REGISTERED OFFICE OF COMPANY:
As per section 12(1) and rule 25 of Chapter II- Company shall have a place as its registered office in the State stated in the Memorandum on and from the 15th Day of its Incorporation. (Practically from the date of incorporation).
Verification of Registered Office:
There shall be attached to said Form, any of the following documents, namely :-
Following documents are required to file with Registrar:-Forms will be filled as per sequence given below.
(Attached in e-form- INC-7)
(Attached in e-form- DIR-12)
(Attached in e-form- INC-22)
Other Documents Require to File WITH ROC:
Procedure for filling of e-forms with ROC/MCA:
After Preparation of documents mention at Step-I to Step-VII require to file these documents with ROC as per STEP- VIII:
STEP-IX is the last Step of Pre-Incorporation. After Filling e-form as given above now ROC will process the Form check the particulars and Attachments of e-from. If ROC found everything is as per requirement of Act and the Rules in respect of registration. He shall registered in the Register all the documents and information as given and issue
ISSUE CERTIFICATE OF INCORPORATION in form INC-21.
The Effect that company is incorporated under the Act.
ABOVE MENTION ARE IX STEPS FOR PRE INCORPORATION OF A COMPANY!
Once you get Certificate of Incorporation in form INC-21. You company Name and Details of Directors will be available on MCA Web-Site. Now a Company having share capital required to obtain a separate CERTIFICATE OF COMMENCEMENT of business according to section 11 of the Companies Act, 2013.
CERTIFICATE OF COMMENCEMENT OF BUSINESS:
QUICK RECAP OF ABOVE STEPS
INCORPORATION OF A COMPANY LIMITED BY SHARES UNDER THE COMPANIES ACT, 2013
Documents to be attached-
– Address Proof like electricity or telephone bill and NOC of use of property.
– a declaration is filed by a director in form INC10 and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him and the paid-up share capital of the company is not less than five lakh rupees in case of a public company and not less than one lakh rupees in case of a private company on the date of making of this declaration;
– Such Declaration has to be filed in Form INC-21 within 180 days of receiving th Certificate of Incorporation.
Works Require To Be Done After Incorporation And Drafts Of All The Documents Related To Above Will Be
(Author – CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi and can be contacted at [email protected])