Company Incorporation In India

To embark the journey as an entrepreneur, the first thing to do is to incorporate the company. In India, company registration is also referred to as incorporation of company or formation of a business. Incorporating a company makes the business a distinguished entity and gives it a legal existence. The company registration process in India is done under the Ministry of Corporate Affairs.

The Indian economy has an array of companies in its economic market such as public companies, private companies, investment companies, limited liability companies etc. There are conventional classification of the companies that are categorized based upon factors such as liability, control, incorporation, transferability of shares etc.  These business organizations have some key categories that make them look different on the surface but are based on some overlapping characteristics, they can be grouped into classifications in the market may look different from each other on the surface, but based upon certain identifiable common characteristics they can be grouped into below-mentioned classifications.

Types of Companies on the basis of incorporation:

• Royal Charter Company

It is basically a company born out of the authorization of the sovereign or the crown. This was the mode of incorporation that was followed prior to the Registration under the Companies Act. The sovereign of a nation grants a charter to the people requesting to form a cooperative or a company. A few examples to understand such kind of companies are, The Bank of England (1964), The East India Company (1600). The authorization given by the sovereign provides a legal existence to these companies by means of the body of the charter. This mode of incorporation however is not applicable in a democracy.

• Statutory Company

These companies that are formed by the means of a special statute passed by the Parliament or the State Legislature. The examples of statutory companies in India are The Reserve Bank of India, Life Insurance Corporation of India Act etc. The Statutory origins of these companies provide power to organizations to be bound by their own statute, i.e. whenever there is any dispute between statute under which these companies were formed and the Companies Act 2013, the statute being special legislation persists over the general law of Companies Act. The parliaments both State and Centre are empowered to make such legislation for incorporation under the power endowed to them by the Constitution of India.

• Registered Company

As defined under Section 2(20) of the Companies Act, 2013, registered companies are the companies which are incorporated under the statute of the Companies Act. The Registrar of the Company also provides companies with a certificate of incorporation.

Company Incorporation Documents Required for Director/ Share Holders (Indian Citizens):

Documents required for Company Registration :

• Pan Card Copy

• Copy of ID Proof (Any of the following)

• Aadhar Card

• Passport

• Driving License

• Proof of residence (current address proof)

• Telephone Bill

• Electricity Bill

• Gas Bill

• Bank Statement

• Passport Size Photo

Documents required for Registered Office Address

1. Rental Agreement

2. NOC (No Objection Certificate) from the owner

3. Electricity Bill / Property Tax

4. In case of own property (Property Tax is mandatory)

Company incorporation documents required in case of Foreign Nationals

1. Copy of Passport (Translated into English if the document is in Local Languages)

2. Copy of Present Address (Translated into English if the document is in Local Languages)

• Telephone Bill

• Bank Statement

Steps to register a Private Limited Company:

With the following simple steps a Private Limited Company can be Incorporated with the time period of 15-18 days:

Step 1: Obtain a DSC (Digital Signature Certificate)

The foremost step to register a private limited company is to acquire the DSC of the Directors and Subscribers to MOA. Any e-form is filed with the Ministry after affixing the DSC of the authorized Signatory for Company Incorporation. Also, it is required for the application of the Memorandum of Association (MOA) and the Articles of Association (AOA).

Step 2: Obtain DIN for Directors

Director Identification Number (DIN) is an identification number for a director. It is to be obtained by the one who is to be the director of the company. Under this step, the DIN allotment is carried out by the Ministry to the Individual for the acting Director in a company. The DIN is a unique number such as the PAN Card for any person and is applied and allotted once in the lifetime.

Step 3: Name approval Application

The next step in company incorporation is to make an application for reservation of the name for the proposed company. The application is to be made in Form INC-1, where one can apply for a maximum of 6 names in order of preference. the point to be noted here is that the names applied should not be identical or should not resemble with any existing Company or LLP or Registered Trademark. Once the proposed name is approved, it is reserved for the applicant for a period of 60 days, under which time period one has to apply for the Incorporation of Company, non-compliance of which leads to withdrawal of the name granted by the Ministry.

Step 4: Application for Certificate of Company Incorporation

Once the name is reserved for the proposed company, one shall proceed for making the Application of Certificate of Incorporation in SPICe+ form accompanied with SPICe_MOA and SPICe_AOA. The application is submitted by paying the requisite Stamp Duty as applicable in case of concerned state on the portal. Once the application is successfully submitted, the form for application of PAN and TAN of the company is generated online, which shall be duly submitted after affixing the DSC with MCA.

Step 5: Formulation of MOA and AOA

The MOA and AOA stands for Memorandum of Association and Articles of Association, respectively. MOA and AOA are the two most important documents for any company and marks the last step in the process of registering a Company. MOA of company clearly state the scope of operations of the company, whereas AOA states how the company will be carrying the operations as per the laid Act. In case of a Private Limited company, the Articles should mandatorily consist of he following three clauses in addition to general clauses:

• Limitation on the number of members up to 200.

• Restriction on transfer of shares.

• Prohibition on accepting securities from public.

For submitting this application, one shall collect following documents first:

• Utility Bill and NOC from the owner for the Registered Office address of the Company;

• Rental Agreement with the owner of registered office, if premises is rented;

• Consent to act as a Director of the company in form DIR – 2;

• Affidavit and declaration by first subscriber(s) and director(s) in form INC – 9 (duly franked and notarized);

• Certified True copy of the self-attested Identity proof of the first subscriber(s) and director(s).

After the due verification of the application and documents provided, the concerned RoC may grant the Certificate of Incorporation (COI). It is a conclusive proof of existence of the company, wherein the date of Incorporation, Company Identification Number (CIN) and Permanent Account Number (PAN) is mentioned with the sign and seal of the Registrar. Once, the Certificate of Incorporation is granted, the company may commence the Business Activity as the Incorporation procedure is completed.

Advantages of company incorporation

The incorporation of a company provides many benefits as it makes the organization genuine, and enhances the business credibility. Other benefits include:

• Protects against personal obligation, and defends against other threats and losses.

• Builds goodwill and also supports more customer attraction

• Gives reliable investors bank credits and good investment with ease.

• Provides cover of the responsibility to protect the company’s assets

• Bigger commitment to wealth and greater stability

• Increases the ability to develop and grow large