The best way to start a business is to
incorporate Private limited company because it has many advantages like limited
liability of members and directors, separate legal entity, easy compliance,
etc. A company can be formed with minimum 2 directors and minimum paid up
capital of Rs 1 Lakh.
What is a Company? – A company is a voluntary association of persons formed for the
purpose of business activities. A company has distinct name and limited
liability, it is a juristic person having a separate legal entity different
from its members who constitute it, capable of rights and duties of its own and
endowed with a potential or perpetual succession.
Types of Companies - A company can be formed any of the three ways:—
1) Incorporation of a new company; or
2) Conversion of existing business (sole proprietorship concern or
partnership firm or co-operative societies) into company under the provisions
of Chapter IX and Chapter IXA of the Companies Act, 1956; or
3) Companies incorporated under section 25 of the Companies Act,
1956. (Non Profit Making Companies
The incorporation
(birth) and winding up and dissolution (death) of a company are governed by the
provisions of the Companies Act, 1956. Therefore each company is subject to the
provisions of the Companies Act, 1956, as may be amended from time to time.
COMPANY INCORPORATION PROCEDURES
To register a company, you need to first apply
for a DIN. You would then need to acquire your Digital Certificate and register
the same on the portal. Thereafter, you need to get the company name approved
by the Ministry. Once the company name is approved, you can register the
company by filing the incorporation form depending on the type of company
Persons desirous of forming a company must
adhere to the step by step procedure as mention below:—
a. Selection of type of Company.
b. Apply for Directors Identification Number
and Digital Signatures, if does not have.
c. Selection of name for the proposed company.
d. Drafting of Memorandum and Articles of
Association.
e. E-filing of various forms and documents
with the Registrar.
f. Obtaining Certificate of Incorporation.
g. Preparation and filing of
Prospectus/Statement in lieu of Prospectus and e-Form 19/20 for obtaining the
certificate of commencement of business.
h. Obtaining Certificate of Commencement of
business.
Note - Step (g) & (h)
required only in case of Incorporation of a Public Company.
SELECTION OF TYPE OF COMPANY
The promoters of a
company may be individuals or bodies corporate engaged in efforts to
incorporate a company. They have the power of defining the object of the
company and deciding various connected matters regarding incorporation.
Proposed scale of operations, capital involved, etc. depend upon the purposes
for which the company is to be incorporated. The promoters are at liberty to
select type of the company viz. Private Company, Public Company, Nonprofit
Making Company, etc.
APPLICATION FOR DIN
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 per Section 266A, every individual,
intending to be appointed as director of a company shall make an application
for allotment of Director Identification Number (DIN) to the Central Government
in the prescribed e-form DIN-1. Therefore, before submission of e-Form 1A all
the directors of the proposed company must ensure that they are having DIN and
if they are not having DIN, it should be first obtained.
Din is individual specific not Company specific.
This means DIN once obtained shall serve the requirement for all the companies
in which individual is director or intended to be a director. No one can
have more than one DIN.
DIN Form required to
be certified by the Company Secretary or Chartered Accountant or Cost
Accountant in whole-time practice.
REQUIREMENT OF DIGITAL SIGNATURES
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.
After 16th September 2006, every document
prescribed under the Companies Act, 1956 is required to be filed with the use
of Digital Signatures by the person authorised to sign the documents.
Therefore, it is compulsorily required to obtain digital signatures of at least
one director before filling e-Form 1A.
The signatories have
to register their Digital signature certificates (DSC) with MCA.
APPLYING FOR APPROVAL OF NAME
Six names are required to be selected in order
of preference after taking notes of numerous clarifications, circulars and
rules made by the Ministry of Company Affairs. In case key word is required,
significance of each key word should be given in the e-Form 1A.
If e-Form 1A is signed by practicing CA/CMA/CS,
then only one name is required.
An application shall
be in e-Form 1A duly digitally signed by any one promoter or managing director
or director or manager or secretary of the company along with required fee of
Rs.1000 only for ascertaining whether the selected name is available.
APPROVAL OF THE NAME
After receipt of
completed application in e-Form 1A, the Registrar shall intimate whether the
proposed name is available for adoption or not. The confirmation of the name
made available by the Registrar shall be valid for a period of 60 days from the
date of letter issued in these regards.
INCORPORATION OF COMPANY
Next step is to file
the following Forms with the Registrar for incorporation of the Company. These
shall be submitted to the Registrar along with adequate filing fees as
applicable for registration of the Company within a period of 60 days from the
date of Name Approval:
Form 1: This E-form is filled for Application and declaration for
Incorporation of a Company. Form 1 should attach Memorandum of Association and
Articles of Association. These should be duly signed by the subscribers and
witnessed, showing the number of shares against their names. It should be noted
that main objects should match with the objects shown in e-Form 1A.
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.
Form 18: This E-form is filled for situation or change of situation of
registered office. It is to be filed with the Registrar electronically with the
digital signatures in regard to location of the registered office. E-Form 18
shall also be certified by the Company Secretary or Chartered Accountant or
Cost Accountant in whole-time practice.
Form 32: It is required to be
filed with the Registrar electronically for filing particulars of directors.
The personal details should match with the information provided in the DIN.
E-Form 32 is required to be digitally signed
by the director or managing director or manager or secretary of the company.
E-Form 32 shall also be certified by the Company Secretary or Chartered
Accountant or Cost Accountant in whole-time practice.
Notes-
1. E-Form 18 & E-Form 32 should be filed
together at the time of filing of E-Form 1.
2. Only e- payment is
allowed for payment of all MCA fee (I.e. Net banking / Credit Card / NEFT) for
all e-forms. No challan payment will be accepted under revised procedure.
CERTIFICATE OF INCORPORATION
Once the form has been approved by the
concerned official of the MCA; you will receive an email regarding the same
along with Certificate of Incorporation. Now no hard copy of Certificate of
Incorporation will be send. You need to take print out of attached Certificate
for future use.
Corporate Identity Number (CIN) – After Incorporation each Indian company
(Listed or Unlisted) will allotted a unique 21 Digit CIN (Alphanumeric). Once this number is filled,
company details are automatically filled in E-Forms issued by MCA by using
pre-fill function.
How it is structured?
Digit No.
|
What it Shows
|
Remarks
|
1st digit
|
Listing status
|
If Company is Listed
it will start with ‘L ‘and if Company is not Listed it will start with ‘U’
|
Next 5 digit
|
Industry code
|
|
Next 2 digit
|
State code
|
I.e. UP for Uttar
Pradesh.
|
Next 4 digit
|
Year of incorporation
|
I.e. for Company
formed in Calendar Year 2012 the same will be 2012.
|
Next 3 digit
|
Ownership
|
PLC for Public
Limited CompanyPTC for Private Limited Company.
|
Last 6 digit
|
ROC reg.
|
i.e. 048933 for ROC-
Kanpuri.e. 090633 for ROC- Kolkata
|
COMMENCEMENT OF BUSINESS
A Private limited company and a company not
having share capital may commence its business activities from the date of its
incorporation. However, a Public Limited Company having share capital is also
required to obtain a separate certificate of commencement of business according
to section 149(2A) of the Companies Act, 1956.
MCA 21 project has made it possible to get
company incorporated without visiting any registrar office. Entire formation is
completed online, from getting Directors Identification Number (DIN) to getting
Certificate of Incorporation
As the entire process is now can be completed
online, formation of Private Company takes around 10 to 15 days time. So that
for a business man to start a business this option is highly advisable.