Incorporation of a company looks simple when we say and tough and complicated when we do it.
I am sure no practical experience can replace with a written article. The intention of this article to put light on to the regulatory aspects with regard to incorporation of private or public companies.
Incorporation of a company is the legal process that is used to form a corporate entity or a company. After incorporation the company will become a separate legal entity on its own, recognised by the law. There are detailed processes to be followed to incorporate a company into existence as per the Companies Act 2013. After incorporating a company successfully, the company will be allowed to use the suffix Limited.
After the Companies Act 1956 got repealed in 2013, a completely new law came into force. The entire system has changed and given more importance to electronic filing of forms rather than the old physical forms system. Automatic approval system on many areas were introduced.
Now we will try to understand how a new company can be incorporated through detailed steps.
Apply for the Name approval.
Name is the identity of a company with which people recognise them as brand and as a quality. Necessary care should be taken while selecting and registering the name, it should not be prohibited, should not be identical with others and resemble other names or brands.
To find the availability of name and get that registered we need to log in to the MCA Website. If we are visiting first time, we need to create a new account. After login , click on the icon RUN (Reserve Unique Name). This is the form which in the MCA service to reserve a name on availability. Companies can also apply for name through SPICE form. On clicking the icon a non downloadable form will open and the applicant need to fill all information there.
Following are the details to filled in the RUN form;
1. Entity type like private, public, one person company, producer company, section 8 company, Nidhi company etc.
2. Corporate Identification Number if the company is an existing company want to change its name and trying to reserve a new name.
3. Proposed name. There we will have auto check facility, means, when we enter the name the system will show whether that name is available or not.
4. Add comments like mention objects of the company, Trade Mark or any other relevant information.
5. If any attachment to be added choose the file and upload. The files need to be in PDF format.
Submit the form in the website
After filling up RUN form as above, the user can submit the form.
The system does not permit a later payment option and all payment need to done immediately to generate payment challan.
Validity of name
The reserved name will be valid for 20 days from the date of approval of name but in the case of existing company want to change the name, the reserved name will be valid for 60 days.
For reserving of the name through RUN no need to have Digital signature Certificate or Director identification number. Attaching details of the directors are not compulsory for name reservation.
Only one name can be applied through RUN, and the fee for application is Rs. 1000. There is only one resubmission is allowed in the RUN. No attachments are mandatory but if the name requires sectoral regulator approval or need No Objection Certificate, then that should be attached. Maximum size of the file is 6 MB and the number is one.
PREPARATION OF DOCUMENTS FOR INCORPRATION OF COMPANY
After getting the name approved by MCA the company need to prepare the following documents for smooth process of incorporation
• Declaration by first subscribers and Director(s), on plain paper – Form INC 9
• Declaration from first Director(s) along with copy of proof of identity and residential address in plain paper – Form DIR – 2.
• Proof of office address – lease/rent agreement with rent receipts.
• NOC from owner of the property on plain paper.
• Copy of utility bills which are not alder than two months.
• If director(s) or subscriber(s) does not have DIN, attach proof identity and residential address of the subscribers.
• All the subscribers should have digital signatures.
FILL FORM SPICe 32 with all information.
SPICe ( Simplified Performa for Incorporating Companies electronically) also called as Form INC 32 is the next form to be filled up an filed for completing the incorporation. This form is having following features
• Maximum 7 subscribers are allowed and if more subscribers are there, physically signed MOA and AOA shall attached in the form. If any of the subscriber to MOA/AOA are placed out side India and signing from outside India, physical signed copies of MOA/AOA should be attached.
• Maximum 20 director details are allowed to enter and among them three can file application for DIN. If more than three directors have not have DIN, then the company need to register with three directors first and later add others.
• There is a provision for applying for name also in this form. There are chances that the form may be asked for resubmission due to non availability of name, the new proposed name should be added in all forms and papers.
• INC 33 is electronic MOA, and just by affixing DSC of the subscriber, the date of signing will be automatically filled up in the form.
• PAN or TAN can be applied with SPICe form, and it is mandatory.
• SPICe form have the provision form applying GST, IEC through AGILE form to get the establishment code.
• There will not be any fees for companies incorporated with nominal capital of less than or equal to 10 lakhs or in respect of companies not having a share capital whose number of members as stated in the articles of association does not exceed twenty. This fee does not mean stamp duty waiver, as stamp duty is state subject it cannot be waived by centre, but it means the waiver of registrar of companies fees.
PREPARATION OF MOA AND AOA -Electronic or Physical
After filing SPICe form the company can download the e-form of MOA(INC 33) and AOA(INC 34) from the MCA site which need to filled with all information as per the nature of operation and management of the company. The respective formats are given in TABLE A TO J of Schedule 1.
After filling all information, all subscribers and profession should affix their DSC on the subscriber sheet of the MOA and AOA, on the same date.
DETAILS OF PAN AND TAN
PAN and TAN details should be mentioned in the SPICe form with area code.
DETAILS OF GST OR IEC IN AGILE.
If GST or IEC is already available it should be provided and if not registered already, they have select YES in the form and fill all informations.
SUBMIT FORM INC 32, 33, 34 and AGILE on MCA
When all the above mentioned forms are ready, upload the documents in MCA website and make all necessary payments.
If all the above procedures are completed properly, Certificate of Incorporation will be generated with CIN, PAN and TAN.
The procedure above mentioned procedures are of typical situations. When w face practical situations these may have changes and we may need to adapt.