Public Lmited Company

Formation Process

HOW TO ERECT A COMPANY IN INDIA

Individuals or organizations that want Company Incorporation in India need to adhere to the following step-by- step approach:

Selection of nature of the company
The Promoters of a company may be individual entrepreneurs or body corporate engaged in efforts to incorporate a company. They have the power of defining the object of the company and deciding various matters for the company proposed to be incorporated. It is depending upon, the purposes for which the company is to be incorporated, proposed scale of operations, capital involved, etc. The promoters can select type of the company as they wish to form themselves into viz. private company, public company, non-profit making company, etc.
Selection of name for the proposed company
Six names are required to be selected in order of preference after taking notes of numerous provisions, clarifications, circulars and rules made by the Ministry of Corporate Affairs, etc. In case key word is required, significance of each key word should be given in the e-Form INC-1.
  1. Applying for ascertaining the availability of the selected name
  2. The promoters are required to make an application to the concerned Registrar of Companies to be submitted electronically to the Ministry of Corporate Affairs on the portal of MCA. An application shall be in e-Form INC-1 duly digitally signed by any one promoter or managing director or director or manager or secretary of the company along with the required fee for ascertaining whether the selected name is available for adoption by the promoters of the proposed company.

  3. Approval of the name
  4. After receipt of completed application in e-Form INC-1, 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 six months. In case, if the promoters fail to submit all the required documents for incorporation of company in India within that period, then they are required to submit another application after payment of requisite fees.

Submitting the application for the Identification Number of the Directors and the Digital Signatures
All the existing and intending Directors have to obtain DIN within the prescribed time-frame as notified. However, as per sec 155, no individual, who has already been allotted a Director Identification Number under section 154, shall apply for, obtain or possess another Director Identification Number.
As per Rule 9(1) of the Companies (Appointment and Qualification Of Directors) Rules, 2014, every individual, who is to be appointed as director of a company shall make an application electronically in Form No. DIR-3, to the Central Government for the allotment of a Director Identification Number (DIN) alongwith such fees as provided in the Companies (Registration Offices and Fees) Rules, 2014.” Presently the fee for filing of DIR-3 is Rs. 500.
Specific care should be taken that a person cannot have more than one DIN, therefore, a DIN once obtained shall serve the requirement for all the companies in which he is a director or intended to be a director.
  1. Requirement for having digital signatures
  2. After 16th Sept., 2006, every document prescribed under the Companies Act, 2013 is required to be filed with the digital signature of the managing director or director or manager or secretary of the Company, therefore, it is compulsorily required to obtain digital signatures of at least one director to sign the e-Form INC-1 and other documents. It may be noted that if the director or other persons covered are having digital signatures, their signatures may be used for the above said purpose and there is no need take new signature again.

Drafting the Memorandum and Articles of Association.
Drafting of the MOA and 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. These two documents are basically the charter and internal rules and regulations of the companies. Therefore, they must be drafted with utmost care with the expert advise and the other object clause should be drafted in a very broader sense.
As per section 4(6) the memorandum of a company shall be in respective forms specified in Tables A, B, C, D and E in Schedule I as may be applicable to such company.
As per section 5(6) the articles of a company shall be in respective forms specified in Tables F, G, H, I and J in Schedule I as may be applicable to such company.
Role of Registrar – Stamping, digitally signing and e-filing different documents.
  1. Association, which is signed by the subscribers in the presence of witnesses, depicting the number of shares next to their names. This has to be sent in a PDF file attached electronically. It should also have the required stamp in accordance with the stamp duty applicable to the State in which the company’s registered office needs to be situated. In addition, the original version of the Memorandum of Association shall be stamped and submitted to the concerned Registrar of Companies.
  2. Articles of Association should be signed electronically by the subscribers in the presence of witnesses, with the number of shares they hold next to their names It should also have the Drafting the Memorandum and Articles of Association Role of Registrar – Stamping, digitally signing and e-filing different documents required stamp in accordance with the stamp duty applicable to the State in which the company’s registered office needs to be situated. In addition, the original version of the Memorandum of Association shall be stamped and submitted to the concerned Registrar of Companies.
  3. If the company wished to enter into an agreement with any individual to be appointed as its managing or whole-time director, a copy of the agreement needs to be attached. This had to be in PDF format.
  4. Declaration of e-Form INC-8 by an advocate or company secretary or chartered accountant who is a full time practitioner in India, or by a person who is listed as a director, manager or secretary of the company in the Articles, there is a compliance with the provisions of the Companies Act 2013 and all its underlying rules, with respect to the preceding matters of registration, which may be sufficient according to the Registrar as the compliance evidence. An important point to be made note of is that, for companies in which directors are also director, the details such as the names, addresses and other particulars of directors should be given and these should match the information provided in the DIN application Form.
  5. Power of Attorney for should be duly filled by all the subscribers with details of any one subscriber or any other person giving him the authority to file these documents with the Registrar and to obtain certificate of incorporation. A Non-Judicial stamp paper should be used for giving the power of attorney and this should be submitted to the Registrar.
  6. Any other agreements stated in the Memorandum or Articles of Association also need to be filed in the PDF file with the Registrar due to the fact that in such cases the agreement forms a part of this basic document.
  7. Obtaining Certificate of Incorporation in Form INC-11 as directed by Rule-18 of Companies (Incorporation) Rules, 2014.
  8. E-Form INC-22 needs to be filed with the Registrar in an electronic format with the digital signatures with respect to the location of the registered office. E-Form INC-22 is also required to be certified by the company secretary or chartered accountant or cost accountant who is a full time practitioner
  9. E-Form DIR-12 should be filed with the Registrar electronically for the purpose of filing the particulars of directors. The personal details need to be in accordance with the information provided in the DIN. The below mentioned specifications also need to be given in e-Form DIR-12:
    1. Name and CIN of all companies of which they are directors
      • Names of the concerns they are in partnership with
      • Names of concerns they are proprietors of
    The director or managing director or manager or secretary of the company needs to sign the E-form DIR-12 in a digital format. It needs to be filed with the necessary filing fee as specified under Companies Act, 2013.
  10. E-Form INC-7 deals with incorporation of a new company (other than OPC). This E-Form is accompanied by supporting documents such as details of Directors/subscribers, the Memorandum of Association (MoA) and Articles of Association (AoA) and evidence of payment of stamp duty. Once the E-Form is processed and found complete, a company is registered and CIN is allocated.
Payment of Fees.
The amount of fees that needs to be paid to the Registrar during the registration of a new company differs according to the authorized capital of a company which is to be registered.
Acquisition of Certificate of Incorporation.
Once the Registrar is satisfied that the company is compliant with the stipulations specified, he retains the documents and registers the MOA, AOA and other documents. The Registrar is obligated by Rule-18 of Companies (Incorporation) Rules, 2014 to issue a Certificate of Incorporation, generally within 7 days after the documents are received.
Preparation and filing of Prospectus/Statement in lieu of Prospectus and e-Form (in case of public companies) for obtaining the certificate of commencement of business.
As per Rule-24 of Companies (Incorporation) Rules, 2014, the declaration filed by a director shall be in Form No. INC.21 along with the fee as prescribed and the contents of the form shall be verified by a Company Secretary in practice or a Chartered Accountant or a Cost Accountant in practice.
Once the Registrar is satisfied that the company is compliant with the stipulations, he retains the documents and registers the MOA, AOA and other documents. The Registrar is obligated by Rule-18 of Companies (Incorporation) Rules, 2014 to issue a Certificate of Incorporation, generally within 7 days after the documents are received.
Procurement of Certificate of Commencement (for Public Limited Companies).
A company which does not have a share capital or a private Ltd company is allowed to commence its business activities on the date of its incorporation. However, a company which has share capital or a public company should take a certificate of commencement before the business can be started