Steps To Be Followed For The Incorporation Of New Company In India
The Companies Act, 2013 lay down the rule for the incorporation of both Public and Private Companies under Chapter-II of the act along with the [Rules] of the Companies (Incorporation) Rules, 2014.
A company to be incorporated as a Private Company must have a minimum paid-up capital of Rs. 1, 00,000, and minimum number of members required to form a private company is 2 or more members.
For Public Company it must have a minimum paid-up capital of Rs. 5, 00,000 and requires at least 7 or more members.
1. Select Name of Person - Under Section-149(1) (a) of Companies Act, 2013. Select the name of directors i.e. who will be directors (At least Three Name for Three for Public Company and Two for Private Company) [Rule-17] (The Companies (Incorporation) Rules, 2014.
2. Apply for Digital Signature Certificate (DSC) -
Digital Signature Certificates (DSC) are the digital equivalent (i.e. electronic format) of physical or paper certificates. Certificates serve as proof of identity of an individual for a certain purpose. Likewise, a digital certificate can be presented electronically to prove your identity, to access information or services on the Internet or to sign certain documents digitally. One can get DSC registered by signing MCA-21 E-forms digitally.
A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate. The list of licensed CAs along with their contact information is available on the MCA portal (www.mca.gov.in). The Fees for obtaining DSC is different among all the Certifying Authority.
3. Apply for Director Identification Number (DIN)
It is a unique identification number allotted to the existing director of the company or intending to be appointment as director of a company according to Section-152(3), Section-153 & Section-154 of the Companies Act, 2013.
It is only after the DIN is approved, the incorporation documents can be filed with the Registrar Form No.-DIR-3. However, the name approval can be obtained prior to approval of DIN. It takes about 7 days for getting the DIN approved, provided all proper documents are furnished. Fees to be paid for the allotment of DIN is Rs.500.
Documents to be furnished for getting DIN application are:
· Identity proof: Copy of PAN card is mandatory.
· Address proof: Copy of passport or Voter Id or Ration card or Electricity bill or any other address proof.
· Passport size photograph (latest) in soft copy (.JPEG format).
· Current occupation.
· Email address of applicant.
· Education qualification and contact number of applicant.
· Verification to be signed by the applicant.
4. Filing the Proposed Name of Company For Approval to The Registrarof Companies (ROC)-
According to Section-4(4) of The Companies Act, 2013 person can make an application to propose the name of the company to be registered with such forms and manner accompanied by fees of Rs. 1,000/- to be paid, as may be prescribed, to the Registrar for the reservation of a name set out in the application.
According to Rule No.-9 of Companies (Incorporation) Rules, 2014 reservation of the name can be made by an application for the reservation of a name shall be made in
Form No. INC.1 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 to the Registrar of Companies (ROC) in the State/Union Territory in which the company will maintain its Registered Office.
According to Section-4(5) of The Companies Act, 2013 the application submitted to the registrar will be reserved for a period of 60 days to check and verify the document and information furnished along with the application.
5. Drafting of Memorandum of Association (MoA) -
The MoA is the Constitution of the Company which must contain all the fundamental information of the Company. MoA define the relationship of the Company with its shareholder. Therefore, it is important to draft the MoA very carefully with properly incorporating Clauses carefully.
Drafting of Memorandum must be done in which:
· Name of the Company lasts with word “Limited” in case of a public limited or the last words “Private Limited” in case of a private limited company.
· State in which the registered office of the company is to be situated.
· Object of the company for which it is proposed.
· Liabilities of the members of the company Limited/Unlimited.
· Mention the amount of share capital in case of company having a share capital.
· In case of the One Person Company the name of the person who in the event of death of the subscriber shall become the member of the company.
According to Section-4(6) of The Companies Act, 2013 MoA shall be in respective form as prescribed in Table A, B, C, D and E of Schedule-I as may be applicable.
6. Drafting of Articles of Association (AoA)-
AoA which is an important document explains the operation of the company, purpose for which Company is incorporated along with the information for the process of Appointment of Directors and also management of the financial Record of the company.
In drafting of the AoA of company it shall contain-
· Regulation for management of the Company.
· It shall also contain such, matter as may be prescribed.
· May contain the provisions for entrenchment to the effect that specified provision of the Article may be altered only if condition or procedures as that are more restrictive than those applicable in the case of a special resolution are met or compiled with.
According to Section-5(6) of The Companies Act, 2013 the Article (AoA) shall be in respective form provided in Table F, G, H, I and J of Schedule-I as may be applicable to such company.
[Rule-10] -Where the articles contain the provisions for entrenchment, the company shall give notice to the Registrar of such provisions in Form No.INC.2 or Form No.INC.7, as the case may be, along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 at the time of incorporation of the company or in case of existing companies, the same shall be filed in Form No.MGT.14 within thirty days from the date of entrenchment of the articles, as the case may be, along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014.
7. Application for Incorporation of Company-
According to Section-7 of The Companies Act, 2013 shall be filed with the registrar within whose jurisdiction the registered office of a company is proposed to be situated.
[Rule No.-12] of Companies (Incorporation) Rules, 2014- 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.2 (for One Person Company) and Form no. INC.7 (other than One Person Company) along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 for registration of a company.
1. By a company having an authorized share capital of:
|Nominal Share capital
||Other than OPCs and Small Companies
||For every 10, 000 or part thereof
||For every 10, 000 or part thereof
|Up to 1, 00, 000
|More than 1,00,000 up to 5,00,000
|More than 5,00,000 up to 10,00,000
|More than 10,00,000 up to 50,00,000
|More than 50,00,000 up to 1,00,00,000
Memorandum of Association (MOA) filing fee (in case of company not having share capital)
|Number of members
|Up to 20 members
|More than 20 but up to 200 members
|More than 200 members (If number of members not stated as unlimited in AOA
||5,000 Rupees 10 for every member, after the first 200
2. Fee for filing Articles of association (in case of company having share capital)
|Nominal Share Capital
|Less than 1,00,000 Rupees
|1,00,000 to 4,99,999 Rupees
|5,00,000 to 24,99,999 Rupees
|25,00,000 to 99,99,999 Rupees
|1,00,00,000 or more Rupees
Fee for filing Articles of association (in case of company not having share capital)-
Fee applicable - Rupees 200 per document
3. Fee for filing form INC-7 (in case of company having share capital)-
|Nominal Share Capital
|Less than 1,00,000
|1,00,000 to 4,99,999
|5,00,000 to 24,99,999
|25,00,000 to 99,99,999
|1,00,00,000 or more
Fee for filing Form INC-7 (in case of company not having share capital)
Fee applicable - Rupees 200 per document
File with Registrar Form No. INC.7 [Rule 12 to 18] along with Documents -
(a) The Memorandum and Articles of the company duly signed by all subscribers;
(b) A declaration in Form No.INC.8 by an Advocate or Practicing professional (CA, CS, CA) who is engaged in incorporation, and a person named in director as Director, Manager or Secretary, that all requirements related to incorporation has been complied with;
(c) An affidavit in Form No. INC.9 from each subscriber and from each person named as first director in the articles that; he is not convicted if any offence in connection with promotion, formation or management of any company, he is not been found guilty of any fraud or misfeasance or of any breach of duty to any company during preceding five years, and all the documents filed with the Registrar contain correct, complete and true information to the best of his knowledge and belief;
(d) The address for correspondence till its registered office is established;
(e) The particulars of every subscriber along with proof of identity. List of poof required Listed under [Rule-16.];
(f) The Particulars of first directors along with proof of identity and his interest in other firms or bodies corporate along with his consent to act as director;
(g) The particulars of interests of first directors in other firms or bodies corporate along with their consent to act as directors of the company shall be filed in Form No.DIR.12 along with the fee of Rs.500/- as provided in the Companies (Registration offices and fees) Rules, 2014.
8. Commencement of Business
According to S.11 of the Companies Act, 2013. – Company having a share capital shall not commence any business or exercise any borrowing power unless- Director should file Declaration with Registrar in Form No. INC.21 [Rule 24] in such a 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 capital is not less than 5 Lakh Rupees in case of Public Company and not less than One Lakh in case of Private Company.
According to [Rule-24] the declaration filed by a director shall be in Form No.INC.21 along with the fee as Nominal Share Capital Fee applicable-
||Nominal Share Capital
||Less than Rs.1,00,000/-
||Rs.1,00,000 to Rs.4,99,999
||Rs.5,00,000 to Rs.24,99,999
||Rs.25, 00,000 to Rs.99,99,999.
||Rs.1,00,00,000 or more
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: Provided that in the case of a company requiring registration from sectorial regulators such as Reserve Bank of India, Securities and Exchange Board of India etc., the approval from such regulator shall be required.
9. Registered Office
Section-12 of The Companies Act, 2013 that the company on and from the 15 days of its incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it and company shall furnish to the registrar verification of its registered office within a period of 30 days of its incorporation in such manner as may be prescribed.
[Rule-25]The verification of the registered office shall be filed in Form No.INC.22 along with the fee.
Nominal Share Capital Fee applicable-
· Less than 1,00,000 -Rs.200\-
· 1,00,000 to 4,99,999-Rs.300\-
· 5,00,000 to 24,99,999 -Rs.400\-
· 25,00,000 to 99,99,999-Rs.500\-
· 1,00,00,000 or more -Rs.600\-
This is the basic requirement which must be fulfilled for incorporation of new Company in India Under new Companies Act,2013.
*** Student of 4th Year, Dr. Ram Manohar Lohia National Law University,Lucknow.
# Section-3(2), Companies Act, 2013.
# Section-3(1), Companies Act, 2013.
# Section 24, Indian IT Act, 2000.
# Instruction Kit, http://www.mca.gov.in/MCA21/dca/help/instructionkit/NCA/Form_INC-7_help.pdf last seen on 18/07/2015.
# Instruction Kit, http://www.mca.gov.in/MCA21/dca/help/instructionkit/NCA/Form_INC-21_help.pdf last seen on 18/07/2015.
# Instruction Kit, http://www.mca.gov.in/MCA21/dca/help/instructionkit/NCA/Form_INC-22_help.pdf last seen on 18/07/2015.