PROCEDURE OF INCORPORATION OF A PRIVATE LIMITED COMPANY IN A SIMPLE WAY (IN LAYMAN LANGUAGE)
Most of the times, a no. of Businessmen who want to incorporate the company, instead of taking the initial help/ consultancy of PROFESSIONALS, try to search the benefits and procedure of incorporation of company on internet. There are a no. of sites/ Blogs which provide the complete and thorough procedure of incorporation of company but after going through the complicated language used and the lengthy procedure in such sites, the individual gets confused and his mind diverted to the other forms of business i.e. Proprietorship/ Partnership Firms. So, here I have tried with my experience to elaborate the simple procedure in just 10 points to incorporate the company which will be beneficial for the Corporates/ Individuals/ Business man as well as Emerging Professionals:
1. For incorporating a private limited company, there must be:
At Least 2 Promoters: Promoters who will promote/ incorporate the company. Promoters may be individual or body corporate. AND
At Least 2 Directors: Directors should be individual only. No Body corporate/ HUF or Partnership Firm can be appointed as Directors. For this the individuals will apply for DIN i.e. Director Identification Number in Form DIN 1 along with affidavit of Rs. 10 (Depending upon the stamp duty rates of the States) as an attachment along with PAN card copy and address proof (Driving Licence/ Passport copy/ Voter ID Card/ Electricity Bill/ Telephone Bill) which should either be self attested by Individual or notary attested. This DIN 1 has to be certified by the Professional i.e. CA/ CS/CWA who will certify that the documents attached is the true copy of the original documents and the photo attached is of the individual who is applying DIN and that individual is known to such Professional or has come to him along with the original documents. The DIN will have then to be applied and will get approved through STP on the basis of Certification of Professional as if correct information is being filed.
Generally, in most of the cases, Promoters and Directors are the same in Private Limited Companies.
2. One of such two directors must have DIGITAL SIGNATURE who can apply with any of DSC Vender i.e. E Mudra/ Siffy/ TCS etc. These vender are known as Certifying Agencies who are duly appointed office of the Controller of Certification Agencies (CCA) under the provisions of IT Act, 2000. There are a total of seven Certification Agencies authorised by the CCA to issue the Digital Signature Certificates (DSCs). The details of these Certification Agencies are available on the portal of the Ministry www.mca.gov.in. This Digital Signature has to be affixed over all the E Forms i.e. Form 1A, Form 1, Form 32 and Form 18 required for incorporation of Company.
3. Then the promoters should apply for the name of the company to be approved with the concerned ROC of the State where the company has to be formed in E Form 1A by payment of Rs. 1000 through Credit Card or Net Banking, describing the capital of company, main objects, state in which the company is to be incorporated and to affix the digital of Applicant. The promoter can apply for 6 names amongst which the ROC will approve only 1. If the ROC rejects all the names, the applicant have another two chances to apply the name again with the same fees he has incurred while filing Form 1A.
4. After the name is approved, the Directors/ promoters are to draft MOA and AOA. In MOA, the 5 clause mainly i.e. Name Clause, Registered Office Clause, Main Object Clause, Capital Clause and Subscribers Clause will have to take into consideration. And in Articles all the bye laws of the company corresponding to Companies Act, 1956 have to be considered. The names of First Director are mandatory to be given in AOA.
5. These MOA and AOA should be followed by the tables of subscribers to be signed by subscribers in their own handwriting along with the shares to be subscribed by them before any person who will act as witness and will sign in the witness column that the subscribers have signed in his presence. The word subscribers here used is because of the reason that these subscribers will subscribe for the shares in the company at time of incorporation and will invest the minimum capital i.e. Rs. 1, 00, 000. They will contribute the amount by way of cash or cheque when the company gets incorporated and shares will be allotted to them followed by the share certificates
6. After the MOA and AOA are drafted, Director will take the Professional Service i.e. from CA/ CS/ CWA to incorporate the company. Professional Service is mandatory as for incorporation, E Forms 1, 18 and 32 are to be filed which are to be Digitally signed by any One Director followed by Digital Signatures of Professional who certify that all the documents and information is correct one.
7. Form 1, 18 and 32 are to be filed online after the MOA and AOA are drafted. The E Forms have been described as follows:
E Form 1: In such form, the Director is to give declaration that he is going to incorporate the company and the information filled is true and to the best knowledge to him. Information entered in E Form 1 is: The Authorised and Paid up capital of the company, Particulars of Promoters along with information of at least 2 Directors, The information about the companies in which such promoters are already acting as directors, The Stamp Duty fees to be paid and to attach the scanned copies of MOA and AOA along with their tables, duly signed by all the directors
E Form 32: In this E Form, the applicant is to give information about the first Directors of the company i.e. email id etc along with their
(i) DESIGNATION i.e. Director/ Additional Director/ Managing Director
(ii) Category i.e. Promoter/ Professional/ Independent/ Chairman/ Executive Director/ Non Executive Director
This E Form 32 is then digitally signed by one Director followed by signatures of Professional who will give verification that the appointed director has given declaration to the company that he/ she is not disqualified and not declared as an offender by any Court. The attachment in case of Private Limited Company in form of consent by Director to act as Director is optional but it is better to attach the same.
E Form 18: The Applicant is to give here the office address as well as nearby police station address. Here the Applicant is required to attach the scanned copies of Rent Agreement for the office in case the office is taken on rent OR NOC from the person/ entity if the office is not taken on rent. The Proof of registered office address is mandatory which can be electricity bill/ telephone bill on any individual name but must be of that building where the office is to situate exhibiting that the building is in existence and not a fake one. This documents is to be digitally signed by the Director followed by Professional certifying that he has visited the particular address given in E Form 18 and verified the same.
8. The Applicant will then make the payment of Government Fees as well as Stamp Duty Fees through Credit Card or Net Banking after the E Forms are filed if the Government Fee is less than Rs. 50, 000 and can pay by challan to be deposited in bank if the fee is more than Rs. 50, 000. The E Forms then will be checked by the ROC at their level. And will approve if found all the information in order or may not approve if require some extra information or of the information is not in order. Then the applicant is to give that information and to file the necessary documents if requisite E Form 61 or to re-submit the forms if any form is not found in order.
9. If the E Forms are found to be in order and gets approved by ROC, Certificate of Incorporation will be generated and will be dispatch online at the email id of the person/ entity given in the e forms.
10. The Directors are to get the MOA AOA printed and to comply all the compliances after the company gets incorporated.
Conclusion: Hope this above article will serve the purpose of incorporation of the Private Limited Companies for those Individuals/ Professional/ Business Man who does not find the required matter/ detailed Practical information etc. over the internet or somewhere else.
CS Mohit Saluja
Practicing Company Secretary