When it comes to starting a new business with a registered entity, we always find hard to know about the complete procedure and legal compliance involved in it. This article is an attempt made by my side to share my experience and solve your queries regarding Incorporation of Company under Companies Act, 2013. I hope this would be of some help with respect to your working.
To start a business with a registered entity, one can form a Limited Company and the word 'Limited’ means the liability of the members will be limited to the amount unpaid, if any, on the shares held by them or limited to the amount guarantee by him to be paid at the time of winding up.
The procedure or brief overview for the Incorporation of a Private Company along with the practical aspects is mentioned below:
The very first basic requirement to make an application for incorporation of a private company is, there shall be Minimum 2 directors who shall form Board of Directors [Sec-149] and Minimum 2 members [Sec-3] a.k.a. Subscriber to the Memorandum and Articles of Association of the Company. Only individual (natural person) can be a director and one person can be a Director and a Member at the same time.
Following is the Step by Step procedure to incorporate a Company with SPICe (Simplified Proforma for Incorporating Company Electronically) Form INC-32 under Companies Act, 2013:
OBTAIN DIGITAL SIGNATURES
For signing the e-forms DSC are required. It is compulsory to obtain Class-II Digital Signature Certificates for all the subscribers of MOA and AOA and for atleast one director (if different form the subscribers) to sign the forms necessary for incorporation. A basic overview for how to obtain DSC has been mentioned below for your reference.
How to obtain DSC?
a) DSC application form duly filled and signed along with the colored passport size photo;
b) Self attested copy of PAN Card as Identity proof; and
c) Self attested copy of address proof
shall be submitted to the concerned authority.
DIRECTOR IDENTIFICATION NUMBER
As per Section 153, every individual intending to be appointed as director of a company shall make an application for allotment of Director Identification Number to the Central Government.
Now, there is no prerequisite of at least 1 (one) director shall possess DIN before making an application for incorporation. Therefore, Directors of the proposed Company can apply for their DIN through SPICe. The self attested copy of identity proof and address proof is required to be attached with the form for the processing of DIN.
Important Point to be kept in mind:
- Proof of Identity: Self attested copy of PAN Card (mandatory) and copy of Voter’s Identity Card/ Passport/ Driving License/ Aadhar Card.
- Proof of Address : Copy of Bank Statement/ Electricity Bill/ Telephone Bill/ Mobile Bill which shall not be older than two months
Further, if the individuals not having DIN and being appointed as director exceeds 3 then, they can apply for DIN by filling of Form DIR-3 with the Registrar. A basic overview of how to apply for DIN through the same is given below.
How to Obtain DIN with Form DIR-3?
Download form DIR-3(Application for Allotment of DIN) from the MCA portal. Fill the form & attach the requisite documents and upload the duly filled and signed form to MCA portal.
NAME OF THE COMPANY
While filing the SPICE we can apply for only one name. Further, there is an option to reserve the name in advance through the facility available on MCA portal known as Reserve Unique Name (RUN). An overview for applying of name through RUN is given below for your reference.
How to apply name through RUN?
The Company can apply upto two names through 'RUN’ facility accompanied with a fees of Rs. 1000/-. If the name gets rejected, one resubmission is allowed within 15 days of the date of rejection. Once the name reserved it shall be available for 20 days from the date of reservation. Which means SPICe shall be filed within such 20 days.
Important points to be kept in mind while reserving the suitable name:
The name of Company should not be a name similar/identical to any existing company or LLP or similar/identical to a registered trademark or a subject matter of an application pending for registration under the Trade Marks Act, 1999. Further, the same shall be in accordance with the provisions of Rule 8 of Companies (Incorporation) Rules, 2014.
If the objects of the Company is as such that it requires any approval from any regulatory body then while reserving the name through Run facility, a declaration by the directors shall be attached that the company shall take such approval before the commencement of the business. (In case of NBFC, approval of RBI is required)
PREPARE MEMORANDUM AND ARTICLES OF ASSOCIATIONS OF THE COMPANY
Memorandum of Association is the charter of the company whereas the Articles of Association are the internal rules and regulations of the Company. It shall be drafted with utmost care and with the help of professionals.
Further, the Simplified Proforma for Incorporating Company Electronically (SPICE) in Form INC-32 is to be filed along with e-Memorandum of Association in Form No. INC-33 and e-Articles of Association in Form No. INC-34.
Therefore, the Subscriber Sheet will be authenticated by affixing the digital signatures of all the subscribers in both the forms.
The above two forms is required to be signed by the witness which shall be an associate or a fellow member of ICSI/ICAI/ICMAI.
Some Practical Aspects:
The DSC of all the subscribers shall be associated with the PAN as authorized signatory on the MCA portal.
APPLICATION FOR INCORPORATION
The Application for Incorporation shall be filed in Form INC-32 (SPICE). Some of the key aspects to be kept in mind while filling the form are as follows:
Name of the Company: If the name is reserved through RUN then the SRN of the Run shall be entered in the form and it will automatically pre-fill the name reserved. If the name is not reserve then the applicant can apply for one name in the Form INC 32 (SPICE).
Capital of the Company: There is no minimum or maximum bar for the Authorised and Paid-up Capital of the Company [Sec-2(68)]. You can form a company with any amount but always consider the fees and stamp duty payable as statutory fees is totally correlated with the Capital of the Company.
Note: If the company is formed with a nominal capital of less than or equal to rupees ten 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, fee on INC-32 (SPICe) shall not be applicable (Rule 38)
Details of directors and subscribers: The details of the subscribers and directors shall be filed such as address, educational qualification. D.O.B., occupational qualification, number of shares subscribed etc. If the individual proposed to be appointed as director in the company then it can apply for DIN by the procedure mentioned above. In case the subscriber is already holding a valid DIN, and the particulars provided therein have been updated as on the date of application, and the declaration to this effect is given in the application, the proof of identity and residence need not be attached.
Other details: Other details such as address of the registered office, main division activity, source of income etc.
Attachments: The following documents needs to be annexed as attachment with the form:
- Declaration by the first subscriber(s) and director(s) in Form INC-9 [Rule-15].
- Interest in other entities by first directors.
- Affidavit by the first subscriber(s) and director(s) for Non-Acceptance of Deposit [MCA circular No. 11/2013]
- Consent to act as directors by the individual proposed to be appointed as director in the company in Form DIR-2.
- Proof of Office address (Conveyance/ Lease deed/ Rent Agreement etc. along with rent receipts).
- Utility Bill of the premise (Electricity/Water/Gas/Telephone Bill not older than 2 months)
- Identity and Address of Subscribers and Directors (if applying for DIN).
- NOC from Owner if the premise is not owned or taken on a lease.
Signing of Forms: The form shall be digitally signed by one individual that is proposed to be director in the company and shall be certified by a professional.
To avoid any mistakes and assist you in filing the form diligently and efficiently you should engage a professional in the above process.
UPLOADING OF FORM: Form SPICE along with the e MOA and e AOA shall be uploaded on the portal of MCA.
PAN & TAN for the Company
We can apply for PAN and TAN of the Company trough SPICE. We need to fill the AO code for the PAN and TAN. The AO code can be found by the link that is available in the help lit of Form SPICE.
Importer Exporter Code
The Company can also apply for importer exporter code through SPICE.
CERTIFICATE OF INCORPORATION
If after filing the requisite forms for Incorporation, the Registrar is satisfied with the content of document filed, Registrar (ROC) will issue the certificate of Incorporation in form INC-11 [Rule-18] along with the PAN and TAN of the company
YOUR COMPANY IS READY !
This article is intended only for academic discussion. Readers are advised to refer relevant provisions of law before relying on any of the point mentioned above. The author accepts no responsibility whatsoever and will not be liable for any losses, claims or damages which may arise because of the content of this article.
The author can also be reached at firstname.lastname@example.org
Tags Corporate Law