A company is an artificial legal person. The practical procedure for incorporation of a Company is very simple, but a special attention is required to be given in the area of share capital requirement for each form of business and availability of name. Normal capital requirement for incorporation of a company is ` 1,00,000/- for a private limited Company and ` 5,00,000/- for a Public Limited Company. However, there are certain names which require higher amount of authorized share capital (Please see Annexure I). Similarly there are certain kinds of business activities which require higher Authorized share Capital such as broking Company, which requires ` 10,00,000/- as Authorized share Capital. In case of confusions it is recommended that the pre-incorporation preparation be made by the Company Secretaries in consultation of government authorities working in the office of Registrar of Companies in order to avoid unnecessary delay in work and for the better interest of the client. Now, whenever a client comes for incorporation of a private limited company following procedure is to be followed;
1. Firstly it is very important to know who are going to act as Directors and shareholders of the Company. There must be minimum two Directors and two shareholders in a private limited Company.
2. Every person who is desirous to act as a director must obtain a Director Identification Number (DIN) from DIN authorities, New Delhi.
3. For the purpose of obtaining DIN, an application needs to be prepared. The person who wishes to act as Director must deposit with the Company secretary one photocopy of Address proof and one photocopy of Identity proof. One passport size photograph is also needed for affixing on DIN application. (Please refer annexure II)
4. Usually, in normal case the DIN application is approved in 3-4 days from the date of application. Meanwhile the application for availability of the name in e-Form Number 1A can be made by using PAN for saving time.
5. After receipt of necessary documents application can be made for ascertain availability of name for the proposed company. Usually the promoters are predetermined about the name of their company, but it is duty of the company secretary to make sure that the desired name is not prohibited or granting of the name is conditional. Accordingly application is required to be made to the Registrar of Companies in e-Form Number 1A.
6. As a standard practice a note, justifying desirability of the name may be given as an optional attachment. However preparation of the note is not compulsory.
7. A filing fees of ` 500/- is required to be paid either online or offline in the authorized bank.
8. After Filing of fees, Service Request Number is generated which is our reference number for tracking the progress of Application. Service Request Number is system generated and same can be using track transaction facility provided on MCA portal at www.mca.gov.in
9. If the professional wants to save time, payment of fees by online mode is better option as offline mode is time consuming and involves unnecessary manual work.
10. According to provisions of Companies Act, 1956 a period of 30 days is provided to ROC for approval/rejection of the Name availability application. However, practically it takes not more than a week’s time for approval of the name. If the name is rejected, the reasons for rejections are provided and accordingly reapplication can be made. No fee is required to be paid for resubmission. However only two resubmissions are allowed on one Service Request Number. If the application is rejected for third time, then fresh application is required to be made by paying fees of ` 500/- again.
11. Once the name is made available Company secretary needs to prepare Memorandum and Articles of Association. These two documents are very important from the point of view of prospects of the Company. All the governing power to the Director’s is conferred under Memorandum and Articles of association.
12. Usually in the offices of Company secretary drafts for the memorandum and articles is available. However, according to me a good professional should sit with the promoters and discuss the proposed activities of the Company before drafting of Clauses especially of Memorandum of Association. This improves the quality of work and satisfies the clients.
13. Each Memorandum and Articles have subscription pages in the end. This pages needs to be signed by the promoters. In case if the promoter is illiterate, the Company secretary should tell him the details written on the page and its significance.
14. The Registrars of Companies have been advised to ensure at the time of registration of a new company that the subscribers to the memorandum and the articles of association tally with the list of promoters / first director stated in the application for availability of name and in case, one or more of the promoters are not interested to participate in the promotion of a new company at a later state. “No objection letter” from such promoter(s) is made available to the Registrar, while submitting the documents for registration. The Registrars of Companies are also being advised to dispose of applications for availability of name ordinarily within 14 days of the receipt of application and to correspond with the applicant promoter(s), in this behalf” No. 27/1/89-CL-III dated 17-02-1989: (1989) 65 Com Cases 575 (St.)
15. Power of attorney is not necessary to be executed for incorporation of a company. However since the Company Secretary is acting on behalf of promoters and representing the promoters in the office of registrar of Companies, generally as a prudent practice power of attorney is executed in the name of Company Secretary.
16. Consent to act as Director is required to be prepared as an attachment to e-Form Number 32.
17. Three e-Forms are required to be filled up, namely
i. E-Form No. 1 – Declaration for compliance with all the formalities with the process of incorporation. It is filed pursuant to section 33 (1) and (2) of the Companies Act, 956. This form is required to be digitally attested by the promoter.
ii. E-Form No. 18- Notice of Address of Registered Office. In this form clear address of the Proposed Registered office of the Company is specified. The address of the police station within whose jurisdiction that address falls is also required to be given.
iii. E-form No. 32 - Appointment of Directors. Consent to act as Director/Managing Director is required to be filed as attachment to this form.
18. A necessary Registration fee is required to be paid. Stamp Duty is also required to be paid. Amount of Stamp duty depends upon Amount of Authorized Share Capital. The rate of stamp duty differs from state to state and therefore different amounts are there for stamp duty, according to each state.
19. Once the application is made to the registrar, he scrutinizes the documents. If any irregularities found in the documents, registrar shall intimate about it and in such case corrections are required to be carried out. Once all documents are free from errors and if registrar found them in order, he issues Certificate of Incorporation.
20. Certificate of incorporation contains Name of the Company and it Corporate Identification Number (CIN). CIN is unique in nature and same is used for all further filing with the ROC by that company.
ANNEXURE I
| S. No. | Key Words | Required Authorized Capital |
| 1 | Corporation | ` 5 Crore |
| 2 | International, Globe, Universal, Continental, InterContinental, Asiatic, Asia being the first word of the name | ` 1 Crore |
| 3 | If any of the words at (2) above is used within the name(with or without brackets) | ` 50 Lakh |
| 4 | Hindustan, India, Bharat being first word of the name | ` 50 Lakh |
| 5 | If any of the words at (4) above is used within the name(with or without brackets) | ` 5 Lakh |
| 6 | Industries / Udyog | ` 1 Crore |
| 7 | Enterprises, Products, Business, Manufacturing | ` 10 Lakh |
ANNEXURE II
Following documents are being enclosed at the time of filing application for DIN:
Proof of identity (Tick against the document being enclosed)
Passport
Election (voter identity) card
Driving license
Income-tax PAN card
Others-Please Specify
Proof of residence (Tick against the document being enclosed)
Passport
Election (voter identity) card
Ration card
Driving license
Electricity bill
Telephone bill
Bank account statement
Others-Please Specify
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