Incorporation of company

Let’s breakdown everything about incorporation of Company in India.

Section 3 to Section 7 of Companies Act, 2013 read with Companies (Incorporation) Rules, 2014 governs the incorporation of Company.

1. What is Incorporation of Company?

2. Type of Company incorporation.

3. Legal requirements to be fulfilled.

4. Process of incorporation.

5. Attachment(s) required.

6. Timelines of incorporation.

7. What documents are received from MCA after incorporation?

What is Incorporation of Company?

Incorporation of Company is a legal process of registration of proposed Company with the name approved by Registrar of Companies (Ministry of Corporate Affairs) (MCA) by submitting the required forms with Registrar of Companies, which we will discuss in the later part of this article.

Type of Company incorporation;

These are the type of Companies that can be incorporated in India depending on the requirements:

1. Private Limited Company

· Company limited by Guarantee

· Company limited by Shares

2. Public Limited Company

· Company limited by Guarantee

· Company limited by Shares

3. One Person Company

4. Section 8 company

5. Subsidiary of Foreign Company

6. Producer Company

7. Unlimited Company

8. IFSC Company

9. Nidhi Company

Legal requirements to be fulfilled;

There are certain requirements which are to be fulfilled for each type of Company. Different requirements are prescribed for different types of Company.

In this Article, we will explain about the requirements that a private Company has to fulfill.

A Private Company shall have:

1. At least two shareholders, they can be resident or Nonresident.

2. At least two directors, one of them shall be a resident in India.

3. A physical registered office within thirty days of incorporation and at all times thereafter.

Process of incorporation;

There are two stages in the incorporation of any Company, first is application for Name reservation and second is preparation and submission of incorporation forms of Company with the reserved name.

Let’s discuss both stages in detail;

1. Application for Name Reservation;

1. In this stage form Spice plus Part A is filed with MCA for reserving the name of the Company, by paying fee of Rs. 1000. In one form, we can give two names, only one name will be approved by the MCA depending on its availability.

There should not be any existing company and trademark with the similar name, if such is the case with both names, the same will be rejected by MCA. MCA has an embedded option called auto check, in the form itself for checking whether similar name or trademark exists or not.

In case of rejection of form, MCA gives specific remarks informing why the name(s) are rejected, in such a case we can re-submit the form with different names without paying the fee again. Form has to be resubmitted within the specified time. MCA only allows one re-submission of Spice Part A, meaning if the resubmitted form is also rejected by MCA, then fresh form will be filed by paying fee of Rs. 1000 again.

Once name is approved by MCA, it is reserved for twenty days, within twenty days, incorporation forms are required to be submitted. If for some reason incorporation forms are not submitted within the abovesaid period, the name can be extended for additional twenty days by paying fee of Rs. 1000 or you can extend it for additional forty days by paying fee of Rs. 2000.

The form is prepared online on MCA V3 portal. We have to choose category, sub-category of Company and NIC Codes as per the object of the company. Once form is prepared, we can submit the form with the required attachments. There is no requirement of signing at this stage neither digitally nor manually.

2. Preparation and submission of incorporation forms;

In this stage five form are prepared (this differs on the basis of type of Company being incorporated), here we will explain the process of incorporation of a Private Company. All the forms are prepared online on MCA V3 portal.

Let’s discuss about each form one by one;

A. Form Spice Plus Part B;

First form we have to prepare is Spice Plus Part B form, this is the first and main form for incorporation of Company, rest of the forms will be available for preparation only when this form is prepared.

We have to give the following details in this form:

1. Capital of the company

2. Address of the company

3. Directors of the Company

4. Director’s interest in other companies and/or LLPs.

5. Details of Stamp duty to be paid

6. Information for obtaining PAN and TAN of the Company.

7. Necessary Attachments

Both directors have to digitally sign the form using their DSC and form is required to be certified by a practicing Company Secretary or Practicing Chartered Accountant.

B. Form INC-33 (e-Memorandum of Association) (MOA);

This form has five clauses which state information about the name, registered office, objects, liability and capital of the company;

1. Name Clause: This clause mentions the Name of the Company.

2. Registered office Clause: This clause mentions the name of the State or Union Territory in which registered office of the Company is situated. This clause determines the jurisdiction of Registrar of Companies.

3. Object clause: This clause mentions the object with which the Company is formed. Company cannot undertake any activity which is not mentioned in the objects of the Company.

Two types of objects are mentioned in this Clause:

· Main Objects: Main business of the Company is mentioned here. Same objects are to be mentioned here which were given in Spice Part A form.

· Incidental Objects: Activities which are necessary or ancillary to the attainment of main objects are mentioned here.

4. Liability Clause: This clause states the nature of liability of the members of the Company. In case of a Company limited by Shares, the liability of the members is limited to the amount unpaid on their shares. In case of a Company limited by Guarantee, the liability of the members is limited by the amount each member has agreed to contribute.

5. Capital Clause: This clause mentions the maximum capital a Company can raise, known as Authorized or Nominal Capital. It also mentions the number of shares in which Authorized capital is divided and the face value of share.

All subscribers have to digitally sign the form using their DSC and this form is also required to be certified by a practicing Company Secretary or Practicing Chartered Accountant.

C. Form INC-34 (e-Articles of Association) (AOA);

Articles of Association are the rules and regulation of a Company which govern the internal affairs of the Company. Articles define the process of conducting various affairs of the Company. Articles cannot be in violation of the Companies Act, 2013.

There are certain activities which a Company can undertake only if the authorization is given in the Articles for the same.

All subscribers have to digitally sign the form using their DSC and this form is also required to be certified by a practicing Company Secretary or Practicing Chartered Accountant.

D. INC-35 (Agile-Pro-S)

Agile pro form is used for making application for obtaining various types of registration which are mentioned below:

· Goods and Services tax Identification number (GST)

· Employees State Insurance corporation (ESIC)

· Employees provident fund Organisation (EPFO)

· Opening of bank Account

· Shops and Establishment Registration

It is signed by the director who is nominated as Authorized signatory in the form.

E. INC-9 (Declaration by Subscribers and first Directors)

This form is used for giving declaration by Subscribers and First Directors. This is a prefilled form. It is digitally signed by the subscribers and directors.

Attachment(s) required;

Attachment(s) required for application for Name reservation (Form Spice plus Part A):

1. Write up of Main objects of the company

Attachment(s) required for Form Spice Plus Part A:

1. Utility Bill (not older than two months)

2. Rent Agreement if registered office is not in the name of any director.

3. No objection certificate by owner of registered office.

4. Residential proof of directors: Mobile bill, Telephone bill, Electricity bill, Bank Statement (not older than two months)

5. Identity proof of directors: Passport, Voter id, Driving License, Aadhar Card

6. DIR-2 of all directors

7. If any shareholder is a Company, its resolution for authorizing authorized signatory.

Attachment(s) required for Form INC-33, INC-34 & INC-9:

No attachments are required

Attachment(s) required for Form INC-35 (Agile pro S):

1. Passport size Photo of Authorized Signatory

2. Specimen signature of Authorized Signatory

3. PAN and Aadhar of Authorized Signatory

4. Passport size Photo of other Director(s)

Timelines of Incorporation;

Timeline of Name Approval (Form Spice plus Part A):

There is no exact timeline prescribed for approval of this form. MCA typically approves the name within maximum seven days (excluding holidays). It can vary based on certain factors like type of company, workload on MCA, discrepancies in the form (if any). This is as per Author’s view.

Timeline of Incorporation Form(s) (Form Spice plus Part A, INC-33, INC-34, INC-35, INC-9):

Again, there are no exact timelines prescribed for approval of incorporation forms. MCA typically approves the forms within ten to twenty days (excluding holidays). It can vary based on certain factors like type of company, workload on MCA, discrepancies in the form (if any). This is as per Author’s view.

What documents are received from MCA after incorporation?

· Certificate of Incorporation of Company

· MOA and AOA of the Company

· PAN and TAN of the Company

· Director identification number of all Directors

· ESI Certificate

· EPF Certificate