Incorporation of Companies

Incorporation of a Company is the process of formation of a company.  The term 'company' is defined under Section 2 (20) of the Companies Act, 2013. 'Company' means a company incorporated under this Act or under any previous company law.

PRE-REQUISITES OF INCORPORATION

PROCESS OF INCORPORATION OF COMPANIES

1. OBTAINING DSC

Digital Signature Certificate (DSC) is a digital equivalent for signing electronic documents. The validity period of a DSC is one or two years. The forms required to be filed for incorporation of a company needs to be signed with DSC.

Kinds of DSCs:

A) Class 2 DSC: The identity of the applicant of DSC is verified against trusted, pre- verified database.

B) Class 3 DSC: This is the highest level where the applicant of DSC needs to present himself in front of Registration Authority (RA) and prove his identity.

Identity proof -------- Self Attested copy of PAN card

Documents required for DSC Application

Address proof -------- Self Attested copy of Aadhaar card/

(If applicant is Indian National)

Voter's id/ Passport/ Driving License
Passport size photo
Identity proof -------- Self Attested copies of Passport, VISA, and Resident Permit Certificate (if applicant is in India)

Documents required for DSC Application

Address proof -------- Self Attested copy of Voter's id/

(If applicant is Foreign National) Passport/ Driving License/ any other address proof issued by Government.

Passport size photo

[Note: All the identity and address proofs of the applicant should be attested by Embassy of the Native country of the applicant/ Apostilized by Native country after Public Notary (if such country is in Hague convention)/ Consularized by Native country after Public Notary (if the country is not in Hague convention)]

2. RESERVATION OF NAME

Name applications will be processed by Central Registration Centre (CRC) and such name will be subjected to comprehensive check by the CRC and thereafter they approve or reject. To avoid rejection of name, it is ideal to undergo search whether there is any name of company or trademark existing.

The proposed name should not be undesirable, i.e., identical, resembling, restricted, or prohibited under the conditions of Rule 8 of the Companies (Incorporation) Rules, 2014.

Name for a proposed company can be reserved by filing Part- A of Form SPICe+. If the applicant wants to apply for name, incorporation and other integrated services together, Part- A and Part- B can be filed together. In SPICe+, Part- A is for reservation of name and Part- B is application for incorporation. Part- A and Part- B of SPICe+ can also be filed separately. Firstly, Part- A can be filed with 2 proposed names and approval of name can be awaited. Secondly, on receipt of approval of name incorporation filings can be made by filing Part- B of SPICe+.

While applying for name for reservation, 2 proposed names can be given out of which one can be approved. In brief, explanation for such proposed names and object of the proposed company should be mentioned.

Before the Companies (Incorporation) Amendment Rules, 2020 became effective (i.e., 23/02/2020), reservation of name was made via RUN (Reservation of Unique Name), a web form. After that amendment, RUN can be used only for change of name for an existing company.

3. DRAFTING OF MEMORANDUM OF ASSOCIATION

The Memorandum of Association (MOA) is the charter of a company and it is the document that defines the area within which a company can operate. The MOA shall be in any of the respective forms specified in Table A, B, C, D and E as per Schedule I of the Act.

The MOA has 6 clauses, namely,

1. Name clause
2. Registered office clause
3. Object clause
4. Liability clause
5. Capital clause
6. Subscribers clause

[If the company is a One Person Company, Nominee clause shall be included]

4. DRAFTING OF ARTICLES OF ASSOCIATION

The Articles of Association (AOA) of a company are the bye- laws or rules and regulations governing the management of internal affairs and the conduct of business. An entrenchment provision in articles of enables a company to follow more restrictive procedures. The AOA can be in any of the respective forms specified in Table F, G, H, I and Jas per Schedule I of the Act.

5. FILING OF INCORPORATION FORMS

Within 20 days from the date of approval of name of the company, filings for incorporation should be made.Such filings include Form SPICe+ (i.e, Part- B), SPICe+ MOA, SPICe+ AOA and AGILE PRO.

SPICe+ MOA, SPICe+ AOA and AGILE PRO are linked forms for SPICe+

Part- B of SPICe+ includes;

1. Incorporation
2. DIN allotment
3. Appointment of first Directors
4. Notice of Registered Office of the Company
5. Issue of PAN & TAN
6. EPFO registration
7. ESIC registration
8. Profession Tax registration
9. Opening of Bank Account
10. Allotment of GSTIN

6. ISSUE OF CERTIFICATE OF INCORPORATION

When the Registrar is satisfied with the documents submitted for incorporation, he issues Certificate of Incorporation which has the distinct Corporate Identification Number (CIN) of the company.

If the Registrar is not satisfied, the application will be resent for resubmission along with reasons for not approving. On consideration of such reasons, the application should be corrected accordingly and resubmitted. Usually, two re- submissions are allowed, which will thereafter be rejected.

By: Sowmya Parasuraman
The author can also be reached at psowmya29@yahoo.co.in