Registration of Company

Querist : Anonymous (Querist) 21 November 2010 This query is : Resolved
Plz guide me the procedure and guidelines in respect of formation and registration of company I have gone through Companies Act but I want to know the views of persons who have an actual experience of doing this work?

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A V Vishal (Expert) 21 November 2010
Prerequisites for setting up a Company:
Minimum paid up share capital of Rs. 100,000 (Rs. One lacs only) for Private Limited company and Rs. 500,000 (Rs. Five Lacs Only) for Limited Company, except if require some key words e.g. India, Corporation, Bharat, Industry etc..
A minimum number of 2 (two) shareholders/ subscribers to Memorandum of Association for Private Limited Company and Three for Limited Company. For a company which is a wholly owned subsidiary of a Foreign Company, both the subscribers should be the bodies corporate. Any private limited company incorporated in India would be deemed to be a public company in case the following conditions are satisfied:
• It is a subsidiary of a foreign company, which if incorporated in India would qualify as a public company under the Companies Act; and
• The entire share capital of the Indian company is not held by that foreign company,whether alone or together with one or more foreign companies.
Also, the company law provisions do not enable the share capital being held in the name of individual/s as nominees of the foreign body or bodies corporate owning the share capital of the Indian private limited company. In such a scenario any private limited company incorporated in India would be deemed to be a public company, if the holding Foreign Company qualifies as a public company under the Companies Act, 1956 and it would have
to comply with certain additional compliances and restrictions as are applicable to a Public Company in India.
Having two foreign companies as subscribers is necessary in order to avoid the stringent compliance requirements, which would otherwise be applicable to a public limited company.
Foreign investing company would be one of the subscribers (the majority subscriber holding 99.99% shares) and some other body corporate (possibly a sister concern of foreign investing company) could be the other subscriber (it need not have a significant shareholding and may hold only .01% shares).
Director Identification Number (“DIN”): Every director of a company is required to
obtain a unique identification number called DIN from Ministry of Corporate Affairs (“MCA”).
Digital Signature Certificate (“DSC”): The MCA, India launched an e-governance Project in the beginning of year 2006. With the implementation of this project e- filing of all the documents with the Registrar of Companies (“RoC”) has been made mandatory using digital signatures with effect from 16 September 2006. Consequently, the person authorized
to sign any document under the company law would be required to obtain DSC to digitally sign the same.

Step 1 - Name approval
Submission of application for name availability
• An application is required to be submitted online in Form No. 1A to RoC to ascertain the availability of the name along with filing fee of Rs 500.
• The application should mention at least four names upto a maximum of six 6 names, in order of preference. It is at the discretion of the RoC which of these four they choose to allot. It may be noted that the RoC usually insists that the name of any Indian company should be reflective of the main activities carried on by it.
• The significance and use of the word ‘(Brand name)’ should be justified.
• Board resolution should be passed by the promoter companies considering following
matters:
incorporation of a company in India.
allowing the usage of “Brand name” in the name of Indian company (this will be
required to be stated in the board resolution of the promoter company whose name is proposed to be used in the Indian company).
authorization of an individual representative of Promoter Company) to:
sign all documents and to do all acts necessary for the incorporation;
for subscribing to the Memorandum and Articles of Association of the proposed Indian Company; and
sign and execute a Power of Attorney for & on behalf of the company in favor of the professional carrying out the work.

Approval of name by RoC
The RoC verifies the application and communicates his decision regarding the availability of the name generally by 8-10 working days. The name approval is valid for a period of 30 days and formalities regarding registration should be completed within that period.
Step 2 – Steps for incorporation post name approval On receipt of name approval from RoC the following steps should be taken for the incorporation of the company:
Drafting of Memorandum of Association (“MoA”) and Articles of Association (“AoA”) of the company:
The draft MoA and AoA should be prepared. MoA and AoA should be printed, divided into
paragraphs and numbered consecutively.
Stamping of MoA and AoA
The MoA and AoA should be stamped as per the Indian Stamp Act and at the notified rate as per provisions of Stamp Duty rates of that state in which Proposed Registered Office Lies.
Subscription to MoA and AoA
• The MoA and AoA should be subscribed by at least two persons in case of Private Limited Companies and Three in case of Limited Company.
• Each subscriber should take at least 1 share and shall write opposite to his name the number of shares he takes.
• Each subscriber should also sign and add his address, description and occupation (if any) in the
presence of at least one witness who shall likewise add his address, description and occupation, if any.
• It is important to note that the details in the subscribers’ sheet are required to be filled by the subscribers in their own handwriting.
• MoA and AoA should then be dated. It should be ensured that the date mentioned on MoA and AoA is any date after the date of stamping and not before that date.

Stamping of Power of Attorney
Obtain the stamping on duly notarised as
per the Indian Stamp Act or the relevant State Act.

Submission of Documents
Online filing
Within 30 days from the date of intimation of name clearance by the RoC, following documents are required to be filed online with RoC:
1. Declaration of compliance in Form No. 1 duly signed using DSC by a person named in the AoA as a director or manager or secretary of the company.
2. Situation of the registered office of the company in Form No. 18.
3. Particulars of Directors, Managers and Secretary in Form No. 32.
4. Duly signed and stamped MoA and AoA of the company.
5. Power of attorney to act as an authorized representative on behalf of promoters.
6. RoC Registeration fee.
All these documents are required to be digitally signed by a Proposed Director of the Company and certified by counter signature of a Practicing Chartered Accountant or a Company Secretary.

Certificate of Incorporation
The RoC shall verify the documents and suggest modifications wherever required. The authorised person should duly carry out such modifications. The modified documents should be e – filed again.
Thereafter, Registrar on being satisfied that all the requirements for the registration of the company as laid down under the Act and rules made there under have been duly complied with shall certify
under his hand that company is incorporated and issue a certificate of incorporation to the company.