A company is nothing but a group of persons who have come together or who have contributed money for some common purpose and who have incorporated themselves into a distinct legal entity in the form of a company. Supreme Court of India has held in the case of State Trading Corporation of India v/s CTO that a company cannot have the status of a citizen under the Constitution of India. A company as an entity has several distinct features which together make it a unique organization. In India, companies are governed by the Companies Act, 1956 as amended by Companies Act, 2013.
Process for Company Formation India
Every person desirous of forming a company in India needs to comply with specific steps. The procedure for company formation in India is mentioned in brief below:
Selection of the type of company
The promoters of the company need to determine the type of company to be formed i.e. private company, public company, non-profit making company etc depending on the operations and activity of the company, capital required, size of operations, method and amount of financing etc.
Submit an application for the Directors Identification Number (DIN) and Digital Signatures
The planned directors of the company are first and foremost required to get Director Identification Number (DIN). Should they have already been alloted a DIN No. earlier, it is necessary. Further, at least one of the directors must get Electronic Signature from prescribed authority. Every single document of the company would be filed only after getting digitally signed from a director or managing director or manager or secretary from the proposed company. company.
Deciding on a Suitable Name for the planned company
A minimum of six proposed names for the company to be formed, is selected by the promoters subsequently after careful observation of varied provisions, circulars, and also principles of the Ministry of Corporate Affairs (MCA). On delivery of the completed application in e-Form 1A, filled in up by its promoters, the designated Registrar of Companies agrees with the potential of adoption of the provided suggested names, such confirmation remains in force limited to a period of six months.
Drafting of Memorandum and Articles of Association
Composing of the Memorandum (M.O.A) and also Articles of the Association (A.O.A), is the very next action subsequent to obtaining approval of name from the Registrar. These two documents are of the critical significance as these include final goals (as likewise displayed in the e-Form) and valued & ideal principles & polices of the company. The M.O.A and A.O.A need to be drawn up really scrupulously with great attention and concern, after having a comprehensive and elegant counsel of the concerned experts.
E-filing of numerous documents, stamped and digitally signed with the Registrar of Companies
Subsequent to finalising the MOA & AOA, the same are required to be filed before the Registrar of Companies together with necessary formation fees along with other papers as well as forms as may be required. Usually, the form 1, form 32, form 18, Power of Attorney etc. are filed together with the MOA & AOA.
Pay Required ROC Charges
The last action prior to the certificate of incorporation is generated is payment of the necessary fees to the Registrar of Companies. The fees depends upon the authorised capital of the company for limited liability companies.
Getting Certificate of Formation
After the censorious observation of the required papers specified in sections 33(1) and 33(2) in the company side, the Registrar registers the memorandum and articles of the association and provides a certificate of incorporation within a duration of seven days of receipt of the paperwork, as per the section 34(1).
After Certificate of Incorporation is received, the procedure for company formation for private limited company is completed.
- The first additional step is to create and file prospectus / statement in lieu of prospectus for the purpose of getting certificate of commencement of business.
- The ROC after delivery of the Prospectus/ Statement in lieu of prospectus along with required forms, issue Certificate of Commencement of Business for the company.