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G.K.Kedia & Co.

COMPANY FORMATION


The recently enacted Companies Act 2013 is a landmark legislation and is likely to have far-reaching consequences on all companies operating in India.

The Companies Act, 2013 received the assent of the President of India on 29 August 2013, and has become law. The 2013 Act is the culmination of several years of effort to enact a new legislation governing companies to replace the Companies Act, 1956.

Definition of Company

Section 2(20) of the Indian Companies Act 2013 define company, "Company" means a company incorporated under this Act or under any previous company law;

A company is voluntary and autonomous association of persons which is made for achieving business objectives. It acts like human being. However , since a company is not considered as a citizen, it cannot claim any fundamental rights given to a citizen. Company can purchase assets or sell it. It can take alsodebt. It can openbankaccount. It is fully free from its members.A company is a separate legal entity quite distinct from its members and shareholders. Members and shareholders are undoubtedly the legitimate owners of the company but a company is actually managed, directed and governed, by the directors who are elected unanimously by all the members of the company.

Characteristics of a Company

Any Company formed and registered according to the Companies Act, 2013 has the following salient features:
• A separate legal entity
• An organized and incorporated body
• An artificial legal body or person
• Limited range of liabilities
• Perpetual succession
• Right to enter into contracts
• Right to sue
• Right to own property
• Flexibility of investment
As per Section 3 of the Companies Act, there are 3 types of Company which can be incorporated under this Act. The concept of One Person Company has been newly inserted.

    1.Public Company
    2.Private Company
    3.One Person Company

Companies capable of being registered ( Section 366 of the Companies Act, 2013)

For the purposes of this Part, the word "company" includes any partnership firm, limited liability partnership, cooperative society, society or any other business entity formed under any other law for the time being in force which applies for registration under this Part.

Steps for the incorporation of a company


Getting a Digital Signature & DIN

Digital Signature is an electronic signature which can be put on the e-forms only with a password.
Nowadays various documents prescribed under the Companies Act 2013, are required to be filed with the digital signature of the Managing Director or Director or Manager or Secretary of the Company, therefore, it is compulsorily required to obtain a Digital Signature Certificate from authorized DSC issuing authority for at least one director to sign the E-forms related to incorporation like form INC.1 and other documents

Documents Require:PAN & Address Proof . These documents must be attested by the Group A/B Gazetted Officers / Bank Manager / Post Master

Obtain Director Identification Number

As per section 153 of the Companies Act, 2013, every individual intending to be appointed as director of the company shall make an application for allotment of Director Identification Number in form DIR 3 to the Central Government in such form and manner and along with such fees as may be proscribed.
Therefore before the submission of e-form INC.1 for availability of name, all the directors of the proposed company must ensure that they are having DIN and if they are not having DIN, it should be obtained.

Documents required: Pan Card mandatory for Indians, Passport mandatory for foreign nationals, along with any other address proof such as Driving licence, Voter Id etc.

Application for reservation of Name

After having the DIN nos of all the proposed directors, you can propose any suitable name, provided it is not prohibited under the Indian Companies Act. You have to suggest 6 names on priority wise. Application for the name has to be filed in Form INC-1 alongwith fees. The object of the company must be reflected in the name, e.g., ABC Software Pvt. Ltd. At this stage Form INC-1 should be filled electronically.
After approval of the name ROC will issue a Name availability letter w.r.t. approval for availability of name for the proposed company.
If proposed Company is WOS (wholly owned subsidiary) company of the foreign company, a Board resolution on the letterhead of foreign company for allowing to use the name and authorizing to incorporate a company in India is required which should be countersigned by Indian Consulate in the Indian Embassy there. For using the word 'India, International, Industries, Corporation, etc, different slabs of Authorised capital has been prescribed. In the case of Foreign Directors they are not required to be physically present in India.

Finalisation of Main Objects and Memorandum & Articles of Association of the Company and other documents:-

After getting the name approved of the company, next step is to finalise the main objects and Memorandum & articles of Association. MOA shall be in respective form as prescribed in Table A, B, C, D and E of Schedule I as may be applicable and Adoption of Articles of Association shall be in respective form as prescribed in Table F, G, H, I and J of Schedule I as may be applicable. At least two subscribers are required for subscribing to the Memorandum of Association to form a private limited company and at least seven subscribers are required to subscribe to incorporate a public limited company. In case of Foreign subscribers, their signatures are required to be attested by Indian Consulate in the Indian Embassy there. If the foreigners/NRI are physically present in India, we can attest their signature.
The subscribers should write their particulars in their OWN handwriting. Application for incorporation will be filed in Form INC.7, alongwith fees and other Documents as attachment (MOA as finalised and duly signed and witnessed, Declaration by PCS / CA / Advocate / Cost Accountant in Form No. INC.8, Affidavit by each of the subscribers to the MOA and first directors in Form No. INC. 9, specimen signatures & latest photo verified by banker / notary, in prescribed Form No. INC.10, Identity and Address proof of director/promoters with PAN. Memorandum and Articles of Association are required to be stamped. Now the process of e-stamping has been introduced, which help the stakeholders to pay stamp duty in electronic manner through MCA21.
Together with Form INC. 7, Form DIR-12 and INC.-22 is also required to be filed with the required documents as attachment (Affidavit by each of the subscribers to the MOA and first directors in Form No. INC. 9, Particulars of every subscriber required:-(i) Name & Photograph (ii) Father's Name / Mother's Name (iii) Nationality (iv) DOB (v) POB (vi) Educ. qualification (vii) Occupation (viii) PAN (ix) Permanent & Present Residential Address / Official Address (x) E-mail Id & Phone No. of subscribers (xi) Proof of identity (pan card mandatory) (xii) Residential Proof (BK Statement / Electricity / Mobile Bill not more than 2 months old) (xiii)If already a director / promoter in any other company, then particulars relating to Name of Company, CIN, whether interested as director / promoter (xiv) particulars of director membership details if he is a member of any professional institute, registered office address proof of the proposed company).

Filing of Draft Memorandum and Articles of Association and other documents with Registrar of Companies:-

After Memorandum and Articles of Association are finalised, the same are to be signed by the promoters. After that, it will be filed with Registrar of Companies electronically along with the following forms/documents. Registration Fees which will depend on proposed Authorised Capital of the company:

Form INC-7:     Statutory Declaration for compliance of provisions of the Companies Act, 2013 in regard to Formation of Company.
Form DIR-12:   Particulars of appointment of Directors of new Company.
Form INC-22:      Situation of Registered office Address of new company.
Power of Attorney:   Authorization for making corrections in the office of Registrar of Companies related to incorporation of company.

MCA has introduced a New Form INC - 29 (Integrated form of Incorporation) which now replaces the tedious process of filing of various forms for incorporating a new company.


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