Company Formation Procedure
The New Companies Act, 2013 sets down rules and regulations for the establishment of both private and public companies. Limited company is the most commonly used corporate form. A company is formed by registering the Memorandum and articles of Association with the State Registrar of Companies of the state in which the main office is to be located.
Incorporating a Company: The Approval of the Name: - The approval of the name by the Registrar of companies (ROC) is the first step in the formation of a company in the state /union territory in which the company will maintain its registered office. This approval is provided subject to certain conditions: - For example, there should not be existing company by the same name. In addition, the last words in the name are needed to be "Private Ltd." In the case of a private company and "Limited" in the case of a Public company.
Memorandum and Articles: The Memorandum and articles of association are the two most important documents to be submitted to the ROC for the purpose of incorporation of a company. The Memorandum of Association is a document, which sets out the constitution of the company. It contains the objects and the scope of activity of the company and also defines the relationship of the company with the outside the world.
The articles of association contain the regulations and rules of the company for the management of its internal affairs. While the Memorandum specifies the purposes and objects for which the company has been formed, the articles lay down the regulations and rules for the achieving those purpose and objects. At last, the ROC issues a certificate of commencement of business to the public company. The company can commence business immediately after the receiving this certificate.
Certificate of Incorporation: After the duly stamped Memorandum of Association and Articles of Association, documents and forms are filed after filing fees, the ROC scrutinizes the documents and, instructs the authorized person to make compulsory corrections. This takes one to two weeks from the date of filing Articles of Association and Memorandum of Association to receive a Certificate of Incorporation. Though a private company can commence business immediately after receiving the certificate of incorporation.
Miscellaneous Documents: The below documents/forms stated are filed along with Memorandum of Association and Articles of Association on payment of filing fees:
- Declaration of compliance, duly stamped.
- Notice of the situation of the registered office of the company.
- Particulars of Directors, Manager or Secretary.
- Authority executed on a non-judicial stamp paper, in favour of one of the subscribers to the Memorandum of Association or any other person authorizing him to file the documents and papers for registration and to make necessary corrections.
- The ROC's letter in original indicates the availability of the name.