Cl

FORMATION OF A PRIVATE LIMITED COMPANY

INDEX
SR no Topic Pg no
1
Introduction to Private Limited Company 1
11111
2. Procedures for incorporation and registration of companies 2
3. I.Selection of type of the company. 3-6
II. Selection of name for the proposed company.
III. Apply for Directors Identification Number and Digital
Signatures, if does not have
IV. Drafting of Memorandum and Articles of Association.
V. Stamping, digitally signing and e-filing of various documents
with the Registrar.
VI. Payment of Fees.
VII. Obtaining Certificate of Incorporation.
VIII. Preparation and filing of Prospectus/Statement in lieu of
Prospectus and e-Form 19/20 (in case of public companies) for
obtaining the certificate of commencement of business.
IX. Obtaining Certificate of Commencement of business (in case
of public limited companies).

4. Company Formation in India – Private Limited 7-10
5. Compliance Requirements for Companies in India 11-13
6. Rules of Pvt Ltd Co 14
7. Summary 15-16
8. Conclusion 17
9. Bibliography 18

1 COMPANY LAW PROJECT.


Introduction to Private Limited Company

A private limited company is a voluntary association of not less than two and not more than fifty
members, whose liability is limited, the transfer of whose shares is limited to its members and
who is not allowed to invite the general public to subscribe to its shares or debentures. Its main
features are :-
It has an independent legal existence. The Indian Companies Act,1956 contains the provisions
regarding the legal formalities for setting up of a private limited company. Registrars of
Companies (ROC) appointed under the Companies Act covering the various States and Union
Territories are vested with the primary duty of registering companies floated in the respective
states and the Union Territories.

It is relatively less cumbersome to organise and operate it as it has been exempted from many
regulations and restrictions to which a public limited company is subjected to.
Some of them are :-

It need not file a prospectus with the Registrar.

It need not obtain the Certificate for Commencement of business.

It need not hold the statutory general meeting nor need it file the statutory report.

Restrictions placed on the directors of the public limited company do not apply to its
directors.

The liability of its members is limited.

The shares allotted to it's members are also not freely transferable between them. These
companies are not allowed to invite public to subscribe to its shares and debentures.

It enjoys continuity of existence i.e. it continues to exist even if all its members die or desert
it.
Hence, a private company is preferred by those who wish to take the advantage of limited
liability but at the same time desire to keep control over the business within a limited circle
and maintain the privacy of their business.

Advantages Disadvantages
Continuity of existence Shares are not freely transferable
Limited liability Not allowed to invite public to subscribe to its
Less legal restrictions shares
Scope for promotional frauds
Undemocratic control



PROCEDURES FOR INCORPORATION AND REGISTRATION OF COMPANIES

A company is a voluntary association of persons formed for the purpose of business activities. A
company has distinct name and limited liability, it is a juristic person having a separate legal
entity different from its members who constitute it, capable of rights and duties of its own and
endowed with a potential or perpetual succession. The Companies Act, 1956 prescribes specific
procedures for incorporation and registration of companies. A company can be formed either
by1:—

(i) incorporation of a new company; or

(ii) conversion of existing business (sole proprietorship concern or partnership firm or co-
operative societies) into company under the provisions of Chapter IX and Chapter IXA of the
Companies Act, 1956; or

(iii) companies incorporated under section 25 of the Companies Act, 1956.

The incorporation (birth) and winding up and dissolution (death) of a company are governed by
the provisions of the Companies Act, 1956. Therefore each company is subject to the provisions
of the Companies Act, 1956, as may be amended from time to time. The following procedure
involves for incorporation of a company.

STEP WISE FORMALITIES FOR FORMATION OF A NEW COMPANY
Persons desirous of forming a company must adhere to the step by step procedure as
discussed below:—

I. Selection of type of the company.
II. Selection of name for the proposed company.
III. Apply for Directors Identification Number and Digital Signatures, if does not have
IV. Drafting of Memorandum and Articles of Association.
V. Stamping, digitally signing and e-filing of various documents with the Registrar.
VI. Payment of Fees.
VII. Obtaining Certificate of Incorporation.
VIII. Preparation and filing of Prospectus/Statement in lieu of Prospectus and e-Form 19/20 (in
case of public companies) for obtaining the certificate of commencement of business.
IX. Obtaining Certificate of Commencement of business (in case of public limited companies).

1
Section 25 of the Companies Act, 1956


Selection of the type of company
The promoters of a company may be individuals or bodies corporate engaged in efforts to
incorporate a company. They have the power of defining the object of the company and
deciding various connected matters regarding incorporation. Proposed scale of operations,
capital involved, etc. depend upon the purposes for which the company is to be incorporated.
The promoters are at liberty to select type of the company viz. private company, public
company, nonprofit making company, etc.2

Requirement for having DIN
As per proviso to section 253 of the Companies Act, 1956, inserted by the Companies
(Amendment) Act, 2006, w.e.f. 1-11-2006, no company shall appoint or re-appoint any
individual as director of the company unless he has been allotted a Director Identification
Number under section 266B. 3

New section 266A has been inserted by the Companies (Amendment) Act, 2006 which provides
that every individual, intending to be appointed as director of a company shall make an
application for allotment of Director Identification Number (DIN) to the Central Government in
the prescribed DIN Form. Therefore, before submission of e-Form 1A all the directors of the
proposed company must ensure that they are having DIN and if they are not having DIN, it
should be first obtained, however on the basis of the provisional DIN allotted online will serve
the purpose. 4

Specific care should be taken that a person cannot have more than one DIN, therefore, a DIN
once obtained shall serve the requirement for all the companies in which he is director or
intended to be a director

Requirement for having digital signatures
After 16th Sept., 2006, every documents prescribed under the Companies Act, 1956 is 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 digital signatures of
at least one director to sign the e-Form 1A and other documents.

Selection of name
Six names are required to be selected in order of preference after taking notes of numerous
clarifications, circulars and rules made by the Ministry of Company Affairs (DCA), etc. In case
key word is required, significance of each key word should be given in the e-Form 1A.

2
Article “BASIC UNDERSTANDING ABOUT COMPANIES”
3
Proviso to section 253 of the Companies Act, 1956, inserted by the Companies (Amendment)
Act, 2006, w.e.f. 1-11-2006
4
Section 266A has been inserted by the Companies (Amendment) Act, 2006


APPLYING FOR ASCERTAINING THE AVAILABILITY OF THE SELECTED NAME
The promoters are required to make an application to the concerned Registrar of Companies be
submitted electronically to the Ministry of Company Affairs on the portal of MCA. An
application shall be in e-Form 1A as prescribed5 duly digitally signed by any one promoter or
managing director or director or manager or secretary of the company alongwith the required
fee of Rs. 500 only for ascertaining whether the selected name is available for adoption by the
promoters of the proposed company.

APPROVAL OF THE NAME
After receipt of completed application in e-Form 1A, the Registrar shall intimate whether the
proposed name is available for adoption or not. The confirmation of the name made available
by the Registrar shall be valid for a period of six months from the date of letter issued in these
regards. In case, if the promoters fails to submit all the required documents for incorporation
within that period, then they are required to submit another application for revalidation of
name with fresh filing fee of Rs. 500 only

Preparation of the Memorandum of Association (MOA)6 and Articles of Association (AOA)7
Drafting of the MOA and AOA is generally a step subsequent to the availability of name made
by the Registrar. It should be noted that the main objects should match with the objects shown
in e-Form 1A. These two documents are basically the charter and internal rules and regulations
of the company. Therefore, it must be drafted with utmost care and with the advice of the
experts and the other object clause should be drafted in a very broader sense.

Estimate of registration fees for a new company
The fees payable to the Registrar at the time of registration of a new company varies according
to the authorized capital of a company proposed to be registered as per Schedule X to the Act.
Fees can be calculated at the MCA portal using fees calculator8.

Filing of documents with the Registrar
Next step for the promoters is to file the following documents with the Registrar for
incorporation of the company. The following documents shall be submitted to the Registrar
along with the adequate filing fees as applicable for registration of the company electronically
on line basis within a period of six months from the date of intimation of availability of name:—

(i) Memorandum of Association9, duly signed by the subscribers and witnessed, showing the
number of shares against their names electronically attached in PDF file. It should also be
properly stamped as per the stamp duty applicable in the State, where the registered office of
5
Notification No. GSR 56(E) dated 10th Feb., 2006
6
Section 2(28) of Companies Act 1956
7
Section 2(2) of Companies Act 1956
8
Schedule X to the Act
9
Supra 6



the company is to be situated. Photographs of the subscribers shall also be attached.
Simultaneously original stamped copy of the Memorandum of Association shall be submitted
(physical submission) with the Registrar of Companies concerned.

(ii) Articles of Association10 should also be duly signed by the subscribers and witnessed,
showing the number of shares against their names electronically. It should also be properly
stamped according to the authorised share capital. Photographs of the subscribers shall also be
attached. Simultaneously original stamped copy of the Article of Association shall be submitted
with the Registrar of Companies concerned.

(iii) Copy of the agreement, if any, which the company proposes to enter into with any
individual for appointment as its managing or whole-time director or manager shall be attached
in the PDF file.

(iv) Declaration in e-Form 1 by an advocate or company secretary or chartered accountant
engaged in whole time practice in India or by a person named in the Articles as a director,
manager or secretary of the company, that all the requirements of the Companies Act, 1956
and the rules made thereunder have been complied with in respect of registration.11

(v) Power of Attorney for should be furnished by all the subscribers in favour of any one
subscriber or any other person authorising him to file these documents and to with the
Registrar and to obtain certificate of incorporation. The power of attorney should be given on
Non-Judicial stamp paper of appropriate value and shall be submitted to the Registrar.

(vi) Other agreement if any, which has been stated in the Memorandum or Articles of
Association shall also be filed in the PDF file with the Registrar because in such cases the
agreement will form part of this basic document.

(vii) E-Form 18 is to be filed with the Registrar electronically with the digital signatures in regard
to location of the registered office. E-Form 18 shall also be certified by the company secretary
or chartered accountant or cost accountant in whole-time practice.12

(viii) E-Form 32 is required to be filed with the Registrar electronically for filing particulars of
directors.
Following additional details are also required to given in e-Form 3213:
E-Form 32 is required to be digitally signed by the director or managing director or manager or
secretary of the company. E-Form 32 shall be filed along with the adequate filing fee as
prescribed under Schedule XIII of the Companies Act, 1956.

10
Supra 7
11
Section 33(2) of the Act
12
Section 146(2) of the Act
13
Schedule XIII of the Companies Act, 1956


SUBMISSION OF E-FORM 1

E-Form 1 has to be submitted with following enclosures:
(1) Memorandum of Association (MoA) and Article of Association (AoA) of the company [Not
required for a company licensed under section 25];
(2) Annexure containing details of subscribers (Optional);
(3) Power of Attorney/Authority letter given by the subscribers/promoters/directors to the
professional i.e. advocate or attorney or pleader or CS or CA (in whole-time practice) for
formation of a company.

(4) Copy of Memorandum of Association (MoA) and Article of Association (AoA) after stamping
and physically signed by all the subscribers should be delivered at the RoC office where
company is to be registered.

In case, if any subscribe put his name, and other descriptions and sign in a language other than,
in which the Memorandum and Articles of Associates, then it is required by the witness to give
statement that he had explained the contents of all the documents in such language and the
subscriber has signed the same after proper understanding of the same.
Further that an Affidavit on the stamp paper of adequate value that he had been explained the
contents of the Memorandum and Articles of Association and all other relevant documents for
incorporation of the company and he/she had put his/her signature after proper understanding
of the same and this affidavit should also be furnished with the Registrar along with all the
documents as described above.

Certificate of Incorporation 14
On the satisfaction of the Registrar that the requirements specified in sections 33(1) and 33(2)
have been complied with by the company, he shall retain the documents and register the MOA,
AOA and other documents. Section 34 (1) cast an obligation on the Registrar to issue a
Certificate of Incorporation, normally within 7 days of the receipt of documents. It is advisable
to authorize some person to collect the certificate personally from ROC office

Commencement of Business 15
A Private limited company and a company not having share capital may commence its business
activities from the date of its incorporation. However, a Public Limited Company having share
capital is also required to obtain a separate certificate of commencement of business according
to section 149(2A) of the Companies Act, 1956.

14
Sections 33 and 34 of the Act
15
Section 149(2A) of the Companies Act, 1956



Company Formation in India – Private Limited16

The following article disucsses the process of forming a limited liability company in India. The
laws relating to registration of a limited liability company in India is contained in Companies
ACt, 1956. Registrars of Companies (ROC), appointed under Section 609 of the Companies Act,
by the Ministry of Corporate Affairs (MCA), is vested with the primary duty of registering
companies and of ensuring that such companies comply with statutory requirements under the
Act. A company can be registered with the ROC of the state under whose jurisdiction the
proposed company’s registered office will be situated.

Pre- Registration Requirements17

A Private Limited Company must have a Paid-up capital of INR 100,000 and a Public Limited
Company must have a paid-up capital of INR 500,000. A Private Limited Company must have a
minimum of two directors and two shareholders and Public Limited Company must have a
minimum of three directors and seven shareholders.

The directors must have a valid Director Identification Number (DIN), allotted by the Ministry
of Corporate Affairs. DIN is a unique identification number for an existing director or a person
intending to become a director of a company. As per a recent amenedment to the Companies Act
1956, DIN has become mandatory for all the directors. DIN is unique and specific to an
individual therefore only one DIN is allotted per individual even if the individual serves as
director at multiple companies. Application for the allotment of Director Identification Number
(DIN) can be obtained online on MCA’s website. Duly completed DIN Application Form must
be mailed to MCA DIN Cell, along with a proof of identity and a proof of residence with colored
photo. The photo affixed on the form and the proofs attached must be certified by a Public
Notary or Gazetted Officer or any certified professionals. No fee is charged for issuing DIN.
This process takes approximately 3 to 5 working days.

At least one of the directors should have a valid Digital Signature Certificate issued by the
Certifying Authorities (CA) and approved by the Ministry of Corporate Affairs. The Information
Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in
electronic forms, in order to ensure the security and authenticity of the documents filed
electronically. Every document prescribed under the Companies Act, 1956, is required to be filed
with the digital signature of the managing director or director or manager or secretary of the
company. Therefore at least one of directors must have a digital signature. Any person may make
an application to the Certifying Authority for the issue of a Digital Signature in such form as
may be prescribed by the Central Government. Digital Signatures are typically issued with one
year validity and two year validity. The issuance cost varies depending on the CA. Digital
Signatures can be obtained within an hour.

16
http://www.mca.gov.in
17
Companies House Filing Obligations: A Breakdown


Name Approval18

The first step in the process of formation is the application for MCA’s approval of the desired
name for the proposed company. Once, Company name is allotted, company registration
documents are filed with respective ROC for registration. Application for name approval can be
made online via MCA’s portal MCA 21.Forms are available here.

The following particulars are required to complete the form

Name of the proposed company
Location of registered office of the proposed company
Main Objectives of the business of the company
Names of Subscribers to the Memorandum of Association
Proposed Authorized Share Capital of the Company
DIN & DSC

Select, at least four names (a maximum of Six names can be listed), and indicate the order of
preference. Ensure that the company name is in accordance to the guidelines of the MCA, and
also ensure the name is unique and does not resemble the name of any existing company in India.
The company name must end with the words ‘Private Limited’ or ‘PVT Ltd’. In order to have
specific key words in the name such as corporation, International, Hindustan, Industries, India
etc., the proposed company should satisfy a minimum authorized capital criteria. Duly completed
Form 1A for name approval must be must be submitted to the concerned ROC along with a fee
of INR 500/-.19

The Registrar shall intimate, within two to three days, whether the proposed name is available or
not. If the preferred name is not available apply for a fresh name on the same application. The
name made available by the Registrar shall be valid for a period of six months. In case, if the
company is not incorporated within this validity period, an application may be made for renewal
of name by paying additional fees. Otherwise the name approval process has to be repeated by
submitting new application after payment of requisite fees.20

18
AIR 1958 BOM 247
19
ibid
20
Narmada enterprise v. State Of Maharashtra



Preparation of Documents

After obtaining name approval from the ROC the following documents must be prepared to
incorporate the company21

Memorandum of Association (MOA)
Articles of Association (AOA)
Form 1 – providing details of promoters of the company
Form 18 – providing details of registered office of the company
Form 32 – providing details Directors of the company

The Memorandum of Association is a document that sets out the constitution of the company. It
contains, amongst others, the objectives and the scope of activity of the company and also
describes the relationship of the company with the outside world.

The Articles of Association contain the rules and regulations of the company for the management
of its internal affairs. While the Memorandum specifies the objectives and purposes for which
the Company has been formed, the Articles lay down the rules and regulations for achieving
those objectives and purposes. It also states the authorized share capital of the proposed company
and the names of its first / permanent directors.

Professional help is to be sought in the drafting of the MOA and AOA, as it contains the
governing policies, rules and by-laws of the proposed venture. The draft must be carefully vetted
by the promoters before printing and stamping.

The MOA and AOA must be signed by at least two subscribers in his own hand, along with
father’s name, occupation, address and the number of shares subscribed for and witnessed by at
least one person.22

Then the MOA and AOA are required to be stamped & filed with the ROC. A stamp duty is
required to be paid on the MOA and on the AOA. The stamp duty depends on the authorized
share capital and varies between states. Details of applicable stamp duty can be obtained from
here. eStamping facility is now available via MCA’s portal. The document preparation process
may take five to seven days.23

21
AIR 1973 Cal 78
22
Re paradise enterprise ltd case ,(1989) 3 comp. LJ 248
23
ibid



Submission of Documents24

Submit the following documents to the ROC with the filing fee and the registration fee:

The stamped and signed Memorandum and Articles of Association (3 copies).
Form-1, 18 & 32 in duplicate.
Any agreement referred to in the Memorandum & Articles.
Any agreement proposed to be entered into with any individual for appointment as
Managing or whole time Director.
Declaration of Compliance by an advocate or company secretary or chartered accountant
or director, manager or secretary of the company
Name availability letter issued by the ROC.
Power of Attorney authorizing a person, on behalf of subscribers, any documents and
papers filed for registration. The power of attorney should be given on Non-Judicial
stamp paper of appropriate value and shall be submitted to the Registrar

Payment of Registration Fees

The fees payable to the Registrar at the time of registration of a new company varies according
to the authorized capital of a company proposed to be registered. Payment for the Registration
and Filing Fee must be made by Demand Draft/Banker’s Cheque if it exceeds Rs.1000/.

Obtaining Certificate of Incorporation25

The ROC will issue a Certificate of Incorporation after careful review of documents submitted.
Section 34(1) cast an obligation on the Registrar to issue a Certificate of Incorporation, normally
within 7 days of the receipt of documents.A Private Limited Company can start its business
immediately on receiving the Certificate of Incorporation.

24
http://www.mca.gov.in/MCA21/RegisterNewComp.html
25
ibid



Compliance Requirements for Companies in India26

The Companies Act, 1956 has elaborate provisions relating to the Governance of Companies,
which deals with management and administration of companies. It contains special provisions
with respect to the annual compliance requirements. Companies incorporated under the Act have
to file various forms, returns and documents under various sections with the Registrar of
Companies (ROC) in an electronic mode within the prescribed time along with the prescribed
fees or with payment of additional fees in the event of delayed filing.

As part of its major drive to promote egovernance, the Ministry of Corporate Affairs (MCA)
launched MCA-21, a portal to facilitate e-filing. Physical filing of forms under Companies Act
has been discontinued. All filings, since September 30, 2006, are made through e-filing using
specially designed e-forms.

The general annual compliance requirements for both public and private companies are discussed
below. The requirements for listed public companies are more extensive and not under the scope
of the discussion which is limited to the annual requirements relating to meetings, accounts,
auditing, returns & changes or events.. Please seek professional advice for more details on
regulatory requirements.

Meetings

As per the Provisions of Section 166 of the Companies Act, 1956, the Annual General
Meeting (AGM) of a Company is required to be held once in every calendar year and not
more than 15 months shall elapse between the date of one AGM and that of the next. This
meeting can be held only in the same city or town, where the registered office is situated.
A meeting of its Board of Directors must be held at least once in every three months and
at least four such meetings shall be held in every year. Matters of concern shall be
disclosed and discussed in such meetings. The meeting can be held anywhere in India.
Meeting cannot be called through video conferencing.

Accounts, Auditing & Returns

The first annual accounts of a newly incorporated company should be drawn from the
date of its incorporation up to the day not preceding the AGM date by more than 9
months. Thereafter Audited Annual Accounts for the period ending with the day, not
preceding the AGM by more than 6 months, have to be placed in the said AGM.
Companies are required to file the Annual Accounts with the Office of the concerned
Registrar of Companies within 30 days from their AGM or where the AGM is not held,
then within 30 days of the last date on which the AGM was required to be held.( Form
23AC and Form 23ACA)
The accounts of the company must relate to a financial year (comprising of 12 months)
but must not exceed 15 months. The company can obtain prior permission from the ROC
for an extension of the accounting period to the extent of 18 months.

26
http://www.indiacompanysetup.com/company-compliance-requirements-in-india/



At each AGM, every company must appoint auditor or auditors. Such auditors are to hold
office from the conclusion of that meeting until the conclusion of the next AGM and
shall. Every auditor so appointed must be intimated within seven days of the
appointment. Every auditor of a company shall have a right of access at all times to the
books and accounts and vouchers of the company.
Every company is required to maintain proper books of account according to the
standards issued by the Institute of Chartered Accountants of India. The books shall
maintain records of the following
o All sums of money received and expended and the matters in respect of which the
receipt and expenditure take place
o All sales and purchases of goods by the company
o The assets and liabilities of the company
o In case of companies engaged in manufacturing, processing, mining etc, such
particulars relating to utilization of material or labor or other items of cost
The books of account relating to eight years immediately preceding the current year
together with supporting vouchers are required to be preserved in good order.
Every company having a share capital is required to file an annual return with the ROC
within 60 days from the date on which the AGM of the company was held or where the
AGM is not held, then within 60 days of the last date on which the AGM was required to
be held. (Form 20B). The return is to be duly signed digitally and the requisite certificates
to be attached. In case of a company whose shares are listed on a recognized stock
exchange, the return must be signed digitally by a secretary in full-time practice.
Companies with a Paid-up capital between INR 1million and INR 20 Million are required
to file an annual compliance Certificate (Form 66) from a Company Secretary in whole
time within 30 days from the date of annual general meeting, along with the Annual
Report.

Registers

Register of Member, Register of Directors, Register of Contracts, Register of Charges,
etc. The registers are required to be kept at the registered office of the company.
The directors are required to inform the company about their directorship in other
companies every year

Event Based Compliance

Apart from above annual compliance requirement companies are required to report events to the
ROC. Events requiring reporting compliance are

Receipt of share application money
Allotment of shares
Transfer of shares
Appointment/Resignation of directors
Appointment of Managing Director/ Whole Time Director
Executing agreement with related parties
Change in the Bank signatories



Change in the statutory auditors
Change in registered address
Changes in any of the registered particulars

Filing of Tax Returns

Companies have to file their annual corporate tax returns. Additionally

Companies who provide a service to their customers must file their service tax returns
every six months.
Companies that sell a product must file annual sales tax or submit their value added tax
returns.
Companies located in states where professional tax registration is mandatory, must file
the annual professional tax returns of each of their employees for whom they have
deducted professional tax.

Directors Responsibility in Compliance

The Directors are held responsible for all ongoing compliance requirements. Directors must
ensure that the company’s activities do not deviate from the MOA. Non compliance will attract
heavy fine or even prosecution at the Court of Law. Any changes in registered particulars should
be promptly reported to the Registrar of Companies. Directors must ensure that the company acts
in trustworthy manner without any willful negligence of its obligations, and disclose true
information about its financial status and business activities.



Rule of Pvt.ltd.
For Incorporating a private ltd company:
1. A minimum of two directors are required and minimum two sh. holders
2. The right to transfer share is restricted as per the AOA
3. An invitation to the public to subscribe to any sh. Or deb. Is prohibited.
4. The no. of sh.hol. is limited to 50
5. No invitation or acceptance of deposits from persons other than members, directors or
their relatives is allowed.
6. Lesser number of compliance requirements

The process
Obtain Director Identification number
Time taken : one day
Get your digital signature certificate
Time taken: Four days
Charge: Rs 400 to Rs 2650

Get the name of the company approved
Time taken: Two to three days (within seven days)
Charge: Rs 500

Memorandum and articles of association vetted and printed
Time taken: within six months of name approval
Charge: Nil

Get the documents stamped
Time taken: One day
Charge: Stamp duty varies from state to state

Get the memorandum and articles signed by at least two subscribers
Time taken: One day
Charge: Nil

Get the certificate of incorporation
Time taken: Five to ten days
Charge: Registration fee varies on the basis of the company’s authorized capital



SUMMARY

To register a company, you need to first apply for a Director Identification Number (DIN) which
can be done by filing eForm for acquiring the DIN. You would then need to acquire your Digital
Certificate and register the same on the portal. Thereafter, you need to get the company name
approved by the Ministry. Once the company name is approved , you can register the company
by filing the incorporation form depending on the type of company.

Step 1 : Application For DIN

The concept of a Director Identification Number (DIN) has been introduced for the first time
with the insertion of Sections 266A to 266G of Companies (Amendment) Act, 2006. As such, all
the existing and intending Directors have to obtain DIN within the prescribed time-frame as
notified.
You need to file eForm DIN-1 in order to obtain DIN. To get more information about the same
click Documents required for DIN

A. Identity Proof (Any one of the following)
PAN Card
Driving License
Passport
Voter ID Card
Others (to be specified)
B. Residence Proof (Any one of the following)
Driving License
Passport
Voter ID Card
Telephone Bill
Ration Card
Electricity Bill
Bank Statement
Others (to be specified)

Step 2 : Acquire/ Register DSC

The Information Technology Act, 2000 provides for use of Digital Signatures on the documents
submitted in electronic form in order to ensure the security and authenticity of the documents
filed electronically. This is the only secure and authentic way that a document can be submitted
electronically. As such, all filings done by the companies under MCA21 e-Governance
programme are required to be filed with the use of Digital Signatures by the person authorised to
sign the documents.



Acquire DSC -A licensed Certifying Authority (CA) issues the digital signature. Certifying
Authority (CA) means a person who has been granted a license to issue a digital signature
certificate under Section 24 of the Indian IT-Act 2000.

Register DSC -Role check for Indian companies is to be implemented in the MCA application.
Role check can be performed only after the signatories have registered their Digital signature
certificates (DSC) with MCA. To know about it click Register a DSC

Step 3 : New User Registration

To file an eForm or to avail any paid service on MCA portal, you are first required to register
yourself as a user in the relevant user category, such as registered and business user. To register
now click New User Registration

Step 4 : Incorporate a Company

Apply for the name of the company to be registered by filing Form1A for the same. After that
depending upon the proposed company type file required incorporation forms listed below.

Form 1 : Application or declaration for incorporation of a company
Form 18 : Notice of situation or change of situation of registered office
Form 32 : Particulars of appointment of managing director, directors, manager and secretary and
the changes among them or consent of candidate to act as a managing director or director or
manager or secretary of a company and/ or undertaking to take and pay for qualification shares



CONCLUSION

The registration of companies as also subsequent filings can be done online. Still, there are a
couple of stages where an authorized person has to make a personal appearance—for instance,
during the vetting of the memorandum and articles of association and during the stamping of the
documents.
Before starting the process of registering your company, the prospective directors must have
director identification numbers (DIN) and digital signature certificates
After acquiring the two, you have to get the name of the company approved by the concerned
Registrar of Companies (RoC), which is done by filling Form 1A. You can give a maximum of
six names and the RoC replies within seven days as to the availability of the names. In practice,
however, the name-approval process only takes two to three days. (See Box the process)
Once the name is approved, the next step is drafting the memorandum and articles of
association (MoA and AoA). The difference between the two is that the articles contain only
those clauses that define the internal functioning of the company. On the other hand, the
memorandum of a company defines important clauses such as authorized capital clause and the
object clause. The authorized capital clause determines the extent to which the ownership base
can be expanded by issuing fresh shares or other instruments in the future. The object clause
defines the objectives of the company and has two sections; one for the main objectives and the
second describing the other businesses that you might want to get into at a later stage.
After the MoA and AoA are prepared they are printed and sent to the concerned registrar for
vetting and to mark out objections, if any. The documents are then stamped (the stamp duty
varies from state to state) and finally all the documents along with some other details like
particulars of appointment of managing director, directors, manager and secretary are sent to the
concerned registrar.
The last step is to pay the registration fee, which varies on the basis of the company’s authorized
capital, after which the company gets registered as a private limited company under the
Companies Act, 1956 and gets its certificate of incorporation.
The whole process to get the certificate of incorporation for a private limited company takes
roughly about 15-20 days. One thing to keep in mind is that the registration must be done at the
regional office of the Registrar of Companies where the registered office is to be located.
There are some more things that are required by a private limited company, like getting a
permanent account number and a company seal, after it is registered. However, unlike a public
limited company, a private company can begin its operation right after getting a certificate of
incorporation and complete the rest of the formalities simultaneously.



BIBLIOGRAPHY

WEBSITES
http://business.gov.in/starting_business/org_private_ltd.php
http://www.mca.gov.in/MCA21/RegisterNewComp.html
www.companyformationindia.com/private-limited-company.html
www.indiacompanysetup.com/india-company-formation-pvt-ltd/

BOOKS
Ramaiya Guide to Companies Act, 17th Edn
Lectures on Company Law and Competition Act, Author: KS Anantharaman
Company law, 5th edition , Dr N.V. Paranjape


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