Procedure for incorporating a public limited company
Procedure for incorporating a Public limited Company
-The minimum number of members is Seven (two in case of a pvt.co)
-The minimum paid up capital is Rupees Five lakhs.(one lakh in case of a pvt.co)
-Select in order of preference, a few suitable names, not less than four, each of which should
indicate as far as possible the main object of the proposed company.
-Out of the four names proposed as above, one name will be the main name and the other three
to be mentioned in the order of preference.
-Name should not resemble to an existing name and should not violate the provisions of
Emblems and Names(prevention of Improper Use)Act, 1950.
-An application has to made to the Registrar of Companies(ROC) to ascertain which of the
names selected is available.(a fee of Rs.100/-)
There are guidelines for deciding availability of Names for registration under the Companies Act,
1956, and a few significant guidelines are enumerated below, namely:a) It should be in consonance with the main objects of the company.
b) It should not contain words which are offensive to any section of people.
c) It should not have phonetic resemblance to a company in existence, like J.K. Industries and Jay
d) It should not connote or suggest a connection or patronage of Government(like, Union, National,
Federal etc., or a national hero or a reputed existing company like TATAS, BIRLAS etc.
e) The name is different from the name of the existing company only with the addition of the words
like, new, modern etc for eg. New Bata shoe Co.
f) The names should not include words like Bank, Investment, Insurance, Trust, Banking etc., unless
the circumstances justify it . In case of Banking Companies, the RBI should be consulted and its
advice taken by ROC before a name is allowed for registration. Similarly, ROC should consult
RBI and the Insurance Regulatory and Development Authority before allowing companies to be
registered with the word ‘Insurance’ or ‘risk corporation’, as part of the name.
The then Department of Company Affairs (now it is Ministry of Corporate Affairs) , for the purpose
of uniformity while making available the proposed name under Sections 20 (companies not to be
registered with undesirable name and 21(change of name by a company), has enumerated certain key
words and prescribed a minimum authorized capital, if such key words have to be approved by the
approving authority, ie ROC, which are as follows:KEY WORDS
2)International, Global,Universal, Continental,Inter-Continen
tal, Asiatic, Asia, being the first word of the name
3) If any of the words at (2) above is used within the name
(with or without brackets)
4) Hindustan, India, Bharat, being the first word of the name
5) If any of the words at (4) above is used within the name
(with or without brackets)
6) Industries/ Udyog
7) Enterprises, products, Business, Manufacturing
The Department of Company Affairs, vide their circular dated 13/05/1999, brought some changes in
the name availability guidelines, which are as follows:- As ‘name search’ is a computerized operation in ROCs now, as against manualized operation
earlier, ROCs may allow even names starting with small alphabets like i2 Technologies…..Ltd.
-Companies can change their names to reflect the business of software only if a substantial portion of
their income(as reflected from their audited accounts or accounts certified by a Chartered
Accountant) is derived from software business.
If the proposed name includes the name of a registered Trade mark, the said name will be allowed to
be registered only if the consent of the owner of the Trade mark has been produced by the
promoters. Kothari Product Limited Vs. ROC.(All. H.C)
-Get the Memorandum of Association(M/A) and Articles of Association (A/A)suitably drafted.
-M/A contains, inter alia, the objects clause of the company with Main Objects
and the objects incidental and ancilliary to the Main objects and Other Objects.
-If the shares of the proposed company are to be listed with a recognized stock exchange(a
pvt.Company’s shares cannot be listed in the stock exchange) when later on a public issue is
made, then ensure that the draft of proposed A/A includes those specific provisions which
Stock Exchange generally requires to be included in the Articles of Public Companies going
-In the case of a public company, at least seven persons (two in case of a pvt.co) will subscribe
to the M/A by signing the same and writing his name, father’s name, address, occupation and
the number of shares subscribed for(it should not be less than one.)
-M/A and A/A should be dated and stamped as per the Indian Stamp Act or the relevant state
-certain forms have to be filed with ROC, giving details of the Directors, Manager or Secretary of
the company, the undertaking of the directors to take and pay for qualification shares(if qualification
is stipulated in A/A and directors have not already subscribed for qualification shares in the M/A),
the details of the address of the Registered office of the Company , the declaration by the secretary
of the company or a Practicing company secretary or an Advocate that all the requirements for
formation of a company is duly complied with and the details of the directors, manager etc.
-The stamped and signed copy of the M/A and A/A alongwith the aforesaid documents/information
to be filed with the ROC within six months from the date of availability of name with necessary
registration and filing fees, the minimum being Rs. 5,000/- and the maximum being Rs.2 crores,
depending on the amount of authorized capital with which the company is to be registered.
-The ROC will scrutinize the documents and papers filed and if satisfied, will register the company
and issue the certificate of incorporation of the company and on that date, the company will come
into being as a separate entity.
Some qualifications of a private limited company:A private limited company by it’s A/A has to :-restrict the right to transfer its shares.
-limits the number of its members to fifty excluding the existing and extant employee members..
-prohibits any invitation to the public to subscribe for any share in or debentures of the company/
-prohibits any invitation or acceptance of deposits from persons other than its members, directors or