Public companies can be formed by a group of seven or more people, while a private company just requires two individuals. The process of incorporating a company involves the following steps.
- Checking Availability of Name
The first step in forming any firm is to choose a suitable name. A firm is identified by the name it registers. The company’s name appears in its memorandum of association. A public company’s name must conclude with ‘Limited’, while a private company’s name must end with ‘Private Limited’.
To determine whether the chosen name is eligible for adoption, the promoters must submit an application to the state’s Registrar of Companies. A fee of 500 rupees is paid with the application. The Registrar then enables the company to use the name if all legal documentation formalities are completed within three months.
- Preparation of Memorandum and Articles of Association.
The memorandum of association of a firm is often known as its constitution or rulebook. The memorandum describes the field in which the firm will do business, the company’s aims, and the sort of business that the company intends to conduct. It is then separated into five clauses.
The following clauses are included:
- Name clause
- Registered office clause
- Objects clause
- Liability Clause
- Capital Clause
The Articles of Association are basically a document that defines the regulations that the company’s internal management will follow. The article establishes a contract between the company and its members. The article describes the members’ rights, duties, and liabilities. It applies equally to all members of the company.
- Printing, signing, and stamping, vetting of memorandums and articles.
The Registrar of Companies frequently assists promoters in drawing up and drafting the memorandum and articles of association. Above all, with promoters who have no prior experience drafting memorandums and articles.
After these have been approved by the Registrar of Companies, the memorandum and articles of association can be printed. The memoranda and articles are then separated into paragraphs and placed chronologically.
The articles must be personally signed by each subscriber or their agent in the presence of a witness; otherwise, they are not valid.
- Power of Attorney.
To complete the legal and complex documentation procedures of incorporation, the promoter may hire an attorney who will be authorized to act on behalf of the company and its promoters. The attorney will have the ability to make amendments to the memorandum and articles, as well as any other documents submitted with the Registrar.
- Other Documents to File with the Registrar of Companies
- The First – e-Form No.32 – Consent of Directors
- The Second: e-Form No.18 – Notice of Registered Address.
- The Third – e-Form No.32. – Details of Directors
- Statutory Declaration in e-Form No. 1.
This statement further declares that ‘All the requirements of the Companies Act and the rules thereunder have been compiled with respect to all things prior and incidental thereto.’
- Payment of registration fees
A predetermined fee must be paid to the Registrar of Companies throughout the incorporation process. It is determined by the nominal capital of the companies that also hold share capital.
- Certificate of Incorporation
If the Registrar is totally satisfied that all conditions have been met by the company being founded, he will register it and issue a certificate of incorporation. As a result, the incorporation certificate issued by the Registrar is definitive proof that all Act criteria have been completed.
