An Overview of Incorporating a Corporate Entity in India

A corporate entity in India is governed by provisions of The Companies Act 1956 (The Act).

The Act permits primarily two kinds of Companies –

a) Private limited Company

b) Public limited Company

Both are companies with limited liabilities; owned by shareholders & governed by The Board

of Directors.

This note deals with the processes & the costs involved in forming a limited liability company –

Incorporation Process

1) Selection of Name for Company with Alternatives. (Details to be provided as per

Annexure A)

2) Approval of the proposed Name of the company by Registrar of Companies(ROC)

3) Draft the Charter Documents viz. Memorandum of Association (MOA) and Articles of

Association (AOA), have them vetted and stamped by the ROC.

4) Fill up forms e.g. Form No. 1 (dealing with name of the company), Form No. 18 (dealing

with registered office address etc) , Form No. 32 (details of directors of the company, Details to be provided as per Annexure B )

5) Form No. 29 – In case of the public Company the consent of the directors is also to be

filed.

6) Submit the following to ROC:

a) Certified True Copy of Letter of Approval by ROC

b) Forms mentioned in item no. 4 above duly filled

c) Charter documents, signed and stamped

d) Registration Fee

6) On Submission of the above documents ROC will issue a Certificate of Incorporation.

This is the date of incorporation of the company.

7) Obtain a Certificate of Commencement of Business. This is the date from which a company can commence business in India (Applicable only for Public Limited Companies)

8) You can now open the bank account for the company and start operations.

Approximate Time for formation:

For approval of Name

5 Working days from date of submission of form.

For submission of MOA /

AOA

20 Working days from date of receipt of letter from ROC approving the name. Obtaining final Certificate of Incorporation

10 Working days from the date of submission of AOA / MOA

Total 35 Working Days *

Composition of Board of Directors

Every Public Company shall have at least three directors and private companies two. In order

to qualify for being appointed as a director, few provisions have to be carefully understood -

1) The directors should be of sound mind and solvent

2) The directors should not be convicted by Court for more than six months and if convicted, then a period of five years should have elapsed from the date of sentence

3) The proposed director should have honored payment of all calls on shares and should have not defaulted on the same.

4) The proposed director person should not be a director of more than fifteen companies in

India.

Source:- www.kdpaccountants.com