The legal framework is an important constituent of the business and corporate environment. No company can effectively work and survive without meeting legal obligations. The Companies Act, 1956, the legislation in our country provides various compliances for the incorporation of company in India and various amendments are made from time to time.
What is the Incorporation of Company?
The incorporation of company is a legal procedure to form a corporate entity or company. The company comes into existence only when it is registered under the Companies Act and in ROC (Registrar of Company). A number of compliances have to be completed before an application is made to the Registrar for the company’s registration. After application with relevant documents is submitted, the ROC issues a certificate of incorporation.
Process for Incorporation of Company
Digital Signature Certificate (INC 32, 33, and 34): A digital signature certificate (DSC) is a valid legal instrument i.e. used for digitally signing various documents. DSC can be used for filing the income tax return, e-tender for filing various regulatory filings.
Director Identification Number (Form No. DIR 3): Director Identification Number (DIN) allotted by the central government to a person who intends to be the director of the company. DIN is an 8-digit number that has lifetime validity. Through DIN details of the director are maintained in a database.
Application for allotment of DIN to the director shall be made in SPICe form (Simplified Performa for Incorporating Company Electronically).
Any person intending to become a director in an existing company shall have to make an application in e-form DIR-3 for allotment of DIN.
Any change in the particulars of the director shall be filed in form DIR-6.
DIR 12 form is filed on the MCA portal to notify the Registrar about appointment/resignation/change in designation Directors in the company.
INC 1 (Application for the name): In order of preference at least one suitable name up to 6 names indicating the main objects of the company. Certain things need to be avoided in name i.e. slang, curse, offensive words, similarity to any existing company without NOC or any political references.
INC 7: Application for incorporating of company part-1 & company with more than 7 subscribers.
INC 22: Location of the registered office of the company.
Attach MOA and AOA: The memorandum of association contains the fundamental conditions upon which alone the company is allowed to be incorporated. These fundamental conditions are introduced for the benefit of the shareholders, public, and creditors. On the other hand articles of association are the internal regulations of the company to regulate the relationship between the company and the shareholders.
Stamped MOA and AOA signed by at least two subscribers with father’s name, occupation, address, and the number of shares subscribed shall be submitted in the e-form portal.
Certificate of Incorporation (INC 11): When all the required documents are submitted and scrutinized by the ROC then the name of the company is entered in the register of companies and a certificate of incorporation is issued.
After the incorporation of the company, the company becomes a separate legal entity. The certificate of incorporation is conclusive proof of the existence of the company.
What are the Advantages of Incorporation of Company?
Compared to other legal structures, an incorporated company has the following advantages:
- An independent legal entity, a company is a separate legal entity or a juristic person independent of its members.
- Limited liability, a company can be formed with the liability of its members. In this case, no member is bound to contribute anything more than the value of shares held by him.
- Perpetual succession, “members may come and members may go but the company can go on forever”. The death or insolvency of any member will not affect the existence of the company.
- There is no limit to the maximum number of members in an incorporated public company.
- The company law provides for the control and management of the company through directors of the company.