Accuprosys - Company Incorporation

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Getting Your Company Incorporated The 101 of
Company Incorporation

• A roundup of the basic things every business
  owner should know if he is considering
  incorporation or is completely ignorant about it.

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You are running a successful startup or online
business and an acquaintance walks up and asks
you if your business is incorporated?

• That isnt exactly true.

• You rattle on debating that incorporation of a
  company requires tons of paperwork and cash and
  that these outweigh the benefits of incorporation.

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Company Incorporation The Whats and the Whys
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• Why should I get my company incorporated?
• What kinds of incorporations exist in India?
• What are the different kinds of companies?

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Wait!
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What you need to know first is what exactly is
business incorporation?

• Incorporation of a company is the process of
  creating a new structure for the business wherein
  it becomes a legal entity recognized by law.
• What this means is that it can be treated as a
  separate entity from the shareholders and
  founders, because of which the liability of its
  shareholders is reduced.
• Incorporation is beneficial for the long term
  growth and expansion for a business.

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Under section 12 of the Companies Act, 1956, in
India, seven or more (or two or more depending on
the type of company) individuals can come
together to form an incorporated company for a
legal purpose.

• Limited by shares
• By guarantee, or could be
• an unlimited company

• The company could either be

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Benefiting from Incorporation
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• The incorporation of a company removes personal
  liabilities from the directors, founders and
  shareholders.
• Therefore, their personal assets are not at risk
  and only the company assets are used to clear
  debts at times of crises.
• Incorporated companies are taken more seriously
  by customers, suppliers and prospective workers.

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The ownership of the business becomes
transferable and the tax liability is also
reduced.

• The company will continue to remain even when the
  directors and members change.
• It is also advantageous for those seeking
  financial assistance from banks and other such
  financial institutions.

• While sole traders have to pay income tax,
  incorporated companies have to pay corporation
  tax and enjoy a range of tax deductible costs and
  allowances.

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As companies can make valid contracts with its
directors and shareholders, an individual owning
a company can also be an
At the same time!
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The benefits of incorporation are different for
private and public limited companies.

• Different company categories (public limited,
  private limited, part IX, section 25 company and
  producer company) have different procedures for
  incorporation.

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Minimum Requirements for Incorporation
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• In the case of private limited company,

• For public limited companies,

• There should be a minimum of two directors and a
  minimum paid up capital of Rs. 1 lakh.
• Private limited companies raise capital through
  private deposits and placement of shares.

• There should at least be seven subscribers, three
  directors and a minimum paid up capital of Rs. 5
  lakhs.
• Public limited companies raise capital from the
  public through public deposits and issuing of
  shares.

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Steps for Incorporating a CompanyGuidelines of
the Ministry of Corporate Affairs, Government of
India
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Step 1

• Before subscribing for incorporation, a minimum
  of one and a maximum of six names should be
  listed in order of preference for the company.
• The names should be indicative of the companys
  objectives.
• The names should not resemble that of another
  registered company and should also not violate
  the provisions of names and emblems as described
  in the Prevention of Improper Use Act, 1950.
• The name availability can be checked on the
  portal at the link http//www.mca.gov.in/DCAPortal
  Web/dca/MyMCALogin.do?methodsetDefaultPropertymo
  de16.

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Step 2

• To ascertain the name availability, applicants
  should apply to the concerned Registrar of
  Companies (RoC) by filling the electronic form
  eForm1.
• This is done by logging into the portal. A
  digital signature and fee of Rs. 500/- has to be
  paid along with the form.
• If a name is not approved, the applicant has to
  apply for another name using the same
  application.

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Step 3

• The applicant has to apply for the registration
  of the company after the name has been approved.
• This is to be done by filling forms Declaration
  of compliance (Form-1), Notice of situation of
  registered office of the company (Form-18) and
  Particulars of the Director's, Manager or
  Secretary (Form-32) within 60 days on the
  portal.
• Mandatory documents have to be uploaded along
  with these forms.
• Digital signature and registration fee is
  required to be paid along with the applications.

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Step 4

• After the forms have been submitted, the
  applicant has to arrange for drafting of articles
  of association by the solicitors and the
  memorandum, and get them vetted by the RoC.
• These have to be printed and stamped with
  appropriate stamp duty.

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Step 5

• At least two subscribers need to sign the
  memorandum and articles in their own hand,
  providing their fathers name, occupation,
  address and the number of shares subscribed for,
  and witnessed by at least one person.
• The memorandum and article should be dated after
  the stamping date.

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Step 7
Step 6

• A hard copy of the memorandum and articles is to
  be sent to the RoC.

• After the application has been processed,
  applicants have to collect their Certificate of
  Incorporation from RoC and their Corporate
  Identity is generated.

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Step 7

• After the application has been processed,
  applicants have to collect their Certificate of
  Incorporation from RoC and their Corporate
  Identity is generated.

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Public limited companies have to follow
additional steps.

• For this, they have to file a declaration in
  eForm 20 with the statement in lieu of the
  prospectus (schedule III) or file a declaration
  in eForm 19 with the prospectus (schedule II).

• They need to obtain the Commencement of Business
  Certificate after incorporation of the company.

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Part IX companies need to fill eForm 1 and then
eForm 18, eForm 32, eForm 37 and eForm 39
separately or simultaneously.
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Centre for Innovation and EntrepreneurshipC-4,
IIT-H Foundation, Gachibowli, Hyderabad961840275
1, 9000600247

• Reach us atprabha_at_accuprosys.com
  simplify_at_accuprosys.com anuradha_at_accuprosys.com 
  For more details, please visit
  www.accuprosys.com

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