Rajput Jain And Associates

Rajput Jain & Associates

Chartered Accountants

An ISO 9001:2008 Certified Firm

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Faq's on Company Formation in India

Faq's on Company Formation in India

This form of company is limited by its shares and maximum 50 shareholders. No invitation can be made for the subscription of its shares & debentures to the public. There are also restrictions to make & accept deposits or transfer of the shares through public offer. In a Private Limited Company, The responsibility of the shareholders is limited to the face value of the unpaid amount of shares & the premium in respect to the shares held.

There is no restriction on the number of shareholders. However, there is no such restriction of number of shareholders or any form of transfer of shares or accepting the public deposits. The responsibility of the shareholders is limited to the face value of the unpaid amount of shares and the premium in respect to the shares held. However, the minimum number of shareholders for a public limited company is seven in numbers.

The minimum paid up capital at the time of incorporation is 1,00,000 INR. However, there is no such sealing on the maximum amount of the authorized paid up capital. The company can raise the capital amount any time during the lifetime of the company by paying the additional stamp duty and registration fee.

The share capital which is authorized by the ROC up to which the shares can be issued to the public is known as the authorized capital. The share capital where the paid portion of the capital is subscribed the shareholders are known as the paid up capital.

The application form INC- 1 needs to filed up with the ROC online with the digital signature of any one of the proposed director. The other details are as follows:

  • The selection of the Company name will be according to the name availability along with the alternative names of the proposed company. The names may be coined from the objects of the company or the name of its directors. However, it should indicate the main objective of the company. The justification of the name chosen must be specified along with the application.
  • The promoters’ names and addresses must be mentioned. The minimum number for the Public Limited Company is 7, whereas for the Private Limited Company it is 2.
  • The mention of the authorized capital and objectives of the proposed company.
  • The approval or the objections will be sent by the ROC after the scrutiny within 3-4 days via email.

MOA states the main and the subsidiary objectives of the proposed company. The rules and procedures for the conduct of the proposed company, authorized share capital, names of its first permanent directors are mentioned in the AOA. MOA and AOA is stamped from the Collector of Stamps thereafter. The amount paid for the stamp duty depends on the amount of authorized share capital.

  • MOA and AOA: Both of these must be signed by the promoters in writing in the presence of witness. The details to be mentioned are: full name, father’s name, residential address, occupation and number of shares subscribed for.
  • Name incorporation: Form INC- 1 needs to be filed for the name availability.
  • Incorporation: Form INC- 2 should be filed after the name approval within 60 days of filing the INC-1 form.
  • In case the promoter is not the sole director of the proposed company, form DIR-12 needs to filed along with the linked INC- 2.
  • Form INC- 22 needs to be filed within 30 days of the INC- 2 filing in case the correspondence and registered office address are not the same.
  • All the subscribers of the MOA need to sign the power of attorney by subscribing any of the other subscribers or any other person on their behalf and to accept the certificate of incorporation.

The attorney of the proposed company is called by the ROC for scrutiny while filing of the forms and corrections are made in the MOA and AOA. The registered office of the proposed company thereafter receives the certificate of incorporation through the post.

With the filing of documents the ROC calls the attorney of the proposed company for scrutiny and making the corrections in the MOA and AOA that has been filed. After all these formalities the certificate of incorporation is sent by post to registered office of the company.

The ROC issues the certificate of the commencement of business to the company after the completion of the formalities. The formalities include a statuary meeting within 6 months and a statuary report after the company receives the certificate of incorporation. After the company receives the certificate of commencement, it can start the business. However, in case of a Private Limited company, it can start its business soon after the certificate of incorporation.

Giving the Power of Attorney to the one, who will be appearing before the ROC and completes the formalities after the MOA and AOA are at place. The documents are then, E-mailed to the client and needs to be signed from respective directors, promoters. The signatures of the promoters and the directors are thereafter attested by the notary public of the Indian Embassy/ Consulate located in the home country. However, the attestation of the Indian Embassy is not required if the directors and promoters are based in a Common Wealth country.

After the company receives the certificate of incorporation, the investor has to inform or intimate the RBI about the foreign equity or take approval from the Foreign Investment Promotion Board (FIPB). The approval depends on the sector that the foreign investor is investing in.

  • The company can start the investment after the automatic approval by the RBI, which is available for all the items except for some items or activities mentioned in the Press Note No. 4 (2006 Series). The company is required to report to the RBI within 30 days of receiving the foreign equity or the allotment of shares whichever is earlier.
  • The items or activities which are not eligible for the automatic approval of the RBI, They needs to be approved by the Foreign Investment Promotion Board (FIPB).