How to incorporate and register a company or startup company in India?

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How to incorporate and register a company or
startup in India?

• In this blog, we have discussed about the
  procedures and ways to register and incorporate a
  company or startup companies in India.

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How to incorporate and register a company or
startup in India?

• Chiefly, the word company refers to a legal
  entity formed by a group of individuals to run
  and operate a business, it can be commercial or
  industrial enterprises. Well, company can be
  organized in different ways for tax and other
  financial liability purposes depending on the
  law. The company formation refers to the setting
  up of a company according to the provisions
  listed in the Companies Act of 2013. The startup
  companies are also mandatorily incorporate under
  the companies law. To incorporate a company
  there are certain rules and regulations must be
  followed.

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Incorporate and register a Company

• A company can be incorporated into various types
  based on the need and the capital investment of
  the business owner. These various types includes
  private limited companies, public limited
  companies, one person companies, limited
  liability partnerships, and partnership firms
  etc. All the companies incorporated will be more
  or less same and they bear few minor differences.
• Moreover, according to Section 33 of the
  Companies Act, 2013, the company registration is
  obtained by filing an application with the
  Registrar of Companies. Other than the
  application, the following documents should also
  be submitted by the applicant. These include the
  Memorandum of Associations (MOA) and the Articles
  of Association (AOA).
• Articles of Association are needed only for
  unlimited companies. An agreement copy which the
  company proposes to enter into with any
  individual for his or her appointment as a
  director or a manager also needs to be given if
  at all someone has been appointed. Lastly, a
  declaration that all the requirements of the Act
  have been complied with also needs to be given.

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Advantages of company registration

• Creates a Separate Legal Entity
• In addition, this states that a company is
  independent to incorporate and separate from its
  members, and the members cannot be held liable
  for the acts of the company, even when a
  particular member owns majority of shares.
• Company has Perpetual Succession
• The word perpetual succession refers to
  continuous existence, which means that a company
  will never dies, even if the members cease to
  exist. The membership of a company changes from
  time to time, but that has no effect on the
  existence of the company.
• Can own Separate Property
• Since a company is termed as a separate legal
  entity in the eyes of law, the incorporate
  features defines, it can hold property on its own
  name and the members cannot claim to be the owner
  of the companies property

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• Capacity to sue and be sued 
• Moreover, the Company has the capacity of suing a
  person or being sued by another person in its own
  name. A company can change its name only when it
  is represented by a natural person and any
  complaint which is not represented by a natural
  person is liable to be dismissed in the same way.
• EASIER ACCESS TO CAPITAL
•  Simultaneously, raising capital is easier for a
  corporation. This helps your business to grow and
  develop. They can also easily lend money from the
  banks for the business growth.

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Disadvantages of Incorporation of a Company

• COST
• The cost to incorporate a company includes the
  fee required to file your articles of
  incorporation, or accountant fees, or the cost of
  filing of the paperwork.
• DOUBLE TAXATION
•  Since, some types of corporations such as a C
  Corporation will result in double taxation.
  Double taxation occurs when a company is taxed
  once on profits, and again on the dividends paid
  to those shareholders.
• LOSS OF PERSONAL OWNERSHIP
• In case of company, that is a stock corporation.
  The one person cannot take complete control of
  the entity. The corporation is governed by the
  board of directors who are elected by the
  shareholders

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• ONGOING PAPERWORK
•  However, most of the firms are required to file
  annual reports on the financial status of the
  company. The ongoing paperwork also includes tax
  returns, accounting records, meeting minutes and
  any required licenses and permits for conducting
  business.
• DIFFICULTY DISSOLVING
• While perpetual existence is a benefit of company
  incorporating, it can also be a disadvantage
  because it requires significant time and money to
  complete the necessary procedures for winding.

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Comparison between private companies and the
public companies

• Consequently, when it comes to company formation,
  every firm will choose the following two options
• Private company
• Public company

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• The major differences between Private companies
  and Public companies are
• Minimum number of members required to incorporate
  a private company is two and for a public company
  is seven.
• Private company can have maximum of 50 members,
  but a public company can have any number of
  members.
• A private company can start its business as soon
  as it is incorporated, but the public company
  cannot start its business until it receives
  business commencement certificate.
• In fact, private company cannot sells its shares
  to anyone or should not make any invitation to
  people regarding a company shares, but a public
  company can invite people to buy its shares by
  issuing a prospectus.
• Private limited companies can have two directors,
  but a public company must have at least three
  directors

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FOREMOST DOCUMENTS

• The preparation of a document known as Memorandum
  of Association is the first step in the company
  formation. This document contains the
  constitution of the company.
• MEMORANDUM OF ASSOCIATION
• Since, all the companies in India are legally
  required to have a memorandum and articles of
  association. These governing documents are
  produced during the company incorporate process
  and registered at Companies House.
• The memorandum of association is a legal
  statement which contains the names of those
  founding members of the firm. By signing this
  document, the subscribers are agreeing to form a
  company and become member of the company.
• Likewise, this legal document cannot be altered
  prior to company formation, or the names of the
  subscribers cannot be changed or removed
  after incorporation of the company. This is a
  historical document that will always remain the
  same, regardless of whether any original members
  leave or new members join the company.
• At the time of company incorporation, the
  companies should submit memorandum to the
  Companies House along with the articles of
  association and the application form to register
  a company. Moreover, it is a public document that
  can be viewed by anyone through Companies House.
  All companies must submit a copy of the
  memorandum at their registered office.

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• ARTICLES OF ASSOCIATION
• The article of association consists of multiple
  pages and it forms the constitution of a limited
  company. This document is essentially an internal
  rulebook that states the way in which a company
  should be structured and managed in terms of the
  following
• How decisions can be made.
• The rights, duties and liability of members.
• The duties, responsibilities and powers of
  directors.
• Share capital issuing and transferring shares.
• Distribution of profits.
• Appointing and removing directors.
• Whether a company secretary is required.
• All other administrative matters relating to the
  company.

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CERTIFICATE OF INCORPORATION

• Besides, Companies House will issue you the
  certificate as soon as your company
  registration application has been approved. If
  you register your company through online with the
  help of company formation agent, you will receive
  the certificate in PDF format via email within 3
  hours of the submission as soon as your
  registration is done.
• If you register your company using a postal
  application, your certificate will arrive by post
  only when the Companies House approves your
  application. Postal applications take maximum of
  8 10 days to process, so its more beneficial
  to register online.

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THE REGISTRATION PROCEDURE 4 STEPS

• STEP 1 ACQUIRE DIRECTOR IDENTIFICATION NUMBER
  (DIN)
• This is the first process in company
  registration, each director of the company should
  obtain their identification number. As per the
  amendment act of 2006, DIN is compulsory for
  every director. To get DIN you should file an
  e-Form DIN-1.
• You have register yourself on MCA Website first
  and have a login id. After filling DIN-1 Form,
  one should upload the filled form by clicking to
  e-Form upload button on MCA website and should
  pay applicable fees.
• After getting generated DIN one should intimate
  their company about DIN. Using DIN-2 Form, the
  director can intimate their company about DIN
• The company should intimate the Registrar of
  Corporates (ROC) about all directors DIN
  through DIN-3 Form.
• If there is any change in DIN or need for any
  updating like change of address, personal details
  etc., then director should intimate this change
  by submitting the e-Form DIN-4 Form.

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• STEP 2 ACQUIRE DIGITAL SIGNATURE CERTIFICATE
  (DSC)
• In order to ensure the security of documents
  filed electronically the information act 2000
  demands a valid digital signature on the
  documents submitted electronically. This is the
  only and safest way that you can submit your
  documents electronically.
• In the same way, the digital signature
  certificate should be acquired in government
  approved agencies which are appointed by the
  controller of certification agencies (CCA) for
  registration. You should check for your digital
  signature validity, agencies issue DSCs with one
  or two year validity after expiry you have to
  renew it.

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• STEP 3 CREATE AN ACCOUNT ON MCA PORTAL NEW
  USER REGISTRATION
• However, you have to register on MCA Portal for
  filing an eForm, for online fee payment, for
  different transactions as registered and business
  user. Creating an account is totally free of
  cost. You can also register yourself in MCA
  portal.
• STEP 4 APPLY FOR THE COMPANY REGISTRATION
• As a result, this is the final major step in
  a company registration which includes
  incorporating company name, registering the
  address of the company and notice for appointment
  of company directors, manager and secretary and
  also the shares paid by each director.

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PROCEDURE FOR APPROVAL OF THE PROPOSED COMPANY
NAME

• For obtaining name for your new company, an
  application in Form-1A should be filed with the
  Registrar of Companies (ROC) of the state in
  which the Registered Office of the proposed
  Company is to be located.
• Eventually, you have to provide four alternative
  names for the proposed company. Your company name
  should not resemble the name of any other
  incorporate company or violate the provisions
  according to Act, 1950.
• In this form, you have to fill the name and
  addresses of directors i.e. minimum 2 members for
  a private limited company and 7 members for
  a public limited company. You have to clearly
  mention the main objects of the company and also
  the authorized capital.
• In fact, the ROC will inform you about approval
  or objections in about 10 days. If there are any
  objections, then ROC will suggest you with some
  available names and let you choose among them.
  Specifically, if your company name is approved,
  then you will receive a formal letter regarding
  the confirmation of the company name. You can use
  the same name during registration process of the
  proposed company.

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COMPANY REGISTRATION NUMBER

• A company registration number (CRN) is a
  combination of 8 numbers, or 2 letters followed
  by 6 numbers. This CRN is used to identify your
  company or limited partnership and also verify
  its legal existence as an incorporated entity.
  Companies House will issue a number called CRN
  during the company formation process. You can
  find the CRN in the printed format on your
  Certificate of Incorporation and all other
  official documentation received from Companies
  House.
• In essence, a company registration number (CRN)
  is also known as a Companies House Registration
  Number or company number.

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Documents Required to Register a Company in
India

• The following documents are required for company
  registration in India.
• Passport-sized photograph
• Copy of PAN Card
• Latest Bank Statement or Telephone or Mobile
  Bill, Electricity or Gas Bill
• Voter ID or Passport
• Notarized Rental Agreement in English
• Non-objection Certificate from property owner
• Utility Bill for the incorporate address.