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Company incorporation in India: benefits of registering company


In the article we have discussed about the company incorporation features and the types of company filing available in detailed manner. – PowerPoint PPT presentation

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Title: Company incorporation in India: benefits of registering company

  • In the article we have discussed about the
    company incorporation features and the types of
    company filing available in detailed manner.

  • Chiefly, India is a major place where the
    start-ups and the entrepreneurs are growing
    rapidly. Company incorporation is not an easier
    task. Choosing your business is easy, but you
    have to register your company under the right
    sector. The registered company gains more
    advantages compared to other companies. Majority
    of the people desire to incorporate a registered
    company having separate legal entity in their
    eyes of laws.

Moreover, company refers to the mode of
doing business. Mostly, it depends on what are
your expansion plans, future team size, funding
requirements and business vision. There are
several options like private limited company,
public limited, one Person Company and limited
liability partnership the most preferred option
will be private limited company. This is due to
enormous benefits associated with the business
Company incorporation and commencement steps
  • First of all, formation of a company is a long
    and complicated process. The foremost step
    involved in forming the company is company
    incorporation. After that, there are several
    other procedures followed by the company before
    the commencement of the business. The company
    formation is an early and initial task. It
    involves certain legal formalities and procedures
    to be done at the initial stages. The authorities
    have the special powers and system that are to be
    followed by each and every business organisation
    for the business commencement.

  • For instance, when a human being takes birth, his
    body parts are the immense element which is being
    formed before taking the birth. Similarly, when a
    company is formed, before that it has its several
    aspects which have to be built after which the
    company is taken into an account to commence its
  • Promotion of a company
  • Registration of a company
  • Certificate of incorporation
  • Commencement of business

  • Promotion of a company
  • The process of business promotions comes when
    someone comes up with the good idea and that idea
    is converted into action. (i.e.) the formation of
    the firm and commencement of the business. It is
    the effort thrown by the members of the company
    put to make the company.
  • A successful promoter is the creator of wealth.
    The person who is related to the promotion of a
    particular business or an enterprise is known to
    be a promoter

  • For example, Dhirubhai Ambani is the promoter of
    Reliance Industries. He created the idea of
    starting a business and takes all the measures
    required for bringing the enterprise into the
    existence. Moreover, the promoter finds out the
    way to generate the money, search business idea,
    arranges for finance, gather resource and
    establish a going concern. The company law does
    not give any legal status to promoters. He stands
    in fiduciary position.

There are different types of the promoter,
occasional promoters, company promoter, financial
promoter, entrepreneurs, lawyers, and engineers
etc. They all play different roles during
the company incorporation, and all of them only
hold a fiduciary position until such company is
incorporated. Once the promoters have decided to
launch a company next step is to select a name
for the company and get it registered with the
registrar of companies of the state in which the
registered office of the company is to be
situated. An application with three names, in the
order of their priority, is filed with the
registrar to get the name approved.
  • Registration of company
  • Consequently, the company registration is nothing
    but giving birth or existence to a company. A
    company is properly effectively when it is
    registered under the companies act. There are
    certain procedure for the registering the
    company, it should be followed by each and every
    organisation. Meanwhile, it involves the
    following documents and procedures,
  • Memorandum of Association
  •  It is signed by minimum member that is 7 persons
    for the public company and 2 in case of private
    company. It should be duly stamped.
  • Articles of Association
  •  The document is signed by all persons who have
    signed the memorandum of association.

  • List of directors
  • A list of directors with their names, address,
    and occupation is prepared and filed with the
    registrar of the companies.
  • Written consent of the directors
  • A written consent of the directors that they had
    agreed to act as directors has to be filed with
    the registrar of the company along with a written
    approval to the effect that they will take the
    qualification shares and will pay for them.
  • Notice of the address of the registrar office
  • Consequently, it is also necessary to file the
    notice of the address of the companys registered
    office at the time of incorporation. It is to be
    provided within 30 days after the date of

  • Statutory declaration
  • A statutory declaration mentioning that the
    requisites of the act and the rules there-under
    have been compiled. It must be signed by an
    advocate of the Supreme Court entitled to appear
    before a high court or a practicing chartered
    accountant in India, who engages in the company
    incorporation or by a person indicated in the
    article as a director, managing director,
    secretary or manager of a company. Moreover, it
    is also to be filed with the registrar of the

  • Company Incorporation certificate
  • The registration of the memorandum of the
    association, the article of association and other
    documents are filed with the registrar of the
    company. After getting fulfilled with the
    application documents submitted, Registrar will
    issue the Certificate of incorporation. A
    certificate of incorporation is the ultimate
    proof for the existence of a company.

  • Certificate of Commencement of Business
  • As soon as a private company gets the
    certification of incorporation it can start its
    business. Once the certificate of incorporation
    is received by the company, a public company
    issues a prospectus for inviting a public to
    subscribe to its share capital. It fixes the
    minimum subscription in the prospectus. Then it
    is required to sell the minimum number of shares
    mentioned in the prospectus.
  • After completing the sale of the required number
    of shares, the certificate is sent to the
    registrar along with the letter from the bank
    stating that all the money is received. The
    registrar then inspects the documents. If all the
    legal formalities are done then the registrar
    issues a certificate known as certificate of
    commencement of businesses. This is the
    conclusive evidence for the commencement of
    business for the public.

Company incorporation Types
  • The different types of company formation are 
    Private limited company, public limited company,
    one Person Company, Nidhi Company, proprietorship
    registration, section 8 company, limited
    liability partnership, Partnership firm
    registration, non-banking finance companies etc.

  • Private limited company registration
  • Private limited company registration offers
    multiple benefits such as ease of formation,
    limited liability, freely transfer of shares,
    easy to raise funds, etc. Private Limited Company
    is nothing but a privately held business with a
    minimum of 2 and maximum of 200 members.

  • Public limited company registration
  • A public company has to follow much more
    consequences compared to a Private limited
    company. It can deal in both secured and
    unsecured debts. A public limited company allows
    you to trade in the market and issue shares,
    debentures and accept deposits. Similarly, a
    public limited company registration is always
    beneficial because a public limited company is
    preferred to provide big financial loans as
    compared to Limited liability partnership and

  • One person company registration
  • Moreover, Section 2(62) of Companies Act defines
    a one person company as a company which has only
    one person as its member. Furthermore, members of
    a company are nothing but subscribers to its
    memorandum of association. So, an OPC is a
    company that has only one shareholder as its

  • Section 8 company registration
  • The primary objective of the section 8
    companies are working for the development of the
    society, protection of the earth and environment,
    working in the field of art, commerce,
    literature, sports, protection of living
    creatures, research, and development, etc.
    without earning any profit. In other words,
    section-8 Company is a non-profit organization
    whose main aim is to contribute its effort for
    the development and betterment of the society,
    but under companies act this non-profit
    organization is known as section-8 Company.

  • Limited liability partnership
  • Further more, the Limited liability partnership
    is the good choice for those who are involving in
    the business of consultancy. LLP have little
    compliance to follow as compared to other
    companies. Under Indian Partnership Act, 1932 the
    registration of partnership firm, but if any
    person wants to run LLP, and then he shall have
    to take a certificate of registration from the
    Registrar and register the LLP agreement.
    Consequently, all the details of the business
    such as profit loss sharing ratio amount of
    capital invested should be mentioned in the LLP

  • Non-banking finance companies
  • In essence, NBFCs or Non-banking financial
    company as it is commonly known as in India is
    the financial institution that provides the
    banking services without any bank licenses.
    Moreover, they are allowed to perform some
    banking activities but they do not require any
    pre-banking licenses for such activity. The NBFCs
    in India runs under the companies act which came
    into place in 1956. Services provided by NBFCs
    include investment, hire purchase, and chit

  • Proprietorship registration
  • Besides, the proprietorship registration is the
    good practice for the start of small scale
    business. Moreover, it does allow the business to
    scale up and reach maximum growth as the many of
    the features are missed out in a proprietorship
    firm. In particular, the features of
    proprietorship are transfer of shares limited
    liability, easy funding process etc. are major
    things a growing business should possess.
    A proprietorship firm can be converted into a
    company by executing a proprietorship takeover