SIUT & Co LLP BLOG - PROCEDURE FOR INCORPORATION OF PRIVATE LIMITED COMPANY

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PROCEDURE FOR INCORPORATION OF PRIVATE LIMITED COMPANY

In India, a company may be incorporated either as a private company or a public company under the Companies Act, 2013.

Key differences between a private company and a public company are as follows:

  • a private limited company should have a minimum of two members and a maximum of 200 members. On the other hand, a public company should have a minimum of seven members and does not have a limit on the maximum number of members
  • a private limited company should have a minimum of two directors whereas a public company shall have a minimum of three directors, a third of whom shall be independent directors
  • aprivate limited company is not eligible to list its ordinary shares on a stock exchange whereas a public company can list its shares on publicly traded stock exchanges.

In light of the above differences, it may be concluded that, at a seed stage, private limited companies are the most recommended and desirable choice of business structures for running a business in the Indian Start-up led Ecosystem.

The incorporation of Companies is governed by the Companies Act, 2013. An application for incorporation is required to be filed with the Central Registration Centre of the Ministry of Corporate Affairs.

Before looking at the detailed procedure it is important to understand the following charter documents:

Memorandum of Association: An important step in the formation of a company is to the Memorandum of Association (MOA). It is the constitution of the company, and it contains the fundamental conditions on which the company is incorporated. The MOA contains the name, the State in which the registered office is to be situated, main objects of the company to be pursued by the company on its incorporation and objects incidental or ancillary to the attainment of the main objects, liability of the members and the authorised share capital of the company. The main purpose of the memorandum is to state the scope of activities and powers of the company.

Articles of Association: The Articles of Association (AOA) of a company contain rules, regulation and by-laws for the general management of the company. AOA is a very important document for functioning of a private limited company and hence should be drafted with utmost diligence.


Procedure for Incorporation of Company in India

Web form SPICe+ (INC-32) deals with the single application for reservation of name, incorporation of a new company and/or application for allotment of DIN and/or application for PAN and TAN.

SPICe+ (INC-32): This eForm is accompanied by supporting documents including details of Directors & subscribers, MOA and AOA etc. Once the eForm is processed and found complete, company would be registered, and CIN would be allocated.

Part B of SPICe+ offers following services viz.

  1. Incorporation
  2. DIN allotment
  3. Mandatory issue of PAN
  4. Mandatory issue of TAN
  5. Mandatory issue of EPFO registration
  6. Mandatory issue of ESIC registration
  7. Mandatory issue of Profession Tax registration, only for companies to be registered in Maharashtra, Karnataka and West Bengal;
  8. Mandatory Opening of Bank Account for the Company
  9. Allotment of GSTIN (optional, if applied for) and
  10. Allotment of Shops and Establishment Registration Number (Only for Delhi Location).

SPICe+ has two parts – Part-A is for name application and Part-B is for incorporation.

It may be noted that SPICe+ Part A can either be submitted individually ONLY for name reservation or can be submitted together with SPICe+ Part B for both name reservation as well as incorporation. In case SPICe+ Part A is submitted individually for name reservation, Part B and all other linked forms shall be enabled only after the SRN of SPICE+ Part A is ‘Approved’ i.e. the name is reserved.

Below is stepwise procedure for incorporating a Private Limited Company:


STEP 1: NAME RESERVATION

The name of the Company is the symbol of its existence and creates a brand value. Hence the name should be unique and portray the business activity of the Company. Name application shall be filed in Part-I of SPICe+ with the proposed name and proposed object. Before applying for the name the promoters should ensure that the name does not resemble the name of any other already registered company and also does not violate the provisions of emblems and names (Prevention of Improper Use Act, 1950) by availing the services of checking name availability on the portal. Further, if the name is similar to that of an existing LLP/company/registered trademark, no objection from the trademark owner/ LLP/company in the form of board resolution is required. Name application can be filed either separately before filing incorporation or the same can be filed along with the incorporation details in Part-B of SPICe+.

Two names can be proposed in case application is being made ONLY for name reservation i.e. if SPICe+ Part A is submitted individually. In case complete SPICe+ is being submitted for name reservation as well as incorporation, only one name can be proposed. Name once approved is valid for 20 days. However, on payment of additional fees, the name reservation can be further extended to 40 and 60 days under SPICe+ Part A.


STEP 2: DIN AND DIGITAL SIGNATURE (DSC)

DIN is mandatory for all the proposed directors and DSC is mandatory for all the subscribers to the Memorandum of Association (for e-MOA and e-AOA). DSC shall be procured for all the subscribers.

If all the proposed directors have DIN, status of DIN shall be active. If the DIN is inactive, KYC procedure shall be completed to get the DIN activated. If the proposed directors are not having DIN, an application for DIN can be filed in the incorporation Form SPICe+ for up to three directors.


STEP 3: FILING IN SPICE+ PART B

Incorporation documents shall be filed in web-based form SPICe+. Following forms shall be linked along with SPICe+:

  • e-MOA in Form INC-33
  • e-AOA in Form INC-34
  • AGILEPRO-S - For obtaining GSTN, EPFO, ESIC, Professional Tax and opening of Bank Account
  • INC-9

Note: In case of incorporation of a company having more than seven subscribers or where any of the subscriber to the MOA/AOA is signing at a place outside India or for Section 8 company, MOA and AOA shall be filed in the respective format as an attachment with SPICe+ without filing form INC-33 and INC-34.
If the subscriber to MOA and AOA is signing at a place outside India, subscription sheets of MOA and AOA shall be notarised and apostilled/legalised along with the relevant proofs.


The following documents are required to be enclosed with SPICe+:

  1. Declaration by the first director(s) and subscriber(s) (Affidavit not required)
  2. Proof of office address
  3. Copy of utility bills
  4. NOC for use premises for registered office of proposed Company from owner and person whose name mentioned in utility bill
  5. Copy of certificate of incorporation of foreign body corporate (if any)
  6. A resolution passed by promoter company (Applicable if name a body corporate is promoter)
  7. The interest of first director(s)in other entities
  8. Consent of Nominee (INC–3) (Applicable for one person Company)
  9. Proof of identity as well as the residential address of subscribers
  10. Proof of identity as well as residential address of the nominee
  11. Proof of identity and address of applicant I, II, III (Subscriber OR Director)
  12. Resolution of unregistered companies in case of Chapter XXI (Part 1) Companies
  13. Declaration in Form No. INC – 14(Applicable for section 8 Company)
  14. Declaration in Form No. INC – 15 (Applicable for section 8 Company)
  15. Estimate of the future annual income and expenditure of the company for next three years (Applicable for section 8Company)
  16. Optional attachments (if any)

Notary and apostille requirements: documents are required to be notarised and apostilled for incorporation of a company in case the subscriber/director is a Foreign national.

However, the attestation requirement depends on the country in which registered office (in case of body corporate as a subscriber) /residence of the overseas subscriber and / or director is situated.


The documents are required to be attested are as follows:

  1. Proof of Residence in a country which is part of the Commonwealth, by a notary public of that country
  2. Proof of Residence in a country which is party to the Hague Apostille Convention, 1961, attestation to be made by a notary public of the said country and duly apostilled in accordance with Hague Convention
  3. c) Proof of Residence in a country outside the Commonwealth, and which is not party to Hague Convention, authenticated by a Diplomatic or Consular Officer empowered in this behalf under Section 3 of the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948 (40 of 1948) i.e., attested by Public Notary and authenticated by Indian Embassy in the country of residence

Documents to be notarised and apostilled:

  1. Proof of identity
  2. COI of the foreign body corporate, if applicable
  3. MOA
  4. AOA
  5. Document executed outside India (Place of execution determines whether the said document is to be notarised / apostilled / consularised)

STEP 4: FILING IN AGILE-PRO-S, eMOA and eAOA

AGILE-PRO-S is an application for registration of Goods and Service Tax Identification Number (GSTIN), Employee State Insurance Corporation (ESIC), Employees' Provident Fund Organisation (EPFO) Registration and Professional Tax Registration (in Maharashtra, Karnataka and West Bengal), Opening of Bank Account and Shops and Establishment Registration Number. The said form shall be accompanied with application of Incorporation.

Following documents are required for AGILE Pro

  • Name of the Bank, where company is willing to open the Bank Account.
  • Specimen Signature for EPFO
  • NOC for opening a bank account
  • Declaration of Authorised signatory for GSTN
  • Proof of identity of authorized signatory for opening bank account
  • Proof of address of authorized signatory for opening bank account

e-MOA and e-AOA: The MOA and AOA should be filled in based on the requirements of the Company by selecting the applicable standard table as notified under Schedule I to the Companies Act, 2013. Based on the selected table, relevant fields would be displayed. After filling in all the details towards the end details of subscribers are required to be mentioned in the prescribed format.

Details of the subscribers shall match with form SPICe+ (INC32) hence it is necessary to enter same DIN or PAN or Passport number as mentioned in that form for individual subscribers and/or authorized representatives of body corporate subscribers. In the case of a company having a share capital sum of subscribed share capital as mentioned in the MOA should match with form SPICe+ (INC-32).


STEP 5: UPLOADING THE FORMS AND PAYMENT OF FEES

Once the SPICe+ is filled completely with all relevant details, the same would then have to be converted into pdf format, with just a click of the mouse button, for affixing DSCs. Thereafter all digitally signed applications can be uploaded along with the linked forms as per the hitherto process in the following sequence:

  • SPICE +
  • eMOA [if applicable]
  • eAOA [if applicable]
  • URC-1[if applicable]
  • AGILE-PRO-S [mandatory in all the cases]
  • INC-9[if applicable]

The Fees depend upon the Authorised Share Capital of Company. Stamp duty rates may differ for different states. Applicants shall note that if Company attempts to first reserve the name of the proposed company by separately filing SPICe+ part A for name approval then INR 1000/- shall be charged for name reservation. Also, for PAN-Rs.66/- and TAN-Rs.65/-becomes payable. It may be noted that Companies getting incorporated through SPICe+ with an Authorized Capital up to INR 15,00,000 would enjoy ‘Zero Filing Fee’ concession. Such companies will be levied with only stamp duty fees as may be applicable on state-to-state basis.

On approval of SPICe+ forms, the Certificate of Incorporation (Col) is issued with PAN as allotted by the Income Tax Department. An electronic mail with a Certificate of Incorporation (Col) as an attachment along with PAN and TAN is also sent to the user. Further PAN card shall be issued by the Income Tax Department.

Please write us at cs@siut.in for any queries and for further assistance with respect to incorporation.