Incorporation of a company

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Incorporation of Company
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For most businesses, especially startups, the
procedure for incorporation of a company may
appear confusing.

• Various corporate law firms offer corporate legal
  services that not only carry out all the tasks
  associated with incorporation of a company but
  also offer corporate advisory services to assist
  businesses in deciding which type of
  incorporation applies to which kind of company.

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This article gives a low-down on the various
types of incorporations as per company law that
may help businesses understand the process of
incorporation in India.
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Incorporation involves the transformation of a
business into a legal entity which is recognized
by law. A business becomes a separate corporate
entity after incorporation. There are various
types of companies that a business can get
incorporated as.
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These include private limited companies, public
limited companies, one person companies, limited
liability partnership, part IX companies, section
25 companies, and foreign companies.
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The main procedure for incorporation is almost
the same for all these companies, except for a
few minor differences.
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Private Limited company
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In order to get a public company incorporated as
per company law, the applicant is first required
to propose a minimum of one and a maximum of six
names for the proposed company.
Incorporation of company as a private company
requires the business to have a minimum of two
directors a paid up capital of at least one lakh
rupees. A private limited company is that company
which raises capital through private shares or
personal deposits.
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He should check the availability of the proposed
names online and then submit an application to
the Registrar of Companies (RoC) so that the name
of the company can be approved and registered.
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Corporate law firms often assist with name
availability search and also suggest which kinds
of names are appropriate and acceptable for the
company. After the name is registered, the
applicant has to apply for a Director
Identification Number (DIN) that is to be
assigned to each of the company's directors.
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Applications for digital signatures have to be
made as well for all company directors. The
applicant also has to file other forms such as
form 1, form 18 and form 32. Arrangements will
also have to be made for the Articles of
Association and the Memorandum of Association.
These documents are to be signed and stamped.
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All the forms along with signed and stamped
documents have to be submitted to the RoC along
with the registration fee and the company name
availability letter issued at the time of name
registration.
If everything goes well, the certificate of
incorporation is issued by the RoC.
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Public Limited Company
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The procedure for incorporation of a public
limited company is the same as that for a private
company except that additional forms (form 29 and
form 20) have to be submitted along with
Statement in Lieu of Prospectus.
A public limited company raises capital through
issues of shares and public deposits. For
incorporation as a public limited company, the
business needs to have a minimum of three
directors, seven subscribers and five lakh rupees
minimum paid up capital.
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Corporate legal services can be sought by
businesses to avoid confusion over the mandatory
and minimum requirements for company
incorporation.
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One Person Company
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The Companies Act of 2013 has made a new addition
- the One Person Company, to enable single
shareholders in getting their businesses
incorporated. In such as company, there is only
one shareholder who can also be the company's
director.
Upto fifteen directors are allowed for a one
person company. Such a company has all the
benefits of a private limited company.
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For incorporation of company as a one person
company, a minimum paid up capital of one lakh
rupees is required. The procedure for
incorporation is the same as private limited
company.
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Limited Liability Partnership
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The registration for name reservation for LLP is
done by submitting form 1. After this, the
applicant has to submit form 2 for incorporation
of company.
Details of partners and their consent to act as
partners is to be declared in this form.
Following this, an LLP agreement is made under
Section 23 of the LLP Act.
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It then has to be filed through eForm 3 with the
registrar within 30 days following company
incorporation.
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Part IX Company
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Part IX companies also include joint stock
companies. These have a nominal share capital or
permanent paid up capital divided into shares.
This company has seven or more members. It is
registered under the Companies Act, 1956, Part
IX.
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The same procedure of a private company
incorporation is applied for part IX company
along with a few additional forms, namely - form
37 and 39.
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Section 25 Company
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The income of a section 25 company is not
distributed among the company members. For
incorporation of company, an eligible non-profit
business has to file form 1A for name reservation
and approval followed by application for DIN and
digital signature certificate DSC.
A section 25 company is a non-profit organization
that promotes arts, science, charity, and so on.
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Form 24A, 1, 18 and 32 also have to be submitted.
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Foreign Company
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If a foreign company aims at establishing a
business in India and wishes to get it
incorporated, it will have to submit form 44 with
the digital signature of an authorized
representative.
DIN is not required but the DSC is a compulsory
requirement.
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In addition to these companies, businesses can
also register under sole proprietorship. However,
starting such a company does not require
registration although other requirements such as
licenses, import export code, etc have to be
taken care of.
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All the forms can be obtained from the Ministry
of Corporate Affairs website. The website also
describes the step by step procedure for company
incorporation.
The forms along with documents can be submitted
online. It is advisable to avail corporate
advisory services for company incorporation to be
able to get a business incorporated without major
hurdles.
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Accuprosys is one of the best corporate legal
service companies in India. The company, based in
Hyderabad, has a good reputation and is going
strong since its establishment.
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