STEPS FOR COMPANY FORMATION

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1 STEPS FOR COMPANY FORMATION START SELECTION OF THE TYPE OF THE COMPANY APPLY FOR DIRECTORS IDENTIFICATION NUMBER AND DIGITAL SIGNATURES SELECTION OF NAME FOR THE PROPOSED COMPANY AND E-FILING OF FORM 1A. DRAFTING OF MEMORANDUM AND ARTICLES OF ASSOCIATION. STAMPING, DIGITALLY SIGNING AND E-FILING OF VARIOUS DOCUMENTS WITH THE REGISTRAR. PAYMENT OF REGISTRATION FEE TO THE ROC OBTAIN A CERTIFICATE OF COMMENCEMENT OF BUSINESS FROM THE ROC (IN CASE OF A PUBLIC COMPANY) 1.SELECTION OF THE TYPE OF COMPANY END

2 The Promoters of a company may be individual entrepreneurs or body corporate. They have the power of defining the object of the company and deciding various matters for the company proposed to be incorporated like (i) Purposes for which the company is to be incorporated (ii) Proposed scale of operations (iii) Capital involved (iv) Directors, etc. The promoters can select type of the company as they wish to form themselves into private company, public company, non-profit making company etc. Major difference between private limited company & public limited company are: REQUIREMENTS IN PUBLIC LIMITED COMPANY IN PRIVATE LIMITED COMPANY NO. OF MINIMUM MEMBERS 7 2 NO. OF MINIMUM DIRECTORS 3 2 MINIMUM AUTHORISED CAPITAL 5 Lac 1 Lac CERTIFICATE OF COMMENCEMENT OF BUSINESS yes No 2. APPLY FOR DIRECTORS IDENTIFICATION NUMBER AND DIGITAL SIGNATURES: 2.1 DIRECTORS IDENTIFICATION NUMBER (DIN) Every individual, intending to be appointed as director of a company shall make an application for allotment of Director Identification Number (DIN) to the Central Government in the prescribed DIN Form. Therefore, before submission of e-form 1A all the directors of the proposed company must ensure that they are having DIN and if

3 they are not having DIN, it should be first obtained.specific care should be taken that a person cannot have more than one DIN, therefore, a DIN once obtained shall serve the requirement for all companies in which he is a director or intended to be a director. 2.2 REQUIREMENT FOR HAVING DIGITAL SIGNATURES Every documents prescribed under the Companies Act, 1956 is required to be filed with the digital signature of the managing director or director or manager or secretary of the Company, therefore, it is compulsorily required to obtain digital signatures of at least one director to sign the e-form 1A and other documents. 3. SELECTION OF NAME: 3.1 APPLYING FOR ASCERTAINING THE AVAILABILITY OF THE SELECTED NAME: Six names are required to be selected in order of preference after taking notes of numerous provisions, clarifications, circulars and rules made by the Ministry of Corporate Affairs. For Key word of the company name significance should be given in the e-form 1A. The Key word in the company name should be followed by brief object of the company. FOR EXAMPLE: Mr. A incorporates a Private Limited company with object of Textile. The name can be ABC Textiles (P) Ltd. where Key word ABC can be the name of Director/ Promoter, Director/ Promoter Father s name, Director/ Promoter Son s name / Director/ Promoter God etc. The promoters are required to make an application to the concerned Registrar of Companies to be submitted electronically to the Ministry of Corporate Affairs through portal of Ministry. An application shall be in e-form 1A duly digitally signed by any one promoter or managing director or director or manager or secretary of the company along with the required fee of Rs. 500/- for ascertaining whether the selected name is available for adoption by the promoters of the proposed company. If company to be incorporated by any body corporate then board resolution will be required to be attached with Form 1A.

4 3.2 THE BASIC REQUIREMENT OF AUTHORISED CAPITAL WHILE GETTING SPECIFIED NAMES ARE: SR. NO. KEYWORDS REQUIRED AUTHORISED CAPITAL (RS.) 1. CORPORATION 5 crores 2. INTERNATIONAL, GLOBE, UNIVERSAL, CONTINENTAL, INTER-CONTINENTAL, ASIATIC, ASIA, BEING THE FIRST WORD OF THE NAME 1 crores 3. IF ANY OF THE WORD AT (2) ABOVE IS USED WITHIN THE NAME (WITH OR WITHOUT BRACKETS) 50 Lacs 4. HINDUSTAN, INDIA, BHARAT, BEING THE FIRST WORD OF THE NAME. 50 Lacs 5. IF ANY OF THE WORD (4) ABOVE IS USED WITHIN THE NAME (WITH OR WITHOUT BRACKETS) 5 Lacs 6. INDUSTRIES/UDYOG 1 crore 7. ENTERPRISES, PRODUCTS, BUSINESS, MANUFACTURING 10 Lacs 8. SECURITIES, SHARES etc. 10 Lacs 3.3 APPROVAL OF THE NAME: After receipt of completed application in e-form 1A, the Registrar shall intimate whether the proposed name is available for adoption or not. The process of approval of same take 4-5 working days. The confirmation of the name made available by the Registrar shall be valid for a period of six months.in case, if the promoters fail to submit all the required documents for incorporation within that period, then they are required to submit another application after payment of requisite fees. 4. PREPARATION OF THE MEMORANDUM OF ASSOCIATION (MOA) AND ARTICLES OF ASSOCIATION (AOA): Drafting of the MOA and AOA is generally a step subsequent to the availability of name made by the Registrar. It should be noted that the main objects should match with the objects shown in e-form. Memorandum of Association & Article of Association are basically the charter and internal rules and regulations of the companies

5 5. FILING OF DOCUMENTS WITH THE REGISTRAR: Next step for the promoters is to file the following documents with the Registrar for incorporation of the company. The following documents shall be submitted to the Registrar alongwith the adequate filing fees as applicable for registration of the company online with in a period of six months from the date of intimation of availability of name:- 5.1 Memorandum of Association, duly signed by the subscribers and witnessed by chartered Accountant/ Advocate/ Company Secretary, showing the number of shares against their names electronically attached as attachment with Form 1. It should also be properly stamped as per the stamp duty applicable in the State, where the registered office of the company is to be situated. For Delhi, Stamp duty for MOA is Rs.200/-.Simultaneously original stamped copy of the Memorandum of Association shall be submitted with the Registrar of Companies concerned. 5.2 Articles of Association should be duly signed by the subscribers and witnessed, showing the number of shares against their names electronically as attachment with Form 1. It should be properly stamped according to the authorized share capital as per the stamp duty applicable in the state, where the registered office of the company to be situated. For Delhi, Stamp duty for AOA is 0.15% of authorized capital. Simultaneously original stamped copy of the Article of Association shall be submitted with the Registrar of Companies concerned. 5.3 Note for Promoter who are Foreign National / Foreign Company. (i) Not in India at time of Incorporation : The signature of the foreign national or foreign company s authorised signatory, who are not in India at the time of Incorporation, has to be witnessed by public notary & further to be consulte by Indian Embassy of that country. If the foreign national or foreign company s authorised signatory is a citizen of any common wealth nation then they are not required to go to Indian Embassy. Also the power of Attorney in favour of Indian Chartered Accountant/ Advocate/ Company Secretary is to be signed by Sub Divisional Megistrate of local area after the payment of requisite stamp duty applicable on Power Attorney. (ii) In India at the time of Incorporation : The signature in this case can be attested by Chartered Accountant/ Advocate/ Company Secretary. Copy of Passport to be enclosed with Form 1 & this copy to be attested by Registrar of

6 Companies. 5.3 Copy of the agreement, if any, which the company proposes to, enter in to with any individual for appointment as its managing or whole-time director or manager shall be attached in the PDF file. 5.4 Declaration in e-form 1 by an advocate or company secretary or chartered accountant engaged in whole time practice in India or by a person named in the Articles as a director, manager or secretary of the company, that all the requirements of the Companies Act, 1956 and the rules made thereunder have been complied with in respect of registration and matters precedent and incidental thereto, which may be accepted by the Registrar as sufficient evidence of such compliance. It should be carefully noted that details of all the companies in which directors are also director should be given and the names, addresses and other particulars of directors and promoters should be matched with the information provided in the DIN application Form. 5.5 Power of Attorney form should be furnished by all the subscribers in favour of any one subscriber or any other person authorising him to file these documents and to with the Registrar and to obtain certificate of incorporation. The power of attorney should be given on Non-Judicial stamp paper of appropriate value and shall be submitted to the Registrar. 5.6 Other agreement if any, which has been stated in the Memorandum or Articles of Association shall also be filed in the PDF file with the Registrar because in such cases the agreement will form part of this basic document. 5.7 E-Form 18 is to be filed with the Registrar electronically with the digital signatures in regard to location of the registered office. E-Form 18 shall also be certified by the company secretary or chartered accountant or cost accountant in whole time practice. 5.8 E-Form 32 is required to be filed with the Registrar electronically for filing particulars of directors. This is also to be required to be certified by the company secretary or chartered accountant or cost accountant in practice digitally before filing with the Registrar. Consent to act as director on plain paper and authorization to submit e-form 32

7 from all the director should be attached with the e-form E-Form 32/ Form 18 shall be filed along with the adequate filing fee as prescribed under Schedule X of the Companies Act, SCHEDULE X : FEES FOR FILING ANY DOCUMENT FOR WHICH FEES NOT PRESCRIBED UNDER ANY OTHER PROVISION WITH ROC BY COMPANIES. AUTHORISED CAPITAL FEES TO BE PAID (RS.) Up to Rs.1,00, More than Rs.1,00,000 but Less than Rs.5,00, More than Rs.5,00,000 but Less than Rs.25,00, Rs.25,00,000 or more The fees payable to the Registrar at the time of registration of a new company varies according to the authorized capital of a company proposed to be registered as per Schedule X to the Act. Fees can be calculated by the MCA portal. FEES FOR REGITEREING MOA WITH ROC IN RESPECT OF A COMPANY HAVING A SHARE CAPITAL: AMOUNT OF FEES TO BE PAID (RS.) 1. For registration of a company whose nominal share capital does not exceed Rs. 1,00,000. 4, For registration of a company whose nominal share capital exceeds Rs. 1,00,000, the above fee of Rs with the following additional fees regulated according to the amount of nominal

8 capital: (a) for every Rs. 10,000 of nominal share capital or part of Rs. 10,000 after the first Rs. 1,00,000 up to Rs. 5,00, (b) for every Rs. 10,000 of nominal share capital or part of Rs. 10,000 after the first Rs. 5,00,000 up to Rs. 50,00, (c) for every Rs. 10,000 of nominal share capital or part of Rs. 10,000 after the first Rs. 50,00,000 up to Rs. 1 crore 100 (d) for every Rs. 10,000 of nominal share capital or part of Rs. 10,000 after the first Rs. 1 crore 50 Notes : Provided that where the additional fees, regulated according to the amount of the nominal capital of a company, exceeds a sum of rupees two crores, the total amount of additional fees payable for the registration of such company shall not, in any case, exceed rupees two crores. ILLUSTRATION FOR ROC FEES COMPUTATION FOR REGISTERING A NEW PRIVATE LIMITED COMPANY AUTHORISED CAPITAL MEMORANDUM FEES (RS.) FORM 18, FORM 1 FORM 32 ARTICLE FEES (RS.) TOTAL (RS.) 1,00,000 4, ,800 2,00,000 7, ,800 3,00,000 10, ,800 4,00,000 13, ,800 5,00,000 16, ,200 6,00,000 18, ,200 7,00,000 20, ,200

9 8,00,000 22, ,200 9,00,000 24, ,200 10,00,000 26, ,200 12,00,000 30, ,200 15,00,000 36, ,200 18,00, ,200 20,00,000 46, ,200 22,00,000 50,000 1, ,200 25,00,000 56,000 1, ,000 26,00,000 58,000 1, ,000 30,00,000 66,000 1, ,000 35,00,000 76,000 1, ,000 40,00,000 86,000 1, ,000 50,00,000 1,06,000 1, ,08,000 51,00,000 1,07,000 1, ,09,000 75,00,000 1,31,000 1, ,33,000 1,00,00,000 1,56,000 1, ,58,000 1,00,00,000 2,06,000 1, ,08, CERTIFICATE OF INCORPORATION: On the satisfaction of the Registrar that the requirements specified have been complied with by the company, he shall retain the documents and register the MOA, AOA and other documents. Then Registrar will issue a Certificate of Incorporation, normally within 7 days of the receipt of documents.

10 8. COMMENCEMENT OF BUSINESS: A Private limited company and a company not having share capital may commence its business activities from the date of its incorporation. However, a public Limited Company having share capital is required to take certificate of commencement of business before it can commence business.

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