Please find below the basic procedure for Incorporation of a Company under Companies Act, 2013
1. Obtain Digital Signatures.
Nowadays various document prescribed under the Companies Act, 2013, are 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 a Digital Signature Certificate from authorized DSC issuing authority for at least one director to sign the E-forms related to incorporate like form INC.1 and other documents.
2. Obtain Director Identification Number [Section 153]
As per 153 of the Companies Act, 2013, every individual intending to be appointed as director of a company shall make an application for allotment of Director Identification Number in form DIR.3 to the Central Government in such form and manner and along with such fees as may be prescribed. Therefore, before submission of e-Form INC.1 for availability of name, all the directors of the proposed company must ensure that they are having DIN and if they are not having DIN, it should be first obtained.
3. Name availability for proposed company
As per section 4(4) read with Rule-9 of Companies (Incorporation) Rules, 2014, application for the reservation/availability of name shall be in Form no. INC.1 along with prescribed fee of Rs. 1,000/-. In selection of Company name should be in accordance with name guidelines given in Rule-8 of Companies (Incorporation) Rules, 2014. Note: MCA has prescribed certain rules for name availability so it is advisable to check guidelines for the same before applying for name. Refer Rule-8 of Companies (Incorporation) Rules, 2014.
After approval of name ROC will issue a Name availability letter w.r.t. approval for availability of name for a proposed company. Validity of Name approved by ROC: As per section 4(5), maximum time for which name will be available has been prescribed in the law itself under section 4(5). The name will be valid for a period of 60 Days from the date on which the application for Reservation was made. Note: The applicant cannot start business or enter into any agreement, contract, etc. in the name of the proposed company until and unless a certificate of registration is issued by the registrar of companies as per the provisions of the Companies Act, 2013 and the rules made there under.
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 INC.1. These two documents are basically the charter and internal rules and regulations of the company. Therefore, it must be drafted with utmost care and with the advice of the experts and the other object clause should be drafted in a very broader sense.
As per section 4(6) the memorandum of a company shall be in respective forms specified in Tables A, B, C, D and E in Schedule I as may be applicable to such company. As per section 5(6) the articles of a company shall be in respective forms specified in Tables F, G, H, I and J in Schedule I as may be applicable to such company.
5. Application for incorporation of a private company
As per Rule-12 of Companies (Incorporation) Rules, 2014, application for incorporation of a private and Public company, with the Registrar, within whose jurisdiction the registered office of the company is proposed to be situated, shall be filed in Form no. INC 7 [Rule 12 to 18] along with Form no. INC.22 for situation of registered office of the Company.
6. Declaration in Form No.INC-8 by Professionals.
(As per Rule-14 of Companies (Incorporation) Rules, 2014, A declaration in the prescribed form by an advocate, a CA, CMA or CS in practice who is engaged in the formation of the company, and by a person named in the articles as a director, manager or secretary of the company, that all the requirements of this Act and the rules made there under in respect of registration and matters precedent or incidental thereto have been complied with;).
7.Affidavit from each of the subscriber to the Memorandum in Form No. INC-9.
as per Rule-15 of Companies (Incorporation) Rules, 2014, (an affidavit from each of the subscribers to the memorandum and from persons named as the first directors, if any, in the articles that he is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief;).
Proof of residential address (the address for correspondence till its registered office is established; For verification of signature of subscribers [Pursuant to rule 16 (1) (q) of companies (Incorporation) Rules, 2014 in form no. INC - 10. NOC in case there is change in the promoters (first subscribers to Memorandum of Association).
Proof of Identity (the particulars of name, including surname or family name, residential address, nationality and such other particulars of every subscriber to the memorandum and the particulars of the persons mentioned in the articles as the first directors of the company along with proof of identity, as may be prescribed, and in the case of a subscriber being a body corporate, such particulars as may be prescribed;).
Entrenched Articles of Association, if any. Note: Where the articles contain the provisions for entrenchment, the company shall give notice to the Registrar of such provisions in Form No. INC.7, as the case may be, along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 at the time of incorporation of the company.
PAN Card (in case of Indian national) Copy of certificate of incorporation of the foreign body corporate and proof of registered office address Certified true copy of board resolution/consent by all the partners authorizing to subscribe to MOA Optional attachment, if any As per Rule-17 of Companies (Incorporation) Rules, 2014, the particulars of each person mentioned in the articles as first director of the company and his interest in other firms or bodies corporate along with his consent to act as director of the company shall be filed in Form No.DIR-12 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014. Along with the above details in the Form no.INC.7, Form no. DIR 12 to be filed with the following attachments.
Declaration by first director in Form INC-9 is mandatory to attach in case of a new company. Declaration of the appointee Director, in Form DIR-2; Interest in other entities of director it is mandatory to attach in case number of entities entered is more than one. Optional attachment(s), if any Form no. INC 22: As per Rule 25 of verification of registered office Section 12(2) of the Companies Act, 2013 states that the Company shall furnish to the Registrar verification of its registered office within a period of thirty days of its incorporation in such manner as may be prescribed.
Section 12(4) of the Companies Act, 2013 states that Notice of every change of the situation of the registered office, verified in the manner prescribed, after the date of incorporation of the company, shall be given to the Registrar within fifteen days of the change, who shall record the same.
Along with the above details in Form No. INC.7, Form no.DIR.22 to be filed with the following attachments: Proof of Registered Office address (Conveyance/Lease deed/Rent Agreement along with the rent receipts) etc.; or (the notarized copy of lease / rent agreement in the name of the company along with a copy of rent paid receipt not older than one month; or the authorization from the owner or authorized occupant of the premises along with proof of ownership or occupancy authorization, to use the premises by the company as its registered office); and Copies of the utility bills as mentioned above (not older than two months) (the proof of evidence of any utility service like telephone, gas, electricity, etc. depicting the address of the premises in the name of the owner or document, as the case may be, which is not older than two months).
List of all the companies (specifying their CIN) having the same registered office address, if any; Optional attachment, if any PURPOSE OF THE E-FORM 7 From above we can easily understand that lots of Information is to be arranged for Incorporation of a Company under Companies Act, 2013. So it is also important to understand the purpose of E-Form INC-7. E-Form INC-7deals with incorporation of a new company (other than OPC). This E-Form is accompanied by supporting documents such as details of Directors/subscribers, the Memorandum of Association (Moa) and Articles of Association (AoA) and evidence of payment of stamp duty. Once the E-Form is processed and found complete, a company is registered and CIN is allocated.
Please note the following
User is required to file E-Form INC-7 for incorporation of Company other than OPC within sixty days from the date of application of reservation of name in E-Form INC-1. It is suggested that E-Form DIR-12 and E-Form INC-22 should be filed together at the time of filing of E-Form INC-7 when address for correspondence is the address of registered office of the company.
In case the address for correspondence is not the address of the registered office of the Company, user is required to file INC-22 within 30 days of its incorporation. Stamp duty on E-Form INC-7, Memorandum of Association (MoA) and Articles of Association (AoA) can be paid electronically through the MCA portal and in such case submission of physical copies of the uploaded E-Form INC-7, MoA and AoA to the office of ROC is not required. Payment of stamp duty electronically through MCA portal is mandatory in respect of the States which have authorized the Central Governmentto collect stamp duty on their behalf. Now e Stamp duty payment is to be done online through MCA portal for all the states.
DECIDING THE PARTNERS AND DESIGNATED PARTNERS :
i. DIN number for each designated partner
ii. DSC for each designated partner.
STEP-2 LLP FORM INC-1 APPLICATION FOR RESERVATION OF NAME FOR LLP
i. Name for the proposed LLP
ii. Object of the LLP
STEP -3 LLP FORM INC 2-INCORPORATION OF LLP.
i. subscribers statement of all the partners.
ii. Proof of address of registered office.
iii. Resolution in case body corporate acting as Designated Partner
Step -4 LLP FORM 3 - FILING LLP AGREEMENT
i. Details of Partners
ii. Profit and Loss sharing ratio
iii. Details of contribution
iv. Registered office address
v. Rights and Duties of the Partners.
Meaning Limited Liability Partnership entities, the world wide recognized form of business organization has been introduced in India by way of Limited Liability Partnership Act, 2008. A Limited Liability Partnership, popularly known as LLP combines the advantages of both the Company and Partnership into a single form of organization. In an LLP one partner is not responsible or liable for another partner's misconduct or negligence, this is an important difference from that of a unlimited partnership. In an LLP, all partners have a form of limited liability for each individual's protection within the partnership, similar to that of the shareholders of a corporation. However, unlike corporate shareholders, the partners have the right to manage the business directly .An LLP also limits the personal liability of a partner for the errors, omissions, incompetence, or negligence of the L LP's employees or other agents. Limited Liability Partnership is managed as per the LLP Agreement, however in the absence of such agreement the LLP would be governed by the framework provided in Schedule 1 of Limited Liability Partnership Act, 2008 which describes the matters relating to mutual rights and duties of partners of the LLP and of the limited liability partnership and its partners.
LLP has a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP. Further, no partner would be liable on account of the independent or un-authorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful business decisions or misconduct. Limited Liability Partnership Act, 2008 came into effect by way of notification dated 31st March 2009.
Key Incorporation Requirement
• Designated Partners
• Director Identification Number
• Digital Signature Certificate
• LLP Name
• LLP Agreement
• Registered Office
At least 2 persons (natural or artificial) are required to form a LLP. In case any Body Corporate is a partner, than he will be required to nominate any person (natural) as its nominee for the purpose of the LLP. Following can become a partner in the LLP.
a. Company incorporated in and outside India
b. LLP incorporated in & outside India
c. Individuals resident in & outside India
In case of LLP, there is no concept of any share capital but every partner is required to contribute towards the LLP in some manner. The said contribution can be tangible, movable or immovable or intangible property or other benefit to the limited liability partnership, including money, promissory notes, and other agreements to contribute cash or property, and contracts for services performed or to be performed. In case the contribution is in intangible form , the value of the same shall be certified by a practicing Chartered Accountant or by a practicing Cost Accountant or by approved valuer from the panel maintained by the Central Government. The monetary value of contribution of each partner shall be accounted for and disclosed in the accounts of the limited liability partnership in the manner as may be prescribed .The LLP Agreement must specify the contribution intended to be paid by all the members and the form in which it will be paid.
Designated Partner’ means a partner who is designated as such in the incorporation documents or who become a designated partner by and in accordance with the Limited Liability Partnership Agreement. Every limited liability partnership shall have at least two designated partners who are individuals and at least one of them shall be a resident in India Provided that in case of a limited liability partnership in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such limited liability partnership or nominees of such bodies corporate shall act as designated partners.
Designated Partner shall be: a. Responsible for the doing of all acts, matters and things as are required to be done by the limited liability partnership in respect of compliance of the provisions of this Act including filing of any document, return, statement and the like report pursuant to the provisions of this Act and as may be specified in the limited liability partnership agreement.
b. Liable to all penalties imposed on the limited liability partnership for any contravention of those provisions. Director Identification Number
Every Designated Partner is required to obtain a DIN from the Central Government. If a person already has a DIN, the same can be used for forming LLP.The Direction Identification Number would be used as Unique Identification for the Designated Partner also.
Digital Signature Certificate
All the forms like e form 1, e Form 2, e Form 3 etc which are required for the purpose of incorporating the LLP are filed electronically through the medium of Internet. Since all these forms are required to be signed by the partner of the proposed LLP and as all these forms are to be filed electronically, it is not possible to sign them manually. Therefore, for the purpose of signing these forms, all the Designated Partner of the proposed LLP needs to have a Digital Signature Certificate (DSC).The Digital Signature Certificate once obtained will be useful in filing various forms which are required to be filed during the course of existence of the LLP with the Registrar of LLP.
Selection of the name for the proposed LLP to be incorporated is one of the important process of the entire incorporation process, ideally the name of the LLP should be such which represents the business or activity intended to be carried on by the LLP.
For the purpose of forming a LLP, there should be agreement between the partners interested in forming the LLP to be known as LLP Agreement. The said Agreement forms the basis of the formation of LLP and lays down its founding structure. The LLP agreement is an agreement between the Partners and between the LLP & its partners.
The basic contents of Agreement are:
• Name of LLP
• Name of Partners & Designated Partners
• Form of contribution
• Profit Sharing ratio
• Rights & Duties of Partners
In case no agreement is entered into, the rights & duties as prescribed under Schedule I to the LLP Act shall be applicable. It is possible to amend the LLP Agreement but every change made in the said agreement must be intimated to the Registrar of LLP.
The Registered office of the LLP is the place where all correspondence related with the LLP would take place, though the LLP can also prescribe any other for the same. A registered office is required for maintaining the statutory records and books of Account of LLP. At the time of incorporation, it is necessary to submit proof of ownership or right to use the office as its registered office with the Registrar of LLP.