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FORMATION OF COMPANY IN INDIA

A Company is an artificial person created by Law and having a separate existence of its own.In simple Words, It is a legal entity formed by a group of individuals to engage in and operate a business.

Before we proceed further, we need to understand Why is the Company Formed?

A Company is a corporate body formed to carry out certain activities for a particular purpose. A Company is a Voluntary association of a number of individuals, established for some common purpose of economic gain.

What are the Characteristics of a company?

Legal Person, Artificial Person, Continued Existence, Limited Liability, Freely Transferable etc.

Requirements of Company formation in India

1.Minimum 2 shareholders

For a Pvt Lmt Company Registration, min 2 Shareholder is required. However, maximum no is allowed upto 200 Shareholders. The ShareHolder may be Individual or legal entity.

2.Minimum 2 Directors

Minimum 2 directors are required to register a company.The max no of directors may be 15.However, in spice form, only 3 DIN can be generated.

3.Registered Address & NOC

Proof of Registered office & NOC from the owner is filed with Spice Application.

4.New and Unique Name

The name of the new company must be unique and eligible under the guidelines as prescribed under Law.

5.One Resident Indian Director

One Director should be resident in india.Resident status is not related to the citizenship of the director.

6.Availability of promoters in india

For Company Registration, all proposed shareholders & directors must be physically present in india.

Formation of company involves various stages which are as follows:-

  1. Promotion of a Company

  2. Registration/Incorporation of a Company

  3. Certificate of Incorporation; and

  4. Commencement of the Business.

1.Promotion of a Company

A business enterprise does not come into existence on its own.By the efforts of Individuals, group of people or an institutions, it comes into existence.Thats why , it has to be promoted by some persons or persons.The process of promotion begins with generating an idea and ends when an idea is translated into action.

For Example : Azim Premji is the promoter of Wipro.

The promoter arranges the finance, investigates business ideas, assemble resources and establishes a going concern.

In simple words, we can say they are Pillars of Company who convert the dream of a company into reality.

2.Registration/Incorporation of a Company

A Company is properly formed only when it is duly registered under the Companies Act. It is a registration that brings a company into existence.

In order to get the company registered, the important documents need to be filed with ROC.

  • Memorandum of Association

  • Articles of Association

  • List of Directors

  • Written consent of directors

  • Notice of Address of Registered Office

  • Statutory Declaration when needed

When the needed documents have been filed with the Registrar along with prescribed fees, the registrar investigates the documents and if he is satisfied ,the name of the company is registered . Then the ROC issues a certificate called Certificate of Incorporation.

3.Certificate of Incorporation

On the registration of MOA , AOA and other documents, the registrar will issue a certificate called Certificate of Incorporation.This certificate is the evidence that a company is incorporated and complies with the requirements of Companies Act.

4.Commencement of the Business.

As soon as a private company gets its COI, it can commence its business. A public company only commenced its business only after getting the Certificate of Commence of Business.After the company gets COI, the public company issues a prospectus for inviting the public to subscribe to its share capital.