Private Limited Company is the most preferred business structure by entrepreneurs today. However, there are some dos and don’ts involved while setting up a private limited company which you should be aware of for smooth incorporation.
Incorporating A Private Limited Company: Overview
Private Limited Companies are governed by the Companies Act, 2013 under the Ministry of Corporate Affairs (MCA). The MCA has made the process of Company Registration simple, thereby enhancing the ease of doing business in India. Know about Incorporating A Private Limited Company in 2024!
According to Section 3(1) of the Companies Act, 2019, an organisation can be formed by:
- Seven or more people, if the company has to be a public company
- Two or more people, if the company has to be a private company
- One person, if the company has to be One Person Company, that is to say, a privately owned company.
Step For Company Incorporation Under Companies Act 2013
Step 1: Obtain DIN for proposed directors
DIN is an eight-digit Directors Identification Number. According to Section 153 of the Companies Act, 2013, each individual who is selected as director of the organization will file an application in e-Form DIR 3 alongside recommended fees. But, the application for designation of DINs to the projected first directors in regards to new organizations will be made in SPICe Form.
The documents required for DIN are a passport size photograph, self-attested address proof copy, and PAN card copy of the applicant.
Step 2: Obtain DSCs of Subscribers
Digital Signature Certificates is a secured digital key that validates the identity of the certificate holder. A digital certificate can be handed electronically to confirm one’s identity, access data or services online, or sign documents electronically. As the MCA has made it easy for company registration online, the DSC of each subscriber is required. The subscribers and witnesses are expected to affix their digital signatures to the e-MoA and e-AoA.
The documents required for DSC are ID proof, PAN card, address proof, and attesting officer proof
Step 3: Verify the Company’s Name Availability
Ensure availability of the selected name of the organization at the MCA Company Name Search website using the provided link.
Additionally, the projected name of the organization can likewise be held through the RUN web service. RUN (Reserve Unique Name) is simple to utilize web administration for booking a name for a new organisation or change of name for any current organization. Likewise, the applicant needs to apply through RUN for reservation of the proposed organization name alongside payment of relevant charges, which at that point will be handled by the Central Registration Centre (CRC).
Step 4: Draft MoA & AoA of the Firm
Memorandum of Association (MoA) stands for the deed of the company. It is an officially authorised document prepared during the formation and registration process of a company to define its relationship with shareholders and it specifies the objectives for which the company has been formed.
An Article of Association (AoA) outlines the rules and regulations of the company’s internal management. It outlines the duties, rights, and powers of the management of the company. Similarly, it is an officially authorised document prepared during an organisation’s establishment and registration procedure to characterise its association with investors and it determines the aims for which the firm has been built.
Step 5: File SPICE Form – INC 32
SPICe Form (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. Moreover, this e-Form is accompanied by supporting documents including details of Directors & subscribers, MoA and AoA, etc.
Once the e-Form is processed and found complete, the company would be registered and CIN would be allocated. Also, DINs get issued to the proposed directors who do not have a valid DIN. Moreover, three directors are allowed to use this integrated form for filing applications for the allotment of DIN while incorporating a company. Moreover, PAN and TAN would get issued to the company.
You are no longer concerned about coming up with a firm name. To find a list of available firms, use the Vakilsearch Company Name Generator.
SPICE Form is to be filed with the Registrar of Companies along with accompanying documents:
- Form DIR-2 – statement from first directors
- Statement by Directors- regarding credits
- DIN affirmation by proposed directors
- INC-9 affirmation by first subscribers and directors
- Directors’ interest
- Memorandum of Association (can be recorded as eMoA in Form INC 33)
- Articles of Association (can be recorded as eAoA in Form INC 34)
- Statement by the director if any agreement of sector regulator is required
- Registered office address proof
- Proof of address and identity of all the subscribers
Step 6: File form INC 35 or form AGILE
Form AGILE is an application for GST number, Employees State Insurance Corporation (ESI) registration and Employees Provident Fund (EPF) registration. Likewise, startups who are looking to register their companies through SPICe e-form can apply for GSTIN or Establishment Code as provided by EPFO or Employer Code as provided by ESIC through e-form (INC-35).
This procedure will be appropriate for companies incorporated under MCA through the SPICe application. Similarly, different classes of applicants (Tax Collector, Tax Deductors, Casual Taxable Individual, ISD, and so forth) for GSTIN should pursue the current procedure of enlistment through the common portal for GST registration.
However, it is discretionary to apply for GSTIN, Establishment code, or Employer Code at the hour of consolidating the organisation.
Post-Incorporation Procedures
Step 7: Authentication of Registered Office in INC 22 Form
According to Section 12, Companies Act, 2013: https://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf, organisations must furnish their registered office address with the Registrar of Companies within 30 days of incorporation. Moreover, as per Rule 25, the Companies Incorporation Rules, 2014, the confirmation of the enlisted office is required to be documented in form No.INC.22 alongside specified expenses.
The Form INC 22 shall be filed together with the accompanying documents with the:
- Enrolled document of the title of the locations of the registered office in the name of the firm;
- Signed and attested copy by a notary of rent or lease agreement in the name of the firm alongside a duplicate of rent paid receipt (the most recent one month);
- Similarly, approval from the proprietor or approved inhabitant of the properties alongside the verification of possession or tenancy approval, to utilise the property by the organisation as its registered workplace;
- Further, most recent two months proof of any utility service like gas, telephone, electricity, etc. as address proof of the location in the document or the name of the owner.
Step 8: Requirement of Company Name Board & Official Publications
According to Section 12(3), the Companies Act, 2019, each organisation shall hold
- company’s name, and
- the address of the company’s registered workplace.
Also, keep the equivalent ready at the entrance of the office or spot wherein its business operations are running, in an obvious situation, in clear letters, in both English and the local language of the relevant place.
The organisation ought to get its company name, registered office address, and Corporate Identity Number alongside phone number, email, fax number (if any), and website addresses (if any), all printed in business letters, letter papers, billheads, and in every notification and other official publications.
Step 9: Declaration to be Documented by the Directors Within 180 days
As per Section 10A, Companies Act, 2013, an organisation incorporated after the initiation of the Companies (Amendment) Ordinance, 2019 and having a capital share ought not to start any business or exercise any powers except if:
- A statement is documented by a director within 180 days of incorporating the company with the Registrar that each subscriber to the memorandum has share value consented to be taken by them on the date of creation of such an assertion, and confirmed in INC 20A Form alongside the charges as might be agreed.
- Moreover, the organisation has filed with the Registrar a confirmation of its registered firm in the INC 22 Form (which we have just discussed in Step 7).
Step 10: Selection of Auditor
As indicated by Section 139(1) of the Companies Act, 2013, each organisation is required to name an individual or a firm; as an auditor at the initial annual general meeting of the organisation, who will hold the workplace from the end of that meeting till the end of its 6th annual general meeting.
By following all the above steps, an organisation can be incorporated and established effectively. Similarly, after incorporation, the organisation accomplishes the status of a separate legitimate body.
As you can see, these 10 steps can be quite the hassle and a burden. You can choose to get it done smoothly with the help of professionals from Vakilsearch at a nominal cost. Hence, drafting and filing of all the documents and forms will be taken care of on your behalf.
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