Incorporation of Companies

Incorporation of a company is the process of legally establishing a business entity that is separate from its owners. In India, the incorporation of a company is governed by the Companies Act, 2013 and the rules made thereunder. The process of incorporation involves several steps and requires compliance with various legal formalities. In this article, we will discuss the steps involved in the incorporation of a company in India in detail.

Step 1: Obtaining Digital Signature Certificate (DSC)

The first step in the process of incorporation of a company is to obtain a Digital Signature Certificate (DSC). A DSC is an electronic signature that is used to sign electronic documents and filings with the Registrar of Companies (ROC). It is issued by a certifying authority and is valid for a specified period. Every director and promoter of the company must obtain a DSC before proceeding with the incorporation process.

To obtain a DSC, the applicant must submit an application to a certifying authority along with proof of identity and address. The certifying authority will verify the documents and issue the DSC within a few days.

Step 2: Obtaining Director Identification Number (DIN)

The next step is to obtain a Director Identification Number (DIN) for all the directors of the proposed company. A DIN is a unique identification number assigned to each director of a company. It is required to be quoted in all filings and documents with the ROC.

To obtain a DIN, the director must submit an application to the Ministry of Corporate Affairs (MCA) along with proof of identity and address. The application can be submitted online, and the DIN is usually issued within a few days.

Step 3: Choosing a Name for the Company

The next step is to choose a name for the proposed company. The name should be unique, not similar to the name of any existing company, and should not violate any trademarks or intellectual property rights. The name should also comply with the naming guidelines prescribed by the MCA.

The proposed name can be checked for availability on the MCA website. Once the name is approved, it can be reserved for a period of 20 days by filing Form INC-1 along with the prescribed fee.

Step 4: Drafting of Memorandum of Association (MOA) and Articles of Association (AOA)

The next step is to draft the Memorandum of Association (MOA) and Articles of Association (AOA) of the company. The MOA sets out the objects and purposes for which the company is established, while the AOA contains the rules and regulations for the management and administration of the company.

The MOA and AOA must be prepared in accordance with the provisions of the Companies Act, 2013 and must be stamped and signed by the subscribers to the memorandum. The MOA and AOA must be filed with the ROC in e-form INC-33 (MOA) and INC-34 (AOA).

Step 5: Filing of Incorporation Documents

The next step is to file the incorporation documents with the ROC. The following documents must be filed:

• Form INC-32 (SPICe): This form is used for the integrated process of obtaining DIN, reserving the company name, and incorporating the company. It also includes the mandatory compliance of PAN and TAN.
• Form INC-33 (MOA) and INC-34 (AOA): These forms contain the MOA and AOA of the company.
• Form DIR-12: This form contains the details of the directors of the company.
• Declaration by the Subscribers: This declaration confirms that the subscribers to the memorandum have paid the necessary subscription amount and have agreed to become members of the company.

The forms must be filed along with the prescribed fees and digitally signed by the subscribers, directors and professional certifiers. Once the forms are submitted, the ROC will verify the documents and, if everything is in order, issue a Certificate of Incorporation.

Step 6: Obtaining PAN and TAN

After the company is incorporated, it must obtain a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN) from the Income Tax Department. PAN is a unique 10-digit alphanumeric number assigned to every taxpayer in India, while TAN is a unique 10-digit alphanumeric number assigned to entities that are required to deduct tax at source or collect tax at source.

The application for PAN and TAN can be made online through the NSDL website. The PAN and TAN are usually issued within a few days.

Step 7: Opening of Bank Account

The final step is to open a bank account for the company. The company must have a separate bank account in its own name, and all financial transactions must be carried out through this account. The bank account can be opened with any commercial bank in India by submitting the Certificate of Incorporation, PAN, and other required documents.