Incorporation of Companies – Legal Provisions

The Companies Act, 2013 lays out the process for incorporating a company in India. Here are the key legal provisions:

Formation:

• Minimum Members: The number of members required to form a company depends on its type:
  • Public Company: Minimum 7 members Private Company: Minimum 2 members
  • One Person Company (OPC): Minimum 1 member
• Documents Required: The core documents for incorporation include:
  • Memorandum of Association (MOA) outlining the company’s objectives and basic structure
  • Articles of Association (AOA) defining the internal rules and regulations

Registration Process:

• The Companies Act introduces a simplified process for incorporation through SPICe+ form filed online with the Ministry of Corporate Affairs (MCA) website.

Key Sections of the Act:

• Section 3: Defines the formation requirements for various company types.
• Section 4: Deals with the Memorandum of Association (MOA) and its contents.
• Section 5: Covers the Articles of Association (AOA) and its provisions.
• Section 7: Outlines the incorporation procedure upon Registrar approval.

Additional Points:

• Name Approval: You’ll need to get your proposed company name approved by the Registrar to ensure it’s unique and adheres to regulations.
• Registered Office: Every company must have a registered office address within India.

                                                       EXAMPLE

The Companies Act, 2013 governs the incorporation of companies throughout India, and the specific state you operate in doesn’t affect the core legal provisions. However, the registration Companies Act, 2013  process is handled electronically through the Ministry of Corporate Affairs (MCA) portal.

Here’s a breakdown of the key legal provisions for company incorporation:

1. Company Forms (Chapter II):

The Act outlines different company types you can choose from, each with its own minimum membership requirement:

• One Person Company (OPC):1 member, 1 director (minimum)
• Private Limited Company:2 members, 2 directors (minimum)
• Public Limited Company:7 members, 3 directors (minimum)

2. Name Availability and Reservation (Chapter II):

• You’ll need to check for name availability and reserve your desired company name through the MCA portal.

3. Memorandum of Association (MoA) and Articles of Association (AoA) (Chapter II):

• MoA : A document outlining the company’s fundamental information like name, registered office address, objects clause (business activities), and liability clause (limited or unlimited).
• AoA : Internal regulations governing the company’s operations, share capital structure, dividend distribution, meetings, and voting rights. While AoA is mandatory for companies with unlimited liability, it’s advisable for all companies for better governance.

4. Incorporation Application (Chapter II):

• You’ll file electronic forms (SPICe+ etc.) with the Companies Act, 2013 Registrar of Companies (ROC) through the MCA portal. These forms will include details about the company, directors, and subscribers to the Memorandum.

5. Commencement of Business (Chapter XV):

• Once the ROC approves your application and issues a Certificate of Incorporation, your company legally exists.
• However, to commence business activities, a company with share capital needs to file a declaration (INC-20A) confirming that all subscribers have paid for their shares.

FAQ QUESTIONS

General

• What is the process for incorporating a company?

The Companies Act, 2013 along with the Companies (Incorporation) Rules, 2014 lay down the process for incorporating a company. It involves filing electronic forms (SPICe+) with the Ministry of Corporate Affairs (MCA) after obtaining a Digital Signature Certificate (DSC).

• What are the different types of companies I can incorporate?

The Act allows for various company types including Public Companies, Private Companies, One Person Companies (OPC), and Section 8 Companies (for charitable purposes).

Name

• How do I choose a name for my company?

The name should be unique, comply with MCA Companies Act, 2013 guidelines, and reflect the company’s objectives. You can apply for name reservation through SPICe+.

Documents

• What documents are required for  incorporation?

The key documents include Spice+ forms, Memorandum of Association (MOA) outlining the company’s basic information, and Articles of Association (AoA) defining internal governance rules.

• Do I need any specific documents for foreign subscribers or directors?

Yes, documents for foreign subscribers/directors may require notarization and apostille depending on the country’s residency.

Registration Office

• Where should I register the company’s office?

You can choose any location within India for your registered office address. The MOA should specify the state where the office will be situated.

Other FAQs

• What are the minimum requirements for directors and shareholders?

The Act specifies the minimum number of directors and shareholders required for different company types. There are also restrictions on who can be a director (e.g., not be disqualified under the Act).

• What are the timelines for company incorporation?

The MCA usually processes incorporation applications within a few days if all documents are in order.

• Are there any registrations required beyond incorporation?

Yes, new companies need to register for Professional Tax, Employee Provident Fund Organisation  (EPFO), and Employees’ State Insurance Corporation (ESIC) through SPICe +.

CASE LAWS

The Companies Act, 2013 (the Act) is the primary legislation governing the incorporation of companies in India. While the Act itself lays out the legal provisions, there isn’t a direct link between incorporation and specific case law. However, legal interpretations through court cases can be relevant during the process.

Here’s a breakdown of what the Act covers regarding incorporation and how case law can come into play:

Legal Provisions in the Companies Act, 2013:

The Act lays out the requirements and procedures for incorporating different types of companies, including:

• One Person Company (OPC):Requires a minimum of one director and one member [Section 3(1)]
• Private Limited Company: Requires a minimum of two directors and two members [Section 2(68)]
• Public Limited Company: Requires a minimum of three directors and seven members [Section 2(70)]

The Act also specifies the documents needed for incorporation, such as the Memorandum of Association (MOA) and Articles of Association (AOA) [Section 7].

Role of Case Law in Incorporation:

While not directly tied to incorporation itself, case law can be relevant in situations like:

• Naming a Company: Disputes regarding a company name and potential trademark infringement might rely on previous cases [ Aruna Oswal v. Pankaj Oswal & Ors is an example]
• Member/Director Rights and Responsibilities: Legal interpretations on shareholder rights or director duties established through court cases can be important.