For commencing any type of business in India, it is vitally imperative to give that legal business status. In our country, there are arrays of legal structures such as Partnership firm, sole proprietorship, LLP, Partnership, Private limited company, etc., available to select from, and determination of the form of business structure is one of the critical decisions before commencing a business. Let us assume that after determining the pros and cons of each of the business structures, you wish to establish your business in the form of a company; the next critical question that will arise is how to get a certificate of incorporation to form a company?
What is a certificate of incorporation?
A certificate of incorporation refers to a legally enforceable document that affirms the company’s formation. Also known as the corporate charter, this document is vitally essential for doing business as a corporation.
General information available in the Certificate of Incorporation
- Corporation’s legal name
- Company’s official address
- Type of corporation
- Business code
- Business purpose
- Authorized person’s name and address
- No of authorized stock shares
- Value of stock shares
- BODs’ names and addresses
- Incorporator’s name and address
- Filing date
What is an ideal occasion to file for incorporation?
In most scenarios, you can file for incorporation with the authority concerned as soon as you decide to kick-start the business operation as a company.
Before making such a decision, you may need to identify the pros and cons of filing as another type of business, such as LLP, partnership firm, private limited company, and so forth.
In general, you must file for incorporation before starting the business activities. In most states, businesses require to file such a document before initiating business activities under the company’s name. In most scenarios, you have to opt for incorporation filing before you can:
- Apply for state or city-specific licenses
- Hire manpower to work in your facilities
- Open a current bank account
- File corporate taxes
If you need a certificate of incorporation before engaging with business undertakings, make sure to plan ahead. Some states take 24 hours or so to process the submission, while others may take weeks. Go through your state’s directions to affirm the average wait time.
Where should you apply for a Certificate of Incorporation?
Knowing whom to confront and where to apply is vital. Just like when you wish to apply for a passport, you immediately get in touch with the concerned passport office; likewise, when you want to apply for a certificate of incorporation, an application is made to the ROCs, i.e. Registrar of Companies[1].
The Companies Act, 2013 is the legislation that regulates incorporated companies. The Ministry of Corporate Affairs is the frontline authority that regulates the company’s affairs via the Registrar of Companies (ROC).
All application for a certificate of incorporation is made electronically to the ROC of the specific state, which is routed via CRC, i.e. Central Registration Centre, a dedicated MCA department.
No company shall stand legally enforceable entity without a certificate of incorporation granted by the ROCs.
An Overview of the fundamental structures of a company
Following are the common business structures available under the Companies Act, 2013, against which a certificate of incorporation can be granted;
- LLP i.e. Limited Liability partnership
- Private limited company
- One Person Company
- Public Limited Company
As an applicant, comprehending these structures become a very deciding factor not only from the perspective of selecting the right type that offers the best fit but also in w.r.t actual incorporation process of your company.
| Private Limited company | Public Limited company | One person company | |
| Minimum Shareholders Required | 2 | 7 | Only 1 |
| Maximum Shareholders Required | 50 | Unlimited | Cannot have more than 1 |
| Directors Required | Min 2 | Min 3 | Min 1 |
| Capital Required | No Minimum requirement | No Minimum requirement | No minimum requirement |
Key Pre-requisites to consider before application filing
An applicant needs to have a DSC in place for all the shareholders, aka subscribers, that will be willing to make an investment in the company. The said individuals would require a class 2 Digital Signature certificate, and it can be secure by applying to MCA recognized agencies.
Actual process for securing a certificate of incorporation
Upon selecting the company’s type and securing DSC for the concerned shareholders, the next step is to indulge in the actual process of incorporation. The section below discusses the same in detail
- Create an Account on the MCA portal
This is the very first step in which you have to create a valid account on the MCA’s official portal. Account creation is non-chargeable and a straightforward process.
- Apply for a name reservation
The second step is the name reservation. You need to use the RUN services available on the MCA portal. The second way to reserve the company’s name is to apply directly via the e-form SPICe+.
While applying for a name reservation, you are allowed to propose two different names. While doing so, make sure that the proposed names are free from any trademark-related issues. The authority may take around three weeks to approve the submitted name.
- Filing of Incorporation forms
Use the following e-forms for filling out the application for a certificate of incorporation. These forms shall be prompted during the incorporation process on the MCA portal.
- Fillip Form: LLP incorporation
- SPICe+ form: For incorporating Private Limited Company and OPC
Documents to be attached while applying for a certificate of incorporation via Spice+ form;
1) Declaration in form called INC-9 from all the shareholders/subscribers
2) Consent from serving directors in form called DIR-2
3) Proof of registered office such as phone bill, electricity bill, gas bill, along with a NOC from the premises’ owner
4) Subscribers and director’s identification proof (Passport/DL/PAN)
5) Subscribers and Directors’ address proof (utility bill/bank statement)
6) A declaration issued by a practising CA or cost accountant
- Application and document vetting and grant of certificate of incorporation
After forms are filed with the Ministry of Corporate Affairs and the prescribed fee is paid, the registrar shall vet your forms and documentation for authenticity. The certificate of incorporation shall be granted if ROC fails to locate any issue with the application form,
Conclusion
Certification of incorporation makes your business legally enforceable in the eye of regulatory authorities. One has to meet specific legal requirements for incorporating their business set up under the governing legislation. The drafting of MOA and AOA is a crucial requirement for serving such a purpose.
Read our Article:Section 13 of Companies Act, 2013: Explained
