List the steps required to be taken for incorporation of a company?
Answers
1. Choose a name that is both unique and easy to remember.
2. Process documents and register the corporation under the name you have chosen.
3. Be sure to understand the law, especially those related to taxation so as not to violate any of them.
4. Advertise your corporation and the services you offer in different media.
5. Pay the necessary tax to avoid grave consequences.
Explanation:
Steps in Incorporation of a Company
A group of seven or more people can come together so as to form a public company whereas, only two are needed to form a private company. The following steps are involved in the incorporation of a company.
incorporation of a company
1. Ascertaining Availability of Name
The first step in the incorporation of any company is to choose an appropriate name. A company is identified through the name it registers. The name of the company is stated in the memorandum of association of the company. The company’s name must end with ‘Limited’ if it’s a public company and ‘Private Limited’ if its a private company.
To check whether the chosen name is available for adoption, the promoters have to write an application to the Registrar of Companies of the State. A 500 rupee is paid with the application. The Registrar then allows the company to adopt the name given they fulfill all legal documentation formalities within a period of three months.
2. Preparation of Memorandum of Association and Articles of Association
The memorandum of association of a company can be referred to as its constitution or rulebook. The memorandum states the field in which the company will do business, objectives of the company, as well as the type of business the company plans to undertake. It is further divided into five clauses
Name Clause
Registered Office Clause
Objects Clause
Liability Clause
Capital Clause
Articles of Association is basically a document that states rules which the internal management of the company will follow. The article creates a contract between the company and its members. The article mentions the rights, duties, and liabilities of the members. It is equally binding on all the members of the company.
3. Printing, Signing and Stamping, Vetting of Memorandum and Articles
The Registrar of Companies often helps promoters to draw up and draft the memorandum and articles of association. Above all, with promoters who have no previous experience in drafting the memorandum and articles.
Once these have been vetted by the Registrar of Companies, then the memorandum of association and articles of association can be printed. The memorandum and articles are consequently divided into paragraphs and arranged chronologically.
The articles have to be individually signed by each subscriber or their representative in the presence of a witness, otherwise, it will not be valid.
Want to know the Promoters Contract ?
4. Power of Attorney
To fulfill the legal and complex documentation formalities of incorporation of a company, the promoter may then employ an attorney who will have the authority to act on behalf of the company and its promoters. The attorney will have the authority to make changes in the memorandum and articles and moreover, other documents that have been filed with the registrar.
5. Other Documents to be Filed with the Registrar of Companies
The First – e-Form No.32 – Consent of directors
The Second – e-Form No.18 – Notice of Registered Address
The Third – e-Form No.32. – Particulars of Directors
What are the Disadvantages of Incorporation ?
6. Statutory Declaration in e-Form No.1
This declaration, furthermore states that ‘All the requirements of the Companies Act and the rules thereunder have been compiled with respect of and matters precedent and incidental thereto.’
7. Payment of Registration Fees
A prescribed fee is to be paid to the Registrar of Companies during the course of incorporation. It depends on the nominal capital of the companies which also have share capital.
What are the Advantages of Incorporation?
8. Certificate of Incorporation
If the Registrar is completely satisfied that all requirements have been fulfilled by the company that is being incorporated, then he will register the company and issue a certificate of incorporation. As a result, the incorporation certificate provided by the Registrar is definite proof that all requirements of the Act have been met.
