The Limited Company form of organization is the most popular business entity throughout the world due to the immense features it offers. Perpetual succession, Share transferability, Limited liability are few among them. After the implementation of the online company incorporation system by Ministry of corporate affairs, (www.mca.gov.in), the time spent on registering a company has reduced drastically in India.
The Workflow
There are two stages in the formation of a private company, promotion and incorporation. For a public company, the process has one more stage called "Commencement of Business" apart from the above two stages.
Promotion
It begins with a potential business idea. Certain feasibility studies e.g. technical, financial and economic are conducted to determine whether the idea can be profitably exploited. In case, the investigations yield favourable results, promoters may decide to form the company. Persons who conceive the business idea, decide to form a company, take necessary steps for the same, and assume associated risks, are called promoters. Steps involved in Promotion of a new company are:
- Approval of company’s name is taken from the Registrar of Companies.
- Signatories to the Memorandum of Association are fixed.
- Certain professionals are appropriated to assist the promoters.
- Documents necessary for registration are prepared.
- Necessary consent letter are drafted.
Incorporation
An application is made by promoters to the Registrar of Companies along with necessary documents and registration fees. The Registrar, after due scrutiny, issues the certificate of incorporation. The registration may be refused only in case of a major defect in the documents. The certificate of incorporation is a conclusive evidence of the legal existence of the company.
Steps involved in Incorporation of a new company are:
- Filing of Memorandum and Articles with ROC
- Obtaining the certificate of incorporation
Commencement of Business
A public company raising funds from public has to apply to the Registrar of Companies for the certificate of commencement of business.
Directus offers the following forms of company based on the requirements of the entrepreneur.
Private Limited Company
- Shareholders is below 50.
- Minimumtwo Directors.
- 5 days for incorporation.
Public Limited Company
- Shareholders are above 50.
- 30 days for incorporation.
Section 25
Company
- A company for charitable purposes.
- 30 days for incorporation.