Question

Answer the following question:

Explain briefly the steps involved in the incorporation of a company

Answer 1

Following steps are undertaken to incorporate a company :

(1) Obtain Digital Signature Certificate (DSC): Digital signature is a signature of a person in digital (electronic) form. A digital signature is used to sign on e-documents. DSC is required for the persons authorised to sign e-documents. Promoters and the first directors of the proposed company are required to obtain DSC by making an application to the certified authority.
(2) Register DSC in the name of the Director with the Ministry of Corporate Affairs (MCA): The promoters and the first directors have to register their DSC with the MCA. MCA records and maintains the details such as their DIN, personal details, etc. of every promoter and director.
(3) Obtain Director Identification Number (DIN): Every director who is appointed by the promoters must have DIN i.e. Director Identification Number. The proposed directors and promoters, who do not have their DIN, have to apply for DIN in electronic form SPICe 32 at the time of incorporation.
(4) Apply for Reservation of Name: The promoters have to obtain approval for the proposed name of the company from the Central Registration Centre (CRC) by an ailing form called RUN (Reserve Unique Name) with the prescribed 'fees through MCA portal (www.mca.gov.ln). After verifying the database, CRC gives its approval for the proposed name and reserve the name for a period of 20 days from the date of application.
(5) Finalize Memorandum of Association and Articles of Association: For incorporation of the company, promoters have to submit two important documents viz. Memorandum of Association and Articles of Association. Memorandum of Association lays down the aims and objects of the company and Articles of Association contains information regarding the internal management of the company. The promoters take help of professionals such as legal experts, C.A., company secretary, etc. to finalize the draft Memorandum of Association and Articles of Association promoters have to send a copy of Memorandum of Association and Articles of Association to one or more stock exchanges If such pr0posed company wants to be a listed company.
(6) Signing, stamping and dating of Memorandum and Articles of Association: The subscribers to Memorandum of Association must sign the Memorandum of Association and Articles of Association in the presence of at least one witness who has to attest the signatures and sign. The names, descriptions, addresses, occupations, etc. of the subscribers and witnesses are mentioned on the Memorandum of Association and Articles to be stamped as per the provisions of the Indian Stamp Act, 1899. Due stamp duty is required to be paid at the time of Incorporation.
(7) Preparing other necessary documents: A written consent of the Directors or promoters to act as first directors of the company. Such written consent must be in the prescribed format as per Companies Act, 2013, and must be duly signed by each director or promoter. The details of the manager, secretary, etc. should be recorded for filling purposes. A statutory declaration should be taken from the subscribers and first directors that they have not convicted of any offence in connection with the promotion, formation and management of any company during the preceding 5 years. They also have to give written undertaking that all the documents filed with Registrar are correct, true, and complete.
(8) Address for communication and notice of Registered office address: At the time of incorporation, promoters have to give an address for communication. A company is required to have a registered office within 30 days of incorporation.
(9) Obtain a statutory declaration: A statutory declaration stating that all the legal requirements of the Act necessary for the incorporation have been complied with. This declaration must be signed by an advocate, practicing company secretary, a Cost Accountant or Chartered Accountant, etc. who are engaged in the formation of the company.
 (10) Filling of application and documents for Incorporation of a company with R0C: Promoters have to submit an application to the Registrar of Companies (ROC) in the prescribed form along with all the necessary documents and prescribed fees for incorporation.
(11) Obtaining Certificate of Incorporation: The Registrar of Companies (ROC) will, then, scrutinize the documents and, if they are in order. He will enter the name of the company in the Register of Companies and will Issue a Certificate of Incorporation.