Company Incorporation Process Under the Companies Act, 2013

Incorporating a company under the Companies Act, 2013 is a structured process that involves multiple legal formalities. The first step is choosing an appropriate business structure, such as a Private Limited Company, One Person Company (OPC), or Limited Liability Partnership (LLP), based on the nature of the business and its objectives. The promoters must obtain Digital Signature Certificates (DSC) for electronic document signing and Director Identification Numbers (DIN) for individuals intending to serve as directors. Next, a unique company name must be reserved through the Ministry of Corporate Affairs (MCA) portal using the RUN (Reserve Unique Name) service. 

Once approved, the company’s foundational documents, including the Memorandum of Association (MoA) and Articles of Association (AoA), must be drafted to outline its objectives, governance structure, and operational framework. The incorporation application is then filed with the Registrar of Companies (ROC) through the SPICe+ (Simplified Proforma for Incorporating a Company Electronically) form, along with necessary declarations, affidavits, and supporting documents, such as proof of the registered office address. 

Upon successful verification, the ROC issues a Certificate of Incorporation (COI), which includes a Corporate Identification Number (CIN), signifying the company’s legal existence. Additionally, companies automatically receive a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) upon incorporation. With official registration complete, the company gains recognition as a separate legal entity, allowing it to conduct business, enter into contracts, own property, and comply with statutory regulations, including tax filings, annual returns, and financial disclosures. 

Ensuring compliance with these legal requirements is crucial for smooth business operations and avoiding penalties. Properly structured incorporation not only offers credibility but also facilitates business growth by attracting investors, securing loans, and establishing trust in the market.

INCORPROTION OF A COMPANY UNDER COMPAIES ACT 2013 - VAKILKARO

Introduction

The incorporation of a company is a crucial step in establishing a business entity in India. The Companies Act, 2013, governs the formation, regulation, and dissolution of companies in India. This Act replaced the Companies Act, 1956, bringing significant changes to simplify procedures and enhance corporate governance. Incorporation of a company provides it with a separate legal entity, perpetual succession, and limited liability for its members.

In this blog, we will discuss in detail the incorporation process, the types of companies, required documents, and compliance requirements under the Companies Act, 2013.

Types of Companies under Companies Act, 2013

Before incorporating a company, it is essential to understand the different types of companies permitted under the Act. These include:

  1. Private Limited Company – Requires at least two members and two directors with a maximum limit of 200 members. Shares cannot be freely transferred.
  2. Public Limited Company – Requires at least seven members and three directors. Shares can be freely traded in the stock market.
  3. One Person Company (OPC) – A company that has only one person as a member. It is suitable for small businesses and entrepreneurs.
  4. Section 8 Company – A non-profit organization that promotes charitable activities, including art, commerce, science, research, etc.
  5. Producer Company – A company engaged in agriculture, post-harvest processing, and allied activities.
  6. Limited Liability Partnership (LLP) – Though not classified as a company, it provides the benefits of limited liability and flexibility of a partnership.
INCORPORATION OF A COMPANY UNDER COMPANIES ACT 2013

Each type of company has distinct legal and compliance requirements under the Companies Act, 2013.

Pre-Incorporation Requirements

Before proceeding with incorporation, several prerequisites must be fulfilled:

1. Choosing a Business Structure

The choice of the type of company depends on business needs, ownership preferences, and regulatory requirements.

2. Name Reservation (RUN Service)

  • A unique name must be chosen and approved by the Ministry of Corporate Affairs (MCA).
  • The name must not be identical or similar to an existing company.
  • The name should comply with the provisions of the Companies (Incorporation) Rules, 2014.

3. Obtaining Digital Signature Certificate (DSC)

  • Every director and subscriber to the Memorandum of Association (MOA) must obtain a DSC.
  • DSC is required for filing incorporation documents electronically.

4. Director Identification Number (DIN)

  • Each director must obtain a DIN from the MCA.
  • DIN can be applied through the SPICe+ (Simplified Proforma for Incorporating Company Electronically) form.

5. Registered Office Address

  • The company must have a registered office address before incorporation.
  • Proof of address, such as rental agreements or utility bills, must be provided.

Step-by-Step Process of Company Incorporation

Step 1: Name Approval (RUN Service)

  • Login to the MCA portal and submit an application for name reservation through the RUN (Reserve Unique Name) service.
  • Provide two name options in order of preference.
  • MCA approves the name if it meets legal criteria and is not already in use.

Step 2: Filing SPICe+ Form

  • The SPICe+ (Simplified Proforma for Incorporating Company Electronically) form is a comprehensive form for company registration.
  • It includes two parts:
    • Part A – Name reservation.
    • Part B – Incorporation application, DIN allotment, PAN, TAN, and EPFO/ESIC registration.

Step 3: Preparation of Incorporation Documents

The following documents must be submitted along with SPICe+:

  • Memorandum of Association (MOA): Defines the company’s objectives and scope of operations.
  • Articles of Association (AOA): Contains rules and regulations for the internal management of the company.
  • Declaration by Directors: A declaration stating compliance with the Companies Act, 2013.
  • Identity Proofs: PAN, Aadhaar, and address proofs of directors and shareholders.
  • Registered Office Address Proof: Utility bill, rental agreement, or NOC from the owner.

Step 4: Verification and Approval by ROC

  • The Registrar of Companies (ROC) verifies the documents and ensures compliance with the law.
  • If all documents are in order, the ROC issues a Certificate of Incorporation (COI) with a unique Corporate Identification Number (CIN).

Step 5: Post-Incorporation Compliance

  • PAN & TAN Application: PAN and TAN are allotted automatically through the SPICe+ form.
  • Bank Account Opening: A company must open a bank account in its name.
  • GST Registration: If the company meets the GST threshold, it must register for GST.
  • Commencement of Business (Form INC-20A): A declaration must be filed within 180 days of incorporation confirming that the subscribers have paid their share capital.

Note: Memorandum of Association (MoA) and Articles of Association (AoA)

The Memorandum of Association(MoA) and Articles of Association(AoA) are foundational documents required for company incorporation under the Companies Act, 2013. The MoA defines the company’s objectives, scope of operations, and relationship with shareholders. It includes key clauses such as Name, Registered Office, Object, Liability, Capital, and Subscription clauses. The AoA outlines internal governance, rules, and operational procedures, including director roles, shareholder rights, and meeting regulations. While the MoA establishes a company’s fundamental purpose, the AoA governs its day-to-day functioning. Both documents must be submitted during incorporation and serve as the legal framework for corporate operations.

Key Compliance Requirements Post-Incorporation

After incorporation, the company must comply with various legal and regulatory requirements:

1. Statutory Registers

  • Register of Members
  • Register of Directors and Key Managerial Personnel
  • Register of Charges

2. Board Meetings and Annual General Meetings (AGMs)

  • The first board meeting must be held within 30 days of incorporation.
  • Private companies must hold at least two board meetings annually, while public companies require four.
  • An AGM must be conducted within six months from the end of the financial year.

3. Filing of Annual Returns (Form MGT-7 & AOC-4)

  • MGT-7: Annual return filed by all companies.
  • AOC-4: Filing of financial statements.
  • Failure to file these returns may result in penalties.

4. Income Tax and GST Compliance

  • Filing of ITR-6 (Income Tax Return for Companies).
  • Monthly/quarterly GST returns if applicable.
  • Tax audit under Section 44AB of the Income Tax Act if turnover exceeds prescribed limits.

5. Audits and Financial Statements

  • Companies must appoint a statutory auditor within 30 days of incorporation.
  • Financial statements must be audited annually and submitted to the ROC.

Advantages of Incorporating a Company

  1. Separate Legal Entity: The company is distinct from its owners.
  2. Limited Liability: Shareholders’ liability is limited to their investment.
  3. Perpetual Succession: The company continues to exist even if owners change.
  4. Credibility & Trust: Enhances trust among investors, customers, and financial institutions.
  5. Easy Transferability: Shares can be transferred easily in a public company.
  6. Tax Benefits: Certain deductions and benefits are available to companies.

Conclusion

Incorporating a company under the Companies Act, 2013, involves a structured process and regulatory compliance. With the introduction of the SPICe+ form, the process has been streamlined, making it easier for entrepreneurs to register a company. However, post-incorporation compliance is equally critical to avoid penalties and ensure smooth operations.

If you are planning to incorporate a company in India, it is advisable to seek professional guidance from legal and financial experts to ensure proper compliance and smooth business operations.

Why Choose VakilKaro for Company Incorporation Under the Companies Act, 2013?

VakilKaro simplifies the company incorporation process with expert legal guidance, ensuring compliance with the Companies Act, 2013. Their professionals handle MoA & AoA drafting, DIN & DSC registration, PAN, TAN, and GST applications, reducing complexities for entrepreneurs. With affordable pricing, transparent processes, and end-to-end assistance, VakilKaro ensures a seamless registration experience. They offer personalized support for Private Limited Company LLP, OPC, and other business structures, ensuring legal accuracy and faster approvals. Whether you’re a startup or an established business, VakilKaro’s expertise guarantees hassle-free incorporation, making them a trusted partner for business setup in India.

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