Incorporation of a Public Company
Requirement of minimum number of directors and shareholders:
There is a minimum requirement of directors and shareholders, as mentioned below:
- Minimum Shareholders: 7 (Seven)
- Minimum Directors: 3 (Three)
Statutory compliances
A public or private limited, will have to comply with all the laws, rules and regulations as applicable, including but not limited to the Companies Act, 2013, Foreign Exchange Management Act, 1999, Shops and Establishment Act, Income Tax Act, etc., failing which may result in heavy penalties.
Steps for incorporation:
Approving Authority: Registrar of Companies (RoC) and Reserve Bank of India (RBI)
- Obtaining approval from FIPB (Foreign Investment Promotion Board), if required: In case of Incorporation of wholly owned subsidiary of Indian Company, If the activities of the Indian wholly owned subsidiary fall under Government approval route, then the approval from FIPB has to be obtained.
- Obtaining Digital Signature Certificate (DSC) of proposed directors: DSC is the digital equivalent (i.e. electronic format) of physical or paper certificates. DSC is required to sign any electronic document like e-forms. DSC can be obtained from any licensed certifying authority.
- Director Identification Number (DIN) of proposed directors: It is mandatory for proposed directors to obtain DIN upto 3 under the Companies Act, 2013. through SPICE form . In case of existing companies DIN can be applied electronically in Form DIR-3 on the website of Ministry of Corporate Affairs (MCA), along with required documents and filing fee.
- 4. Applying for availability of name: The foremost step in formation of a company is to apply for availability of name of the proposed company. One must comply with the naming guidelines in this regard. E-form RUN has to be filed with MCA for reservation of name of the proposed company.
- Drafting of Memorandum of Association (MoA) and Articles of Association (AoA): Memorandum of Association (MoA)is the charter of the company and it sets out its scope of activities. Articles of Association (AoA), on the other hand, regulate the internal working of the company. Both these documents are very crucial to the company and hence, are drafted with utmost caution.
- Filing incorporation documents: Once the name is approved from the Registrar of Companies, documents for incorporation have to be filed in Form -32
- Filing of documents for registered office of the company (within 30 days of incorporation): The company must have a place of business as its registered office. Form INC-22 has to be filed along with the required documents, within 30 days of date of incorporation of the company.
- Commencement of Business: It is also necessary to file with Registrar a verification of its registered office as provided under Section 12(2) before commencing a business or exercising any borrowing power