15 Jun 2019

Company Incorporation FAQs

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Company Incorporation FAQs

Company Incorporation FAQs

This article shares Company Incorporation FAQs. And specifically relate on opening a company in India. When starting a business, the first thing to do is decide on the organisational structure. The earlier stages of establishing a business are quite crucial. The various options one would come across while choosing the structure would be –
  1. Private Limited Company
  2. One Person Company
  3. Limited Liability Partnership (LLP)
  4. Partnership firm
  5. Proprietorship
In truth, most would prefer to open a private limited company. In this article we share in brief the FAQs while opening a private limited company. We also share some the legal formaties involved in the entire process.

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How to Open a Private Limited company

In our earlier article we shared the procedure to open a private limited company in India. In this article we cover the company incorporation FAQs. These represent the questions we usually come up with during the incorporation process. View our article on how to Open a Private Limited Company.

Background

A quick summary of the process of opening a company in India:

  • There are 2 parties required to open a private limited company. The Directors and shareholders. You need atleast 2 directors and 2 shareholders
  • All members (directors and shares) require a DSC
  • All directors require a DIN
  • Apply for names through either RUN or SPICe form
  • Prepare all documents including the SPICe form, MOA and AOA and submit
  • ROC verifies all documents and if found appropriate, issues COI

Read the entire process on opening a private limited company in India from here. We’ve shared the company incorporation FAQs in detail below.

FAQs

How much time does it take to open a private limited company?

The registration of a company takes anywhere from 1 to 3 weeks. Although It may take more depending on the structure and documents.

Do you need to be physically present for any of the processes?

No. All processes are online. Accordingly, we use DSCs for signatures on eforms.

Who requires a DSC?

So all individuals who intend to become a director must have a DSC. Even shareholders require DSCs. A DSC is mandatory in all cases.

What documents does an application for Digital Signature Certificate require?

  1. Passport size photograph of applicant;
  2. Self-attested Address proof and
  3. Self-attested PAN card

What documents does a DIN application require?

  1.  Passport size photograph of applicant;
  2. Self-attested Address proof; and
  3. Self-attested PAN card.

What documents does company Incorporation require?

  1. NOC and utility bill from the owner for the proposed Registered Office address;
  2. In case premises is rented, rental Agreement with the owner of registered office & Rent receipts;
  3. Consent to act as a Director in form DIR – 2;
  4. Declaration by first subscriber(s) and director(s) in form INC – 9;
  5. Self-attested Identity proof of the first subscriber(s) and director(s).

Are there any general practices for application of Name?

We apply for name approval considering the provisions specifically laid down by the Act. Further, we should understand the following general practices while choosing a name –
 
  1. The name of course should be easy to spell and remember;
  2. The name shall be able to provide a distinct identity to the company;
  3. It should be short & simple;
  4. The name should not contain any word as opposed to public policy or prohibited;
  5. Again, it should not infringe any trademarks registered;
  6. Also, it should not resemble a name similar or identical to any existing company/ LLP.

What is DIN? What does a DIN mean?

DIN stands for Director Identification Number. Its a unique number allotted to the directors. All individuals who want to become directors specifically need to have a DIN. DIN has no expiration date. As allotment is for a lifetime. At any rate, a director can surrender his DIN. Also, it may be withdrawn or expire in case of non compliance with KYC formalites. Having a DIN is mandatory for becoming a director. Hence, obtaining DIN is mandatory to be appointed as Director in any Company. Designated partners in LLPs also required a DIN.

Can you apply for a DIN separately?

Currently the MCA system does not allow for separate application of DIN. That is in case of a new company. So its possible if an individual wants to be a director in a existing company. The director files Form DIR 3 to acquire DIN and become a director in an existing company. SPICe forms allots a maximum of 3 DINs in a single application. So what if there are more than 3 directors at the stage of incorporation? Only 3 directors get alloted a DIN. Others need to apply for it after incorporation.

Is it necessary to have a registered office address at the time of incorporation?

No. You certainly may not have a office at the time of opening your company. This does not stop you from opening your company. Although, on incorporation, you’ll need to fill in additional forms. These should contain the details of the registered office of the company. You have 30 days after the incorporation of the company to finish this.

What does RUN stand for?

There are two ways to apply and reserve a name. On one hand through RUN and the other through SPICe form. RUN form gives more flexibility to the name approval process. Accordingly, we usually reserve names using RUN (Reserve Unqiue Name) form. Also, RUN allows applying for 2 names at one go. And 4 in total. The fee for filing RUN form is Rs. 1,000/-. We enter names in order of preference. We enter the one preferred the most first. Along with the name application we mention the objects of the company. Also, we share the meaning of any coined words or names or significance of words chosen. Approval for a name lasts for 20 days. So we should complete the entire process within 20 days of getting name approval.

What if the name is rejected in the first attempt of RUN?

In case of rejection at the first attempt, the ROC shares the reasons through email. Also, we get another opportunity to share 2 more names. In case of rejection again, we need reapply for the name and pay the fee again

What is an MOA? What is the significance of the MOA?

Both, MoA and AoA are charter the document for a Private Limited Company. Furthermore, MoA is the Memorandum of Association. Above all, the MOA and AOA define the company. The MOA contains the scope of operations of company in brief. It specifically defines the main object and activities of the company.

What is an AOA? What is the significance of the AOA?

Both, MoA and AoA are charter the document for a Private Limited Company. Furthermore, AoA is the Articles of Association. Above all, the MOA and AOA define the company. Though the AOA defines how the objects will be archived. And how the company manages day to day operations.

Can you draft the MOA and AOA by yourself?

Sure. However, its always advisable to get it done through professionals.

SPICe

Both the MOA and AOA are extremely important. And should be drafted very carefully after consultation of professional. But the most important document for incorporation is the SPICe form. The MOA and AOA are filed together with the SPICe forms. We submit the SPICe form (Simplified Proforma for Incorporating Company Electronically) online. Although DSCs are used for signing in the MoA and AoA. As both the MOA and AOA are e-forms. So is the SPICe form. The SPICe form contains all the details of the directors, shareholders and registered address of the company.

Is the stamp duty same throughout the country?

The stamp duty actually differs from state to state. As its levied by the state governments. Check the fee and stamp duty applicable from here.

When does the company actually get incorporated? When can you say that the company registration process is over?

Above all, the Certificate of Incorporation proves that the Company has come into existence. On issue of the COI, we’ve completed the company registration process.

Do we get printed certificates of Incorporation?

No. Since this process is completely online, no direct communications with the ROC exists. You only get the PAN card in hard copy. Everything else should be available in soft copy. Certainly, you may print all these and maintain hard copies.

Do we need to separately apply for the PAN and TAN?

The Government has brought in many ease of doing initiatives. As a result of these initiatives, we’ve seen significant improvements in the process. Now, the ROC processes the PAN and TAN of the company while incorporating the company.

From where to download the forms?

Download the forms from here.

Where to access the company master data on MCA from?

After incorporation, details of the company are always available on the MCA Portal. The portal has details of both the company and the directors. Only on payment of prescribed fee are you able to see the data.

Accordingly, incase you have any doubts, certainly contact us from here. More Company Incorporation FAQs coming soon.

We can be easily reached at communications@goforfiling.com incase you have any questions about the article.

Need help with any registration services, filing or any other compliances or services, we can be reached at the above email.

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