Incorporating a Company - Approval of Name

The very first step in the formation of a company is the approval of the name by the Registrar of Companies (ROC) in the State/Union Territory in which the company will maintain its Registered Office. Certain conditions are there in the name approval of the company: for instance, there should not be an existing company by the same name.Further, the last words in the name are necessary to be "Private Ltd." in the case of a private company and "Limited" in the case of a Public Company. The application should mention minimum four suitable names of the proposed company, in order of preference. The ROC generally informs the applicant within seven days from the date of submission of the application, whether or not any of the names applied for is available. The name is valid for a period of six months , once the name is approved, and within this time Memorandum of Association and Articles of Association together with the miscellaneous documents should be filed. If one is unable to do so, an application may be made for renewal of name by paying additional fees.It normally takes Approximately two to three weeks to incorporate a company depending on where the company is registered, after obtaining the name approval.

 

Memorandum and Articles

For the purpose of incorporation of a company, The Memorandum of Association and Articles of Association are the most important documents to be submitted to the ROC. The Memorandum of Association is a document that sets out the constitution of the company.

The Memorandum of Association contains the objectives and the scope of activity of the company and also defines the relationship of the company with the outside world.

The Articles of Association contain the rules and regulations of the company for the management of its internal affairs. While the Memorandum specifies the objectives and purposes for which the Company has been formed, the Articles lay down the rules and regulations for achieving those objectives and purposes.

The ROC will give the certificate of incorporation after the essential documents are presented along with the requisite registration fee, which is scaled according to the share capital of the company, as stated in its Memorandum. On receipt of its certificate of incorporation a Private Company can commence its business.

There is a option with Public Company of inviting the public for subscription to its share capital. Accordingly, the company has to issue a prospectus, which provides information about the company to potential investors. The information to be contained in the prospectus is specified by the Companies act.

The prospectus has to be filed with the ROC before it can be issued to the public. In case the company decides not to approach the public for the necessary capital and obtains it privately, it can file a "Statement in Lieu of Prospectus" with the ROC. The ROC issues a Certificate of Commencement of Business to the public company, on fulfillment of these requirement.

 

Certificate of Incorporation

After the duly stamped Memorandum of Association and Articles of Association, documents and forms are filed and the filing fees are paid, the ROC scrutinizes the documents and, if necessary, instructs the authorised person to make necessary corrections. Thereafter, a Certificate of Incorporation is issued by the ROC, from which date the company comes in to existence. Receiving of Certificate of incorporation generally takes one to two weeks from the date of filing Memorandum of Association and Articles of Association. Although a private company can commence business immediately after receiving the Certificate of Incorporation, a public company cannot do so until it obtains a Certificate of Commencement of Business from the ROC.

 

Miscellaneous Documents

Along with Memorandum of Association and Articles of Association on payment of filing fees (depending on the authorised capital of the company) following are the documents/forms stated below are to be filed

  • Declaration of compliance, duly stamped
  • Notice of the situation of the registered office of the company
  • Particulars of Directors, Manager or Secretary
  • Authority executed on a non-judicial stamp paper, in favour of one of the subscribers to the Memorandum of Association or any other person authorizing him to file the documents and papers for registration and to make necessary corrections, if any
  • The ROC s letter (in original) indicating the availability of the name.