Saturday, 21 November 2015

CONNECTING THE DOTS: IDEATION AND INCORPORATION



Copyright of the image with respective copyright holder

ARE YOU READY?

Do you have enough experience? Do you have sound technical expertise? Do you have sufficient savings? I am not going to manufacturing since that requires huge investment, but what about being a RESCO i.e. Renewable Energy Service Company. Say you are ready with Rs. 15,00,000/- (Rupees Fifteen Lakhs) and sound knowledge in solar system integration.

YOUR COMPANY AND WHY COMPANY 


You have heard a lot about "Start-up", aren't you? Your "Start-up" is nothing but your OWN PRIVATE LIMITED company. WHY COMPANY because company model of business organization provides greater flexibility. Your company is altogether a separate legal entity. You can manage your company but YOU CANT BE the company itself. However, you can control/manage the company by owning shares which are nothing but the economic units constituting the value of the company. A company is a invisible legal entity that holds, runs, manages a pool of assets and liabilities THROUGH YOU.


MINIMUM REQUIREMENTS

(1) Minimum 2 (two) shareholders; (2) Minimum 2 directors (the directors and shareholders can be same person); (3) Minimum authorized share capital needs to be Rs. 1,00,000 (Rupees One Lakh); (4) DSC or Digital Signature Certificates for all the Directors; and (5) DIN or Director Identification Numbers for all the Directors.

STEPS TO YOUR START-UP

Below are the basic steps to start your Start-up, in other words, to incorporate your own company.

STEP 1 (DSC)

If you start your company, it is certain that you are the one who will be managing it. So, you need to become a director. For becoming a director, you need to obtain DIN and for DIN you need a DSC. DSC is used for digitally signing various documents filed with Ministry of Corporate Affairs ("MCA"). There are specified agencies like Tata Consultancy Services, e-Mudhra etc. which are authorized to issue DSC after verifying your documents. 


STEP 2 (DIN)

DIN is mandatory for a director and for apply for DIN your PAN number is essential. Application to be submitted in eForm DIR 3. Section 153 of the Companies Act, 2013 states that an individual intending to be appointed as director of a company needs to make application for allotment of DIN.

STEP 3 (NAME RESERVATION)

You would have thought of a name for your company and would definitely not like anyone else to use it. So here comes the importance of reserving the name of your company. Section 4(4) read with Rule-9 of Companies (Incorporation) Rules, 2014, states that an application for the reservation/availability of name needs to be in Form no. INC.1 along with a fee of Rs. 1,000/-. As per section 4(5), maximum time for which name will be available has been the name will be valid for a period of 60 days from the date on which the application for reservation was made. While applying for reserving a name please ensure the proposed name is not vulgar, insulting, anti national sentiments etc. 

STEP 4 (PREPARING MOA AND AOA)

MOA stands for Memorandum of Association and AOA stands for Articles of Association. These are basically two documents whose preparation is initiated after availability of proposed name of your company. MOA states the objects of your company e.g. TO PROVIDE SERVICES OF A SOLAR SYSTEM INTEGRATOR. AOA captures the internal rules of your company e.g. GENERAL MEETINGS AND ITS PROCEDURES. These documents need to be drafted with utmost care and with help from experts. You and with minimum of another person (your wife, friend, father, brother anyone) need to subscribe (legal term for agreeing to a document) the documents.

STEP 5 (APPLICATION TO INCORPORATE YOUR COMPANY)

Next step is to file all documents to MCA. Rule 12 of Companies (Incorporation) Rules, 2014 states that application for incorporation of a private company to be filed with the registrar, within whose jurisdiction the registered office of your company is proposed to be situated, shall be filed in Form no. INC 7 [Rule 12 to 18] along with form no. INC.22E-Form INC-7 deals is of huge significance with respect to incorporation of a new company. This E-Form is supported by documents such as details of directors/subscribers, the MOA, AOA, evidence of payment of stamp duty etc. Once this E-Form is processed and found complete, a company is registered and Company Identification Number or CIN is allocated, in other words, your company is born.

STEP 6 (COMMENCEMENT OF BUSINESS)

Next step is to file a declaration for commencement of business within 180 days of your company's date of birth and a verification of registered office within 30 days of such date of birth. Your company is now ready to take up contracts and perform the same.

To bring your own company in place, there will be huge back and forth of documents and e-mails and assistance from a practicing Company Secretary is essential. If anyone is interested in starting his/her own company, can reach us through dropping a comment to this post. Greeinvent India has tie-ups with various company secretaries who can help you beginning your dream at a very reasonable cost.

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