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COMPANY FORMATION IN INDIA

COMPANY FORMATION IN INDIA

The Companies Act of 2013 regulates the incorporation of companies in India as well as the establishment of foreign corporate branch offices in India. In India, the Companies Act of 2013 establishes rules and regulations for the formation of both public and private companies.

The approval of the name by the Registrar of Companies (hence referred to as “ROC”) in the State/Union Territory in which the company will have its registered office is the first stage in the establishment of a company in India under the Companies Act, 2013 by filing e form ‘RUN’, i.e., “Reserve Unique Name”. This permission is contingent on a number of factors. There should not, for example, be another company with the same name. Furthermore, in the case of a private corporation, the last words must be “Private Limited” and in the case of a public firm, “Limited.”

The Reserve Bank of India allows foreign enterprises involved in manufacturing and commercial activities to build branch offices in India. By submitting the requisite E- form with the Reserve Bank of India’s Foreign Investment and Technology Transfer Department, an application for authorization to open a branch, project office, or liaison office can be filed.

To open a project or site office, a separate E form is submitted to the Reserve Bank of India’s Regional offices. Whether or not a foreign investor wishes to own 100% of the company, he or she does not need a local partner. The share of the equity not held by the foreign investor can thus be made available to the general public.

Generally, the ROC informs the applicant within one day of the application’s submission whether any of the names requested are available. Once a name has been approved, it is valid for 20 days, during which time the Memorandum of Association and Articles of Association, as well as other documentations, must be filed electronically. The Memorandum and Articles of Association are registered with the Registrar of Companies to start a business.

The ROC scrutinizes the documents and, if necessary, informs the authorized person to make necessary modifications once the fully stamped Memorandum of Association and Articles of Association, documents and forms are filed, and the requisite stamp duty is paid. After the appropriate paperwork and the required registration fee are presented, the ROC will issue the Certificate of Incorporation.

The registration charge is scaled according to the company’s share capital, which will be mentioned in its Memorandum of Association.

Minimum number of directors and shareholders:

a) A minimum of two directors and two shareholders are necessary to form a Private Limited Company, among one of the directors has to be a person of Indian Origin and Resident of India.

b) A Public Limited Company must have a minimum of three directors and seven subscribers to be formed.

When a private company receives its certificate of incorporation, it can begin doing business. A public firm can invite the general public to subscribe to its share capital. As a result, the company must release a prospectus, which gives potential investors with information about the company. The information that must be included in the prospectus is specified by the Companies Act. Before the prospectus can be distributed to the general public, it must be lodged with the ROC. If a company prefers to raise funds privately rather than through the public market, it can file a statement in lieu of prospectus with the ROC. The ROC grants a Certificate of Commencement of Business to the public company if these requirements are met. The company can begin operations as soon as it receives this certificate.

To simplify, a company is formed by filing the Memorandum and Articles of Association with the Registrar of Companies in the state where the proposed corporation’s main office will be situated. The ROC scrutinizes the paperwork and, if necessary, informs the authorized person to make necessary modifications once the fully stamped Memorandum of Association and Articles of Association, documents and forms are filed, and the filing costs are paid. After the needed paperwork are presented, together with the required registration fee, which is scaled according to the company’s share capital, as indicated in its Memorandum, the ROC issues the certificate of incorporation.

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