Provision and
issues relating to Incorporation
Companies Act 2013 and Companies (Incorporation) Rules 2014
1.
Kinds of Companies that can be
formed:
15 types of companies can be formed under
the new Companies act 2013. They are broadly falling under the head Public, Private and One Person
Company.
2.
One Person Company (OPC)
Formation
Criteria:
1.
The person (sole member and nominee) should be:
a.
A natural person
b.
an Indian citizen and resident
2.
Minor cannot be a member or nominee or hold share with beneficial
interest
Limitations:
-
The Person (ONE PERSON) shall be a sole member / nominee
in only one company
-
If the person becomes a member in another one person
company then he shall within a period of 180 days meet the eligibility criteria
specified above.
Conversion:
The OPC cannot be converted into a
o company under
Section 8. Ie. Charitable Companies
o company carrying
on Non- Banking Financial Investment activities.
Voluntary conversion not permitted
within a period of 2 years unless its Paid up capital excees 50 lakhs or
turnover exceeds 2 crores
a. Compulsory Conversion:
The OPC shall
voluntarily convert itself within 6 months into a public or a private company
on satisfying the following conditions:
§ increase in the
Paid up capital beyond Rs. 50,00,000/-
§ the avg. turnover
during the period exceeds Rs. 2,00,00,000/-
Procedure for conversion:
-
alteration of its MOA and AOA
-
within 6 months from the date of applicability of the
above conditions give a notice of its cessation as a OPC and conversion into
such company to the registrar.
b.
Voluntary
Conversion:
-
OPC may voluntarily convert after complying with the
provisions applicable for a Pvt. or a Public Ltd. Co.
Penalty:
Fine:extends to Rs.
10,000 + (Rs. 1000 for every day after the first day during which such
contravention continues).
Conversion of Private Company into
One Person Company
-
Paid up capital : Rs. 50,00,000 or less
OR average annual turnover less
than 2 crores
-
Resolution to be passed: special resolution.
-
No objection: to obtain a no objection letter from the member and
creditors
-
Filing of documents with the Registrar: The OPC to file the spl. resolution
along with the respective documents with the registrar within 30 days.
-
Issue of Certificate: The registrar on being satisfied shall issue new certificate
of incorporation.
Nomination:
Nomination by the subscriber or
member of OPC
-
The subscriber to the memorandum shall nominate a person
after obtaining prior written consent of the nominee and the name of such
nominee shall be mentioned in the memorandum of One Person Company.
Withdrawal of Nomination:
-
The nominee may withdraw his consent by giving a notice
in writing to such sole members or to the OPC.
-
The sole member shall appoint another nominee within 15
days from the date of receipt of the notice of withdrawal.
Change of Nominee by sole member:
-
The subscriber or member of OPC may, by giving a
intimation in writing to the company change the nominee nominated by him at any
time for any reason.
Death of Sole Member:
On the death of the sole member the
nominee shall become the member and he shall nominate a new member within 15 days
from the date of him becoming a member.
ROC Filing:
c.
Form No. INC 2: for filing the Nomination at the time
of incorporation
d.
Form No. INC 3: for filing the consent of such nominee
i.
At the time or information or
ii.
within 30 days in case of any change
e.
Form No. INC 4: notice
of withdrawal of nomination or change in nomination on him becoming a member
within 30 days
f.
Form No. MGT 14: special resolution
g.
Form No. INC. 6: for
conversion of Pvt Ltd Co. into OPC
3.
Memorandum of Association of the
Company
Object clause:
The Objects clause is to provide the
following:
a.
Objects for which the company is proposed to be
incorporated
b.
Any matter considered necessary in furtherance thereof
Liability Clause:
All the companies to state the
liability of members of the Company, be it limited or unlimited.
Name Clause:
-
No company shall be registered with a name
o identical or too
similar to any existing company’s name
o containing the
words or expressions which is likely to give an impression that the company is
connected with the State or Central Government
o such that, usage
of such name will be an offence under any law in force
Violation of Act:
If a name had been reserved by providing
false information and such offence is discovered:
-
Before incorporation: the reserved name shall be cancelled and the applicant
shall be liable for penalty upto Rs.
1,00,000/-
-
After incorporation, the Registrar may:
o Direct The Company
to change its name within 3 months after passing the ordinary resolution
o Strike off the
name of the company from the Registrar of Companies
o File a Petition
for winding up of the company.
Specimen format of Memorandum of
association is given in Table A,B,C,D and E of Schedule I of the CA 2013.
4.
Articles of Association:
Articles to contain the regulations for
management of the Company
o The company may have entrenchment provisions incorporated in its articles at its Formation or by an amendment agreed by
§ all the members in
case of a pvt co. ;
§ By a special
resolution in case of a public co.
o A notice on the
entrenchment provisions on any incorporation in the articles is to be provided
to the registrar.
The company may adopt all or any of
the regulations contained in Table F,G,H,I,J of Schedule I of the Company Act
2013.
Note: It shall not
prohibit the company from including such additional matters in its articles as
it may consider necessary.
5. Alteration of Memorandum of Association (MoA):
Resolution:
Alteration of MoA can be done only by
passing a Special Resolution
a.
Name Clause:
-
Any change of name of the Company should comply with
regulations relating provisions of name for new companies u/s 4(2)
-
No name change will be allowed if the company is default
in filing its annual returns or financials statements or any documents
-
The process of change in name shall be complete only on
obtaining Fresh Certificate of Incorporation from the Registrar
b.
Shifting of Registered Office within
Same State:
-
Application for confirmation of shifting to be filed with
RD
-
Atleast one month before such filing, :
a.
Publish notice in one English and one vernacular
newspaper
b.
Send individual notice to all creditors & deposit
holders
-
Any objection shall be considered if received within 21
days.
-
In the absence of any objections raised, it is deemed to
have received the consent of all the members, creditors, debenture holders and
others.
-
No shifting shall be allowed if any inspection/
investigation/inquiry has been initiated
c.
Shifting of registered office from
state or union territory to another state:
-
Resolution: Passing a special resolution and altering the MOA of the
Company
-
Filing of Documents: Filing all the required documents along with the fee with
the Central Government
-
The details of creditors and debenture holders shall be enclosed with the
application
-
An affidavit from the directors that no employee shall be retrenched
as a consequence of shifting of the registered office shall also form part of
the application.
-
Acknowledgement copy of the service of the application with the complete
annexure shall be sent to the registrar, chief secretary or the state
government or union territory where the registered office is situated at the
time of filing the application.
d.
Object Clause:
-
if a Company which has raised money from Public through a
prospectus, and some part of such money is still leftover (unutilised) then,No Change in object clause is permitted unlessit is approved by a special
resolution;
-
Such resolution along with details is to be published in
one English and one vernacular newspaper and the dissenting shareholders are
given an opportunity to exit.
-
The notice to be made available on the website also.
Any amendment to the MoA shall come
into effect only after registration of such alteration with the Registrar.
6. Alteration of Articles of Association (AoA)
6. Alteration of Articles of Association (AoA)
-
Alterations to AoA of a Company can be made only through
a Special
resolution passed at a
General Meeting of members of the
Company
-
Any alteration shall come into effect only after registration of such
alteration with the Registrar
Notification of alterations in the
MOA and AOA:Every Alteration made in Memorandum and / or Articles shall be notified
in all copies of Memorandum and / or Articles, as the case may be.
MOA and AOA made available to
members:
Copies of Memorandum, Articles and
specified (under Sec 117) to be provided to members on request, subject to
payment of fees (as prescribed)
7.
Charitable Companies:
Object clause:
Promotion of commerce, art, science, sports,
education, research, social welfare, religion, charity, protection of
environment or any such other object.
Alteration of memorandum / Articles:
Prior approval of the Central
Government is required to alter the memorandum/ Articles of such a Company.
Effect of Violation of the Act:
The Central Government may
-
Revoke the license
-
Order winding up of the company
-
Order Amalgamating it with another company having the SIMILAR OBJECTS.
8. Incorporation of Companies:
8. Incorporation of Companies:
Application:
An application for incorporation of the
company shall be filed with the registrar within whose jurisdiction the
registered office of the company is proposed to be situated.
Signing the memorandum and articles:
-
Indian subscriber/ partner/ director: The subscribers to the memorandum/
directors/ partners as the case may be shall sign on the memorandum on adding
his address, description and occupation as may be required in the presence of
atleast one witness who shall also provide his information as provided by the
subscribers.
-
Foreign national: their signatures on the MOA and AOA along with their
Identity proof shall be notarized by such persons as may be required.
o If the subscriber
is forming part of
§ The
Common wealth: notarized by Public notary in that part of the Commonwealth
§ The
Hague Apostille Convention: notarized before the notary of the country of his origin
and be duly apostilised in accordance with the Hague Convention
§ Outside
the Commonwealth and not a party to the Hague Apostille Convention: before the notary
of such country and the certificate of the notary shall be authenticated by a
diplomatic or consular office empowered or such officials mentioned in sec 6 of
the commissioners of oaths.
-
On his visit to India: If he had visited India and is intending to incorporate
in India then they should hold a valid business visa
-
If he is a person of Indian origin or overseas citizen of India then the business visa is not
required.
Affidavit from subscribers and first
directors:
Affidavit shall be submitted by each of
the subscribers and first directors named in the articles.
Filing of information with the
registrar:
The particulars of every subscribers
and directors to filed with the registrar at the time of incorporation.
Issue of certificate of
incorporation:
The registrar on satisfaction shall
issue a certificate of incorporation.
9. Commencement of Business:
Commencement of business or exercising
any borrowing powers:
-
A Company having share capital cannot commence business
or exercise borrowing powers until it has filed a declaration containing the
following with the registrar within 180 days from the date of incorporation.
o Declaration to be filed by the
directors that the shares that have been taken by the subscriber to the
Memorandum and Articles has been fully paid up.
o The share capital of the company to
be
§ Not less than Rs.
5,00,000/- in case of public company
§ Note less than Rs.
100,000/- in case of a private company
-
The company to file with the registrar a verification of its registered
office.
Relaxation in the Companies Act 2013:
-
The companies need not obtain a certificate of
commencement of business henceforth.
-
They need not enter into any provisional contracts.
10. Registered
office of the Company:
-
Every company shall have a registered office on and from
15th day of its incorporation.
-
Notice of change of the registered office shall be filed
with the ROC within 15 days from the date of such changes.
-
Where the company had changed its name: the company shall
paint or affix or print, as the case may be, along with its name, the former
name or names so changed during the past 2 years on its letter heads, bills,
letter papers, notices, business letters, official publications, hundis, etc…
11. Conversion of Companies:
Any Company registered under any previous
Companies Act, may apply for conversion to any classes of Company specified
under this act, by
-
Making necessary changes to its Memorandum and Articles
for such class of Company
-
Complying with applicable provisions for such class of
Company and
-
Making an application to the Registrar and obtaining a
fresh CoI
12. Holding
of shares by a subsidiary company in holding company:
A Subsidiary cannot hold any shares or
any beneficial interest as member in its Holding Company
13. Service
of Documents
Documents to Company may be served by
any of the following means
-
Registered / Speed Post to the registered office
-
Courierto the registered office
-
Through electronic means and
-
LEAVING DOCUMENTS
AT REGISTERED OFFICE OF COMPANY –What
does this mean???
14. Documents
to Registrar / any Member may be served by any of the following means
-
Post /Regd / Speed Post to the registered office
-
Courier
-
Electronic means
-
Delivery at his office / address
“Courier” means person /agency which delivers
documentand provides PROOF OF DELIVERY
15. Authentication
of Documents:
Unless specified otherwise, any
document or contract made by Company, required to be signed by Company can be
signed by either one of the following
a.
KMP (Don’t they require Board
authorisation in this regard???)
b.
Any other officer duly
authorised by Board
Sanka Indrani, Company
Secretary
Achuthan . R, Company Secretary
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