How to form a Company in India?

Before we could analyse the procedures for incorporating a company in India, let us have a quick view of some of the basic particulars.

WHAT IS A COMPANY?

1. A Company can be termed as a voluntary association of person incorporated for the purpose of carrying out some business.

2. In the eyes of law, a company is considered as a juristic person.

3. The company can sue and it can be sued.

4. It has its own name and a separate legal entity, distinct from its members who constitute it.

5. A company has its own property; the members (shareholders) can not claim the property of the company as their own property.

6. Though a company is treated as a legal person, it is not considered as a citizen; hence, it doesn't hold any citizenship in this country.

7. The liability of the members (shareholders) of the company is limited to the amount of shares they hold in the company.

8. Shares of a company are easily transferable to any person. It means the business can be transferred from one hand to another.

AUTHORISED SHARE CAPITAL:

The Companies act, 1956 limits the powers of board to issue share within the limit of Authorised Share Captial. It can be increased at any time after complying with certain formalities prescribed under the Act.

The minimum authorised share capital for incorporating a Private Limited company is INR 100,000.

The minimum authorised share capital for incorporating a Public Limited company is INR 500,000.

PAID UP SHARE CAPITAL

Paid-up Share Capital is that portion of Authorised Share Capital for which shares have been issued by the company and shareholders had paid for those shares.

PROMOTERS:

As the name indicates, Promoters are the persons who promote / float / incorporate a company. They stand as the primary persons to take through a company. Promoters are normally been appointed as directors of the company.

Number of Promoters

For incorporating a Private Limited Company a minimum of two promoters are required.

For incorporating a Public Limited Company a minimum of seven promoters are required

NUMBER OF DIRECTORS

For incorporating a Private Limited Company a minimum of two directors are required.

For incorporating a Public Limited Company a minimum of three directors are required.

FORMATION OF COMPANIES UNDER THE COMPANIES ACT, 1956

1. As per the Company law, the name of each company should be unique. As such, the proposed name of the company has to be approved by the Registrar of Companies and blocked till registration. The following is the process to get availability of name

a. Promoters / Directors have to file an application in Form 1A giving the following particulars:

b. Names and addresses of promoters

c. Proposed name of the company

d. Two Alternative names of the proposed company is required if the proposed name is not available

e. Type of company - Private or Public

f. Brief objectives of the company

g. Proposed Directors and their addresses

h. Proposed address of the company

i. Authorised Share Capital

j. Details of Group companies, if any

k. Details of fees paid for name availability

l. Note about significance of the proposed name. This is because regulations have some criteria based on which names are to be allowed

m. Director Identification Number:It is a unique Identification Number allotted to an individual who intends to be appointed as director of a company pursuant to section 266A & 266B of the Companies Act, 1956. DIN is mandatory for all directors

2. Digital Signature Certificate:
The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed
electronically. This is the only secure and authentic way that a document can be submitted electronically. As such, all filings done by the companies under MCA21 e-Governance programme are required to be filed with the use of Digital Signatures by the person authorised to sign the documents.

Application for the availability of name: Apply to the jurisdictional Registrar of Companies to ascertain the availability of name in Form- 1A along with fee of Rs. 500/-. Registrar of Companies normally informs the status of the application within 4 days. If the name proposed is not available, apply again for a fresh name. On approval of name, the Registrar will issue a name allotment letter and will block the name.
3. Memorandum and Articles of Association:

I. Arrange for drafting of the Memorandum and Articles of Association, vetting of the same by the Registrar of the Companies and printing of the same.

II. Arrange for stamping of the Memorandum and Articles of Association as per instructions of Registrar of Companies

III. Get the Memorandum and Articles of Association (MoA & AoA) signed by Directors, and each shall also write in his own hand his name, father's name, occupation and address and number of shares subscribed for, and duly witnessed by at least one person who shall also write in his own hand his name, father's name, occupation and address.

IV. In case the Memorandum and Articles is to be signed by any of the promoters out side India, then the signing should be done in the presence of Consul of India at the Indian Consulate. The MoA & AoA should be dated on a date after the date of stamping

4. Fee Structure: Fee required to be paid to the ROC for incorporation of the company.

5 The following forms are to be filled and signed:

I. Statutory declaration by Company - Form No.1.

II. Notice of situation of Registered Office of the Company - Form No. 18.

III. Particulars of Directors, Manager or Secretary - Form No. 32.

IV. Consent to act as Directors - Form No. 29.

6 File the following documents with the Registrar of Companies:

I. Stamped and signed copy of Memorandum and Articles of Association.

II. Form No. 1, 18, 32, and 29 in duplicate.

III. Certified true copy of the Registrar of Companies letter intimating availability of name.

IV. Power of attorney in favour of any person for making corrections on their behalf in the documents and papers filed for registration.

7 Certificate of Incorporation:

I. Once all these procedures are through, Registrar of Companies will issue a Certificate of Incorporation

II. In case of Private Limited Companies, they can commence business immediately on receipt of the certificates of incorporation from the Registrar of Companies.

III. In case of Public Limited Companies, following additional steps are to be completed.

8. Arrange for payment of application and allotment money in cash by the Directors on the shares taken or agreed to be taken by them

9. File the statement in lieu of prospectus with the Registrar of Companies in accordance with Schedule IV of the Companies Act, 1956

10. File a declaration in Form No.20 with the Registrar of Companies to the effect that the application and allotment monies have been paid/will be paid in respect of shares taken up/agreed to be taken up by the Directors

11. After these formalities are over, the Registrar of Companies will issue Certificate of Commencement of Business




WRITTEN BY:-Bala Murgan

An I for an I

It is not often that you meet a head of state, rarer still to meet a head of state who is an elder statesman with wisdom and special insights. So it was a rare privilege this week to meet Shimon Peres, the Israeli president, along with a CII team that was in Tel Aviv and Jerusalem to continue a CEOs' dialogue. Peres' mind ranged far and wide. Agriculture is technology-intensive, he said, which is why 100,000 cows in Israel produce as much milk as 4 million cows in Ethiopia. "We have increased milk yield 30-40 times," he explained. Slipping smoothly to another field, he said "making spare parts for the human body" is the science of the future. He meant stem cell research, of course, and added that Israel is trying to be a leader in the field, having recently replaced a damaged heart muscle by using cells taken from the skin.

Switching subjects again, he got more adventurous. "Why not make the army into a university?" All young Israelis have to serve their time in the army, but Peres said only one in seven soldiers is a fighting man, the rest are in what he called services. "We give them housing, a salary, other facilities—so why not educate them while they are in uniform? Normally, it takes 1,300 hours of study to get a degree. If you do it properly, it can be done in 650 hours." And, of course, he touched on oil and energy, pointing out that the sun was a more reliable, long-term source of energy than hydrocarbons, and that Israel was investing a lot of money in solar energy research.

The sub-text to these and many other stimulating thoughts was that Israel seeks to become an R&D-intensive country, with cutting-edge technology in a variety of fields. "We are only 8 million people, you are more than a billion. We can't possibly produce to feed your market…how many shoes can we make, and how many people to make those shoes? Better for us to do the research and create the technologies that you can use in your production system." Peres was echoing what the CEOs had already discussed, that Israeli technology and Indian production were a perfect match. At dinner the previous night, a former Israeli chief of staff who now heads a water company talked of his company desalinating water at a cost of no more than 3 paise per litre. Then there was the recycling of urban sewage—which his company "bought" and then recycled. Once all the plants under construction come on stream, a third of Israel's total water consumption will be recycled, and the country will actually be recharging its aquifers. It is easy to see the application of these and other technologies (as in drip irrigation and solar energy) in India.

It is not widely known outside Israel as to just how much the country has become a research-intensive and technology-oriented country—and not just in defence technology (the country is now the second-most important source of defence supplies for India). A single Technion university has 15,000 tech students, perhaps more than all our IITs put together.

Doing business for Israel and India (I to I) is easy because there is enormous goodwill for India in the country, not least because India has no history of anti-Semitism—one reason why tens of thousands of Israelis come holidaying to India every year. The Slumdog Millionaire book, for instance, has sold over 100,000 copies in its Hebrew translation, perhaps more than it has sold in India! All of Amitav Ghosh's books, Arundhati Roy's masterpiece, Adiga's White Tiger, all have a ready and large market. Israelis have discovered India. It is time Indians discovered Israel.

by T N NINAN(chief editor Business Standard)

how rain is affecting industrial growth!

All the indusries are directly dependent on the agriculture sector. Because of delay in monsoon agriculture sector is surviving a lot. This inturn affecting all the indstries connected to it. Prices of grains, vegetables & fruits going high day-by-day. because of this people are not spending on other things which again leads to defficiency in demand and lowers the IIP.

but in opposite of this we can see a growth in cement and coal industry by 10.6% & 9.7% respectively. This could be attributed to the weak monsoon which resulted in a delay in maintenance shutdowns.

So we can conclude that during weak monsoon investors can get good returns by investing in coal and cement companies.

NSE launches interest rate futures, trades Rs 267 cr on day 1

The National Stock Exchange (NSE) which launched interest rate futures (IRF) on Monday, registered a trade volume of Rs 267.31 crore on Day 1, the NSE said in a statement in Mumbai.

Trading in interest rate futures was earlier inaugurated by Finance Secretary Ashok Chawla, in the presence of SEBI Chairman C B Bhave and RBI Deputy Governor, Shyamala Gopinath.

Interest rate futures on NSE are based on a notional ten year GOI bond, bearing a notional 7 per cent interest rate coupon payable half-yearly. The tradable lot size is Rs 2 lakh.

Market participants responded enthusiastically to the product launch on the first day. In around five hours of trading time available after inauguration, 1,475 trades were recorded resulting in 14,559 contracts being traded at a total value of Rs 267.31 crore, the NSE said.

Out of the two quarterly contracts available for trading, December 2009 was the most active with 13,789 contracts being traded. The bid-ask spread was observed to be around one tick i.e. quarter paisa most of the time, it said.

Nearly 638 members have registered for this new products out of which 21 are banks. The contribution by banks in the total gross volume was 32.48 per cent. Amongst banks, Union Bank of India was most active bank.

State Bank of India was the first PSU bank to trade, while Central Bank of India has executed the single largest trade.

In the domestic private bank category, HDFC Bank executed the first trade. Bank of America, IDBI Bank and Axis Bank also actively participated, the NSE said.

"After launching currency futures last year and interest rate futures today, we want to see how to introduce more and more products on the exchange traded platform and settled through central clearing entity which gives settlement gurantee," Securities and Exchange Board of India (SEBI) Chiarman, C B Bhave, said after the launch of interest rate futures in Mumbai.

Finance Secretary, Ashok Chawla, said that volumes were not the only thing. The manner in which the market develops is very important, he said.

Banks and FIIs can also participate in interest rate futures within the regulatory framework, Chawla said, adding that this is expected to give a push to this product.

Interest rate futures will be useful to those who have a view on the future interest rates and would like to benefit from interest rate movements. It is also expected to help those who have large a portfolio of GoI securities and would like to hedge against losses from interest rate movements, the NSE said.

Banks, primary dealers, mutual funds, insurance companies, corporate houses, financial institutions and member-brokers will be eligible to participate in IRF trading on the exchange.

The members registered with SEBI for trading in currency/equity derivatives segments are eligible to trade in interest rate derivatives, subject to the trading/clearing member having a net worth of Rs 1 crore and Rs 10 crore, respectively.

Interest rate futures are the most widely-traded derivatives instrument in the world and it also has a huge opportunity in India. Interest rate risk is the uncertainty in the movement of interest rates which have never been constant in the past and presumably not remain constant in the future as well.

The volatility of interest rates has increased manifold in the last couple of years. The annualised volatility of yield of 10-year benchmark Government of India Securities for the calender year 2008 has been 17.40 per cent compared to 8.51 per cent in 2007.