Company Law (ROC)

In India, incorporation of a company is governed by the Companies Act 1956. It is the most important piece of legislation that empowers the Central Government to regulate the formation, financing, functioning and winding up of companies. It applies to whole of India and to all types of companies, whether registered under this Act or an earlier Act. But it does not apply to universities, co-operative societies, unincorporated trading, scientific and other societies.

The Act is administered by the Central Government through the Ministry of Corporate Affairs and the Offices of Registrar of Companies, Official Liquidators, Public Trustee, Company Law Board, Director of Inspection, etc. The Registrar of Companies (ROC) controls the task of incorporation of new companies and the administration of running companies.

The Official Liquidators who are attached to the various High Courts functioning in the country are also under the overall administrative control of the Ministry. The set-up at the Headquarters includes the Company Law Board, a quasi-judicial body, having the principal Bench at New Delhi, an additional principal bench for Southern Region at Chennai and four Regional Benches located at New Delhi, Mumbai, Kolkata and Chennai. The organisation at the Headquarters also includes two Directors of Inspection and Investigation with a complement of staff, an Economic Adviser for Research and Statistics and other Officials providing expertise on legal, accounting, economic and statistical matters.

For registration and incorporation of a company, an application has to be filed with Registrar of companies. Application for registration of a company accompanied by the selected names, Memorandum of Association and Articles of Association and other necessary documents is to be filed with the Registrar of companies of the State in which the company is proposed to be incorporated.

Under the Companies Act, an entrepreneur can form two types of companies, namely a private company or a public company.

A Private Company is one, the articles whereof contains the following restrictions:-

• restricts the minimum paid up share capital to such an amount as may be prescribed but which shall not be less than rupees one lakh;
• restricts the rights of members to transfer its shares, if any;
• limits the number of its members to fifty excluding the past or present employees of the company who are members of the company;
• prohibits any invitation to the public to subscribe for any shares or debentures of the company;
• does not invite or accept any deposits from persons other than its members, directors or their relatives.

Also, the minimum number of members in a private company is two and such a company must have the words \'Pvt Ltd\' as the last part of its name.

A Public Company, as defined in the Companies Act, has the following features:-

• its shares are freely transferable;
• there is no ceiling on its membership;
• it can invite general public to subscribe to its shares;
• it has a minimum paid up capital of Rs.5 lakhs or such higher paid up capital as may be prescribed;
• it is a private company which is a subsidiary of a public company.

Also, the minimum number of members in a public company is seven and such a company must have the word \'Ltd\' as last part of its name.

The following certificate will be issued when all documents for registration are in order:

Form 8 - Certificate of Incorporation for a public company.

Form 9 - Certificate of Incorporation for a private company

For incorporation of a private limited company:-

• We help in selection of suitable names and apply to the concerned ROC to ascertain the availability of a name.
• Arrange for the drafting of the Memorandum and Articles of Association by our solicitors, the vetting of the same by the ROC and the printing of the same.
• Arrange for the stamping of the Memorandum and Articles with the appropriate stamp duty.
• Present the documents to the ROC with the filing fee and the registration fee.
• Obtain the Certificate of Incorporation from ROC.

Additional Steps to be taken for formation of a Public Limited Company::-

• Consent of Directors to act as such.
• Arrange for payment of application and allotment money by Directors on shares.
• File the Statement in Lieu of Prospectus with the ROC.
• File a declaration in Form-20 duly signed by one of the Directors.
• Obtain the Certificate of Commencement of Business.

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