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Private Limited Company Registration Articles
14
Jun
17
Checklist for Due Diligence of Company

Due diligence is a formality performed before bank loan funding, business sale, private equity investment, etc., It is the process to check, the financial, legal and compliance aspects of the company that are usually reviewed and documented. This procedure can be followed in any type of company whether it Private Limited Company or any other Limited Company. Companies should be updated with the checklist by performing due diligence on a company in India.

Due diligence mainly helps the buyer take an informed investment decision and mitigate risks associated with a business purchase transaction. In the procedure both the parties usually enter into a non-disclosure agreement prior to starting a business due diligence as sensitive financial, operational, legal and regulatory information would be divulged to the buyer during the due diligence process. It is the responsibility of the seller of the business or shares or “Seller” to provide the documents and information necessary for performing a due diligence on the company to the buyer. Business due diligence is process performed prior to the purchase of a company or investment in a company by the acquirer or investor or we can say buyer.

Documents Required During Company Due Diligence

  • Certificate of Incorporation
  • Memorandum of Association
  • Articles of Association
  • Shareholding Pattern
  • Financial Statements
  • Income Tax Returns
  • Bank Statements
  • Tax Registration Certificates
  • Tax Payment Receipts
  • Property Documents
  • Statutory Registers
  • Intellectual Property Registration or Application Documents
  • Employee Records
  • Utility Bills
  • Operational Records

Review of MCA Documents

Mainly due diligence of a company starts with the MCA (Ministry of Corporate Affairs) website. The master data about a company is made publicly available. Further, with the payment of a small fee, all documents filed with the Registrar of Companies is made available to anyone. The relevant information from the MCA website is usually verified first. The documents and information gathered in this step include:

  • Company Information
  • Date of Incorporation
  • Authorised Capital
  • Paid up Capital
  • Date of Last Balance Sheet
  • Date of Last Annual General Meeting
  • Status of the Company
  • Director Information
  • Date of Appointment of Directors
  • Directors of the Company
  • Charges Registered
  • Details of Secured Lenders of the Company
  • Quantum of Secured Loans
  • Documents
    • Certificate of Incorporation
    • Memorandum of Association
    • Articles of Association

In addition to the above, the financial information of the company and other filings with the MCA pertaining to various aspects of the company can be downloaded and reviewed. The review of MCA documents of the company would provide a good overview of the company to the person performing the due diligence.

Review of Articles of Association

It is very important to review the articles of association of a company during the due diligence process to ascertain the different classes of equity shares and their voting rights. The articles of association of a company can restrict the transfer of shares of a company. Thus, the articles of association should be studied carefully to ascertain the procedure for transfer of shares.

Review of Statutory Registers of Company

Under Companies Act, 2013, a private limited company is required to maintain various statutory registers pertaining to share allotment, share transfer, board meetings, board of directors, etc., Therefore, the statutory registers of a company must be reviewed to obtain and validate information pertaining to directorship and shareholding.

Review of Taxation Aspects

Taxation aspects of a company must be thoroughly checked during the due diligence process to ensure that there are no unforeseen tax liabilities created on the company in a future date. The following aspects relating to the taxation aspect of a company must be checked:

  • Income tax return filed
  • Income tax paid
  • Calculation of income tax liability by the company
  • ESI / PF Returns Filed
  • ESI / PF Payments
  • ESI / PF Payment Calculation
  • Service Tax / VAT Returns Filed
  • Service Tax / VAT Payments
  • Basis for Service Tax / VAT Payment Calculation
  • TDS Calculations
  • TDS Returns
  • TDS Payments

Review of Book of Accounts and Financial Statements

 Companies need to maintain book of accounts along with detailed transaction information by the Companies Act, 2013. Hence, detailed financial transaction information must be audited and verified against the financial statements prepared by the company. Some of the matters relevant during the business financial due diligence process are:

  • Verification of cash flow information
  • Verification and valuation of all assets and liabilities
  • Verification of bank statements
  • Verification of all financial statements against transactional information

 Review of Legal Aspects

A comprehensive legal audit of the company must be performed by a legal practitioner to ascertain if there are any pending legal actions, suits by or against the company and liability in each. Further, the following aspects must be checked during the legal due diligence:

  • Legal due diligence for all real estate properties of the company.
  • Verification of court documents and court filings, if any.
  • No objection from Secured Creditor for transfer of company.

Review of Operational Aspects

It is important to obtain a through understanding of the business model, business operations and operational information during the due diligence process. The review of operational aspects must be extensive including site visits and employee interviews. Following are aspects that must be covered and documented in the operational aspects review:

  • Number of Customers
  • Number of Employees
  • Business Model
  • Production Information
  • Machinery Information
  • Vendor Information
  • Utilities

In addition to the above, based on the business and business model, other operational aspects may be important. Those aspects must be thoroughly checked and documented during the due diligence process.

05
Jun
17
What is the Fees of Private Limited Company Registration?

Private limited is the most preferred form of company in India. Since, it is to raise funds in this type of company. Private limited company registration has now become very simple process.  One of the major factors is the authorized share capital with which you want to register your private limited company.

If you want to register your private limited company with the minimum requirements then cost of company registration will be less. Cost of company registration depends upon the authorized share capital.

In this article we will calculate cost of company registration applicable to a private limited company to let you know how costs are derived.

Following are the various factors on which let us discuss these factors that affect the cost

  • Initial authorized share capital
  • Number of directors
  • Stamp duty
  • Professional Fee charged by a Chartered Accountant or Company Secretary

Company registration in India is not possible without the help of a chartered accountant or Company Secretary.

Cost remains same in some of the factors the fact on which costing differ is stamp duty charges (but the difference will be very less).

Costing also depends upon the professional fee that a chartered accountant or CS will charge you. This is mainly in case of private limited company.

Following are important things used in the company registration according to which cost of company registration can differ

Getting digital signature certificate is one of the most important step of your company registration. Online Company registration is not possible without DSC. If you do not have DSC then you cannot fill single online form. According to the provisions of Companies act, 2013.Application for DIN (e-Form DIR3) has to be signed digitally by each applicant with DSC.

Chartered Accountants or Company Secretary are not required in getting DSC. DSC cannot be obtained by any Certifying authority providing these services. Chartered Accountants or Company Secretaries provide some offer which will also include DSC with some charges. You should be thorough about this on company registration.

Getting Director Identification number (DIN) is also one of the most important step of company registration. Obtaining DIN is not a complex process. In case you want obtain DIN immediately then your Chartered Accountants or Company Secretary need to electronically certify your DIN application.

Company Approval

One of the processes for registering your company is getting the proposed name of the company approved from MCA before its registration.

This process does not cost you much. Cost of getting your private limited company name approved from Ministry of corporate affairs will cost you Rs. 1, 000 only.

Registering your private limited company This is the final step for registration of private limited company. You pay major part of your expenses in this final step. Cost will vary depending on the authorized share capital of the company. Following costs are involved at this stage of company registration process;

  • Fee for Memorandum of Association
  • Fee for Article of Association
  • Fee for SPICe

MCA portal has all the cost details for this part from by entering the authorized share capital amount of your company. In case you select SPICe from the drop down and then enter the share capital amount for registration, it will show you the cost for filing MOA, AOA.

Sr. No

Particulars

Calculation

Amount is Rupees

1

Getting DIN

Rs. 500 per DIN

1000

(if requirement is for 2 directors)

2

Getting DSC (DSC depends on the number of director applying for DIN)

Rs. 1000 per DSC

2000

(if requirement is for 2 directors)

3

Stamp Papers and notary charges for affidavit

depends on number of affidavit, certification and declarations

200 (approx if requirement is for 2 directors)

4

Company Registration

   
 

I

Spice (Normal)

500

 
 

II

MOA

2000

 
 

III

AOA

300

 
 

IV

PAN

107

 
 

V

TAN

63

 
   

Total

 

2,970

5

Stamp Duty Charges for MOA, AOA and Form Spice(cost depends on the state of your registration)

 

 360

Total cost of company registration

6,530/-

09
May
17
Women Director of the Company
India is a country of opportunities where all people have equal right. According to Indian Constitution people, All the citizen in India deserves equal right whether they are of any…
08
May
17
How to Close a Private Limited Company?

Initiation of any Business needs Company Registration. Organization should be enlisted to have business foundation. Closing down an organization is a testing procedure. In any case, on the off chance that you are the proprietor of a fused business as a Private Limited Company then it is significantly more so can be closed down in a few conduct contingent on the necessities of the entrepreneur.

  • Sell the company
  • Declare the organization " defunct " and close it down
  • 'Wind up' and disintegrate the Company

Defunct Company mainly deals with the closure of companies under the Companies Act 2013 have not yet been notified. According to Section 560, of the Companies Act, 1956, deals with a strike off provisions of a defunct company.

Company can be defuncted or strike off its name from the  of Registrar of Company can apply by means of for strike off of its name from the enlist kept up by ROC. A private restricted organization might be proclaimed outdated and closed around appealing to the Registrar of Companies.

This may be done in the following manner –

  • Board Meeting – Two Directors of the company must sign a resolution that resolves to apply to the ROC for the declaration of the company as defunct.
  • Affidavit –Notarized affidavit must be submitted by 2 director which has also been signed and verified that the company did business for a period up to date, and has since then discontinued its operations, and has no assets or liabilities.
  • Indemnity Bond – A notarized indemnity bond, duly signed by two Directors, which states that in the case of any liabilities on the company, such liabilities will be met fully by the applicants, even after the name of the company is struck off the register of companies must be submitted.
  • Accounting Information – The financial statement of the Company for the most recent year, prepared up to a period which ended one month before the date of application, must be filed by the Company. The statement of accounts submitted must provide a true and fair view of the company’s financial position, and to verify the same, a declaration stating this shall be submitted by a practicing Chartered Accountant.
  • Financial Statement – At least one year from the date of incorporation must have passed before the company petitions the ROC for declaring it as defunct. Audited financial statements for the period in which business has been undertaken must be submitted along with the application. In case any unsecured loans are there, then a waiver letter for the same must be submitted.

Winding up the Company

 (a) By the Tribunal (also known as compulsory winding up); or

(b) Voluntary winding up company

Voluntary winding up may be

  1. Member’s Voluntary winding up.
  2. Creditor’s Voluntary winding up.

Whereas Compulsory winding up may be, in addition to the a fore mentioned –

  1. Any contributor or contributors
  2. By the central or state govt.
  3. By the registrar of any person authorized by central govt. for that purpose.

In the case of voluntary winding up, the process is undertaken without court supervision.

Procedure for Voluntary Winding Up –

  • Board Meeting with 2 Directors is conducted and a resolution consisting of a declaration given by directors that they are of the opinion that the company is under no debt or that it will be able to pay off its debt from the proceeds from the sale of its assets is passed.
  • General Meeting is conducted after issuing due notice for proposing the resolution along with the explanatory statement. In the case of ordinary majority an Ordinary resolution, or a special resolution in case of the 3/4th majority, for the purpose of winding up is passed in the General Meeting. The winding up will start from the date of passing of the resolution.
  • Creditors Meeting is conducted after passing the resolution and if majority creditors are of the opinion that winding up of the company is beneficial for all parties then the company can be wound up voluntarily.
  • Liquidators Account is prepared after winding up of affairs of the company, and the same is audited as well.

Winding up the Company

(a) By the Tribunal; or

(b) Voluntary Winding up

Deliberate Winding up might be

  1. Member's Voluntary Winding up.
  2. Creditor's Voluntary Winding up.

Though Compulsory twisting up might be, not with standing the previously mentioned –

  1. Any donor or givers
  2. By the focal or state govt.
  3. By the enlistment center of any individual approved by focal govt. for that reason.

On account of deliberate twisting up, the procedure is embraced without court supervision.

Strategy for Voluntary Winding Up –

  • Board Meeting with 2 Directors is led and a determination comprising of a presentation given by executives that they are of the supposition that the organization is under no obligation or that it will have the capacity to pay off its obligation from the returns from the offer of its advantages is passed.
  • General Meeting is directed subsequent to issuing due notice for proposing the determination alongside the informative explanation. On account of conventional greater part an Ordinary determination, or an uncommon determination if there should arise an occurrence of the 3/fourth lion's share, with the end goal of twisting up is passed in the General Meeting. The twisting up will begin from the date of going of the determination.
  • Creditors Meeting is led in the wake of passing the determination and if larger part leasers are of the feeling that ending up of the organization is valuable for all gatherings then the organization can be twisted up willfully.
  • Liquidators Account is set up in the wake of ending up of issues of the organization, and the same is reviewed also.

If you have any intension to close your company Registrationwala has all the solution.

04
Apr
17
Foreign Companies Registration in India

India is one of the fastest growing nations in the world. India is the country with a lot of opportunities for not only Indians but also a foreign citizen. Make in India is an initiative taken by Prime Minister Shri Narendra Modi.  Due to globalization and privatization, the efforts of have turned into reality. ‘Make in India’ is the step for investors to invest their money in India.

Foreign Company

Foreign Company is any company or Corporate Body formed outside India. There certain rules and guidelines have to be followed as laid down by The Companies Act, 2013, RBI guidelines etc. Foreign Company can Start the business in India.

Company has a place of Business in India whether by itself or through an agent. It can be physically or in electronic mode. Any business activity in India in any other manner

Following are the forms in which a foreign company can enter the market of India or set up business operations in India

In case of an Indian company

  • Wholly Owned Subsidiary
  • Joint Venture

In case of a Foreign Company

  • Branch Office of the foreign company
  • Representative Office or a Project Office or
  • Setting up a Liaison Office
  • Being an Indian company Way Foreign Company Registration in India

What is a Wholly owned subsidiary Company?

Wholly owned subsidiary Company is form of company in which a foreign company invests 100% FDI in Indian company through automatic route.

For  ABC of UK owns 100% shares in CD Ltd of India then CD Ltd becomes subsidiary company of ABC

It can also be called as an entity whose whole share capital is in the hand of a foreign corporate body. Companies can be Private limited Company by guarantee or shares or an Unlimited Liability Company.

Documents required

Office’s Address proof and in case of accommodation is rented then latest electricity bill.

 Indian citizen

  • PAN card is mandatory
  • Address proof (DL, Aadhar, Passport, Voter id)
  • Photograph

Foreign national

  • Passport is mandatory
  • Address Proof (Passport)
  • Photograph
  • ID Proof (Government license or Document containing Name in full, Photo and Date of birth)
  • Documents submitted must be certified by the Indian Consular or consulate.

Need and Procedure of registration

  • Minimum 2 shareholders or directors.
  • All directors have to obtain DIN (Director’s Identification No.) and DSC( Digital signature certificate).
  • Name of the company has to be filed In Form INC-1 application.
  • Draft your MOA and AOA and then a subscription to MOA has to be done by shareholder and appropriate persons.
  • ROC approves ie. Application for Incorporation of Company)
  • Form DIR-12 -Particulars regarding appointment of directors, the key managerial personnel and any changes in them
  • ROC online fees and stamp duty has to be paid as per the authorized capital of the company.
  • ROC verifies all the documents and also Form INC-22 and DIR-12 are approved and INC-7 is verified.
  • After the satisfaction of registrar certificate of incorporation can be issued.
  • Obtain PAN card and open company’s bank account.
  • After the subscription of share, capital documents have to be submitted for FDI compliance.

What is a Joint Venture?

Joint Venture is an arrangement where two or more parties cooperate to achieve a commercial object or run a business. There are various forms like Company, Limited Liability Partnership, Partnership firm etc. This can be on long term basis like running for perpetuity or for a limited time based on the object. It is a very flexible concept.

 NRI or foreign partner involved in a joint venture it requires government approval ie. either from RBI or FIPB.

The entity has to select a local partner with whom you want to enter into joint venture then a Memorandum of Understanding or a Letter of Intent is to be signed which will state the basis for the joint venture agreement. All the terms should be discussed thoroughly and negotiated and must be consistent with regional as well as international law. It should address the important matters like Dispute resolution agreements, law Applicable, holding shares, Transfer of shares, Board of Directors Non-Compete, Confidentiality etc.

Foreign Company Registration as a Foreign Company in India

  • Setting up a Liaison Office or Representative Office in India has the criteria prescribed by RBI.
  • There should be profit making record in the immediate preceding 3 financial years in the home country and their net value should not be less than USD 50,000
  • Letter can be submitted by a subsidiary of other company which does not satisfy the above condition can submit a letter of comfort from their parent company.
  • RBI approval is required under FEMA 1999 as well as approval from the IRDA Insurance Regulatory and Development Authority).
  • Company should be engaged in activities like manufacturing or trading.
  • Company should have a profit in the immediately preceding five financial years and should have a net worth of not less than USD 100,000 in its home country.
  • The subsidiary company of other if does not fulfil the above condition then they can submit a Letter of Comfort from their parent company if parent company fulfils the above condition

Following are the activities

  • Import & Export of goods.
  • Carrying out research work in area which its parent company is engaged
  • Providing professional or consultancy services.
  • Foreign Airline/ Shipping Company.
  • The representing parent company in India and acting as buying/selling agent in India.
  • Promoting technical/financial collaborations on behalf of the parent
  • Providing IT services and developing software in India.
  • Providing technical support for products supplied by the parent
24
Mar
17
Importance of Annual Filing

Company is a legal entity made up of association of people carrying on a commercial or industrial enterprise. Opening up and running a company is not everyone’s cup of tea .Several things needs to be kept mind while and after setting up a company. People need to obtain many documents, permits and go through several registrations. Company formation requires several taxes and other filings.

It is most important to keep a record of all these events with all the certificates and acknowledgments slips are to be kept carefully. It acts as solid evidence and helps you to file certain documents. This procedure is one of the most difficult tasks. All these documentations are carried out under The Companies Act,2013. This is the act required the same act, you are required to go through company annual filing.

Annual filing includes the filing of certain documents with the Registrar of Companies. Documents included are balance sheet, profit and loss account, annual return and compliance certificate. These documents are filed by filing some forms which can be filed online also. It ensures that you are keeping records of all the important happenings of your company properly. It helps you to run your company smoothly and point out any possible loopholes or mistakes. Detailed guidelines of annual filing are available on the MCA web portal.

Procedure for annual return filing

  • Prepare a financial statement of Company.
  • Appoint and Auditor for Company.
  • Conduct annual general meeting of the company
  • File annual with MCA

Company Annual Filing Importance

Company will face problems if a company does not annually file. Annual Return provides a detailed insight into the health and profitability of a company. It is a way to keep the workings of the company transparent.

  • One of the factors used to decide whether the company will receive additional or any funding at all.
  • Annual filing helps to decide the market price of the shares of the company in case of listed or on a stock exchange.
  • In case the company is going in a loss it helps to figure out what the next best action should be and the direction the company.

Guidelines of annual filing are available on the web portal of MCA

DIN(Director Identification Number) and DSC (Digital Signature Certificate) are required to complete the company annual filing. Annual filing can create some serious issues for you. It ranges from a fine to a victim of a bad image which will ultimately cost you, your investors and customers. This is very important to file all the documents on time and in order. Guidelines should be read properly. Legal advice is very much suggested. You need to verify all the documents and then only can you expect a successful annual filing.

For more information about Annual Compliance filing visit Registrationwala.com

23
Mar
17
Legal Requirements for Company Registration

Company incorporation is ideal process for every Business firm. It is a big, original and creative idea to form a company in reality. Company incorporation mainly follows Companies Act, 2013. Companies Act is a particular procedure to incorporate your company legally. There is a particular procedure given in the Companies Act, 2013 to incorporate a company. Business can be started or you can set your own company but it is not recognized legally as long as it is not registered. There are a certain series of legal services you will require while filing forms, producing documents, consulting and taking advice, registering all the documents etc.

Here are some legal services or consultation

  • Selection of the type of Business

There are many forms of Businesses such as Private limited Company, One person Company, Partnership firm, Limited liability partnership etc. Legal advice is required to avoid any kind of mistake. This will provide you with a clear picture of how all type of companies work.

  • Selection and Approval of a Company Name.

Selection and Approval is a process that requires certain things to be kept in mind while selecting a name of a company. There are certain legal procedures other than the need of the name being unique and easy to remember there are certain other legal procedures you need to keep in mind for e.g. In case of a private company also adding that the Private Limited Company was formed by conversion from a One Person Company. This may require legal assistance in searching a suitable name for your company and getting it approved.

  • Drafting a Memorandum and Article of Association.

Drafting of MOA and AOA follows a particular pattern. These have certain guidelines which include a certain type of information all related to your company. These are basically to avoid any kind of objections which may lead to rejection of your application. In case to create a MOA or AOA that suits your company’s specific needs, you might have to consider or seek legal advice. This will help you to draft a memorandum in the proper format as prescribed and required.

Decision on Forms of Company

  • Unlimited
  • Limited by Guarantee
  • Limited by Shares

Decision of the Types of the Company

Requirements of the Company Incorporation

  • Apply for DSC (Digital Signature Certificate) for directors of the company.
  • Apply for DIN (Director Identification Number)
  • Declaration of Share Capital of the company in case of a company limited by shares.
  • Filing of forms like SPICe form INC-32

It is very important and should be done very carefully. This also includes an application for name approval, DIN, application for registration of your company and TAN and PAN application.

Proper documents should be attached, In order to avoid any confusion and legal advice is generally taken.

  • Arrangement and production of different documents including identification and address proofs and also include the documents related to the registered office.
  • Drafting a business plan or budget plan
23
Mar
17
Maintenance of Minutes of a Company

Minutes is record of meeting or any official hearing in a Company . It is also called as protocols. These are mainly the written record of any official and influential gathering of a Company. Drafting and maintenance of minutes have traditionally been for a long time for Company secretary and have to Signed the Minutes it is a responsibility of Board .Minutes keeps a brief account of all the happenings and attendees of the gathering and are essentially required in certain legal registrations and procedures.

Minutes keeping is the responsibility of the Company Secretary. Companies even hire typists to maintain these minutes as they are obviously very essential. Books of minutes are maintained to keep a record of all minutes such as meetings like Board meetings, influential events and other types of events.  Minutes are maintained by Chairman are reviewed by concerning authority.

Minutes maintained by under following guidelines as mentioned in The Companies Act. Detailed Points are mentioned in that how you can manage the minutes of your Company.

  • Books of account should be recorded and maintained. A separate book should be maintained for Board meetings and related Committees.
  • Minutes should be maintained in either physical or in electronic form
  • Minutes can be maintained in loose-leaf form and should be bounded regularly.
  • In Minute’s recording should be done systematically. Mentioning of the general content is done first and then the specific content is mentioned.
  • Minutes should be recorded according to the proceedings of the meeting and It should be cent percent accurate. These are written in past tense and in third person form. However, resolutions are recorded in present tense.
  • After the proper recording, minutes are circulated amongst all the directors within the of 15 days. Directors are allowed to make comments. These comments are then recorded in the minute’s book in the span of seven days from the circulation.
  • These are signed by the Chairman of the specific or the next meeting along with the date and the place. If minutes are recorded electronically then it requires digital signing.
  • Minutes can be inspected by any Director, Auditor or Company Secretary of the Company is allowed.

Negligence of minutes can lead to a penalty. In case a company has not appointed a company secretary. In that case, the duty can be passed on to any Company authorized figure. The minutes are kept at the registered office. In minutes special alteration is permissible but only after the review of the Chairman. Minutes is helpful while filing certain registrations but they help maintain a detailed description of every important meeting and events occurring in the Company.

Regiistratonwala helps you to Maintain Minutes of your Company 

21
Mar
17
Role of Promoters in Company Formation or incorporation

Promoter is a person, company, or a firm to bring a company into existence. It can be the person who can act with reference to the formation of a company or in aid of its organization. Promoter conceives an idea for setting-up a particular business at a given place and performs various formalities and functions which are required for starting a company.

Promoter is actually a term associated with the person who starts a business. It has various privileges and benefits associated with his status as the person who kick-started the operations. It logically means the person who started the company.

Characteristics of the Promoter

  • Promoter conceives an idea for the setting-up a business.
  • Promoter makes preliminary investigations and ensures about the future prospects of the business.
  • In promotion, various people are brought together who agree to associate with him and share the business responsibilities.

Promoter has not been defined in any company law. But, it finds mention in a number of statutes  

  • Any person who is in control of the target company
  • Any person named as promoter in any offer document of the target company
  • Any shareholding pattern filed by the target company with the stock exchanges pursuant to the listing agreement

There are certain kinds of Promoters. Following are the types:

Professional Promoters: There are specialized people for a promotion of a company. Companies are handed to shareholder in starting. In many countries, promoters have important roles to play and help the business community.  India lacks in professional promoters.   

Occasional promoters take interest in floating some companies. They are not only for promotional work but they are on a regular basis ie. take up some early promotion and then go for an earlier profession.  

Financial promoters may take up the promotion of a company. They generally when financial environment is favourable at that time.

Managing agents as promoters-Duties of a managing agent are to promote new company. People may float new companies and get their managing agents.

 Duties of a Promoter:

  • Promoter should not make secret profits out of the dealings of the company.
  • Promoter must deposit with the company all money received on its behalf.
  • Promoter exercise due diligence and care while performing the work of a promoter.
  • Promoter will be personally responsible for all the preliminary contracts till all these are approved by the company.
  • Promote compensate any person who made investments in the company on the basis of untrue statements made by the promoter.

Formation of a Company involves the following stages

  • Promotion
  • Incorporation
  • Capital Subscription Stage
  • Commencement of Business

Stages of promotion

Identification of Business Opportunity is the first stage in promotion of a business.  It visualizes the opportunities for a particular type of business and it can be run profitability. The idea may be to exploit a new area of natural resources or a venture in the existing line of business. Promoters develops the ideas with the help of technical experts of that field

Detailed Investigation is the second stage. There are various factors relating to the business are studied from a practical point of view. The demand for the product is estimated and the likely business share is determined. After determining the prospective demand, the promoter thinks of arranging finances, labor, raw materials, power, etc. The cost structure of the product is analyzed to find out profitability from the venture. An expert opinion is sought upon the viability of the project.

Signatories to Memorandum are names of People to be the signatories to the memorandum of association. Usually, the first signatories to the memorandum become the first directors of the company. The written consent of the persons to act as directors is taken and they are asked to take qualifying shares of the company.

Appointment of Professionals is a stage of raising funds and deciding about various contracts. Promoter appoints the brokers and underwriters to ensure the availability of capital by sale of company’s securities. They also appoint solicitors to deal with legal matters of the company.

 Preparing necessary Documents is a step to prepare legal documents of the company which have to be submitted to the Registrar of Companies at the time of incorporation. The documents which are required to be prepared include MOA, AOA, Prospectus, etc.

For more about company incorporation visit Registrationwala.com

20
Mar
17
Memorandum of Association of Private Limited Company

Memorandum of Association (MOA) is the company’s sanction that sets down constitution of the company containing certain fundamental matters. MOA is a basic document that oversees the relationship between the company and the outside. Memorandum of association is mandatory for every company. It is the charter of the company which defines powers and limits of the company. It characterizes the objects of your organization or company.

Memorandum of Association is basically an archive that diagrams the degree inside which your business can work. MOA’s purpose is to display the permitted range or action of the company and it characterizes the parameters of your company. It is a supreme document of the company. It is one of the records required to join a company in India and states the accompanying

  • The company’s name
  • Its capital clause
  • The object clause
  • The clause of Association.
  • The circumstance of its enlisted office
  • The facts related to limited liability

Contents of memorandum of association

Name Clause: Name of the Company must be stated with the last word ‘Limited’ in case of Public limited company and ‘Private Limited’ in case of Private limited Company. There are provisions in the Company’s act which states certain rules regarding undesirable name.  

Situation Clause: MOA must mention the state in which the registered office of the company will be located. Domicile should be stated for the determination of jurisdiction of court and registrar.

Object Clause: In object clause only one activity can be included in the main object of MOA and relating to that activity any activity can be carried out

Liability clause: Company must state the member’s liabilities whether limited or unlimited. Member of the company are affected by this clause. Company does not have authority to increase the liability without the written consent.

Capital Clause : Memorandum of Association of the company having shared capital is required to show the shared capital amount.

Association and Subscription Clause: It provides each subscriber to take at least one share in the company is required to state the number of shares. Every subscriber is required to take at least one share in the company and it should be mentioned in front of his/her name in the subscription clause.

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