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Company Registration – Five key Decisions to be made

Before the promoters start the process of company incorporation, there are certain fundamental decisions to be taken by them, which have a long term impact on the company and its functioning.
Though there are many decisions that need to be made, however top five are enumerated and discussed here. Team SETINDIABIZ is available to assist you in case you need any clarification or assistance to understand the meaning and significance of the below-mentioned decisions and its impact on your company.

Table of Contents

Q1. What shall be the name of the new company?

Ans. The name of a company can be adopted after it has been duly approved by the ROC. To be precise a company can be registered with a new and unique name only which should not be same or similar to an already existing company or LLP or not in violation of any others trademark.

Q2. What would be the capital?

Ans. As in any other business the capital is the most important resource to run the company. There is no minimum or maximum level of capital is prescribed, hence the promoters of the company must decide on the amount which they are investing. The government fee to be paid for incorporation and the stamp duty on MOA and AOA is based on the capital of the company.

Q3. Who are the first shareholders and directors of the company?

Ans. A private limited company must have two shareholders and two directors since the inception and must maintain this minimum statutory number at all the time. The shareholders and directors are collectively known as promoter. The powers and obligation of shareholder and directors are different, hence the decision to this effect must be taken carefully.

Q4. What is the capital sharing ratio?

Ans. The shareholders of a company are joint owners of one legal entity, their contribution to the equity capital determines their ratio of sharing the profits in form of dividends or their rights towards rights shares or bonus shares.

Q5. What are the activities for which the company is being registered?

Ans. A company is required to disclose the activities for which it is being formed, the nature of activities is broadly mentioned in the object clause of the MOA of the company. Any act outside the adopted main object of the company shall be termed as ultra-virus.

About Setindiabiz

Setindiabiz is an organized team of experienced CA, CS, & Lawyers, duly supported by a pool of trained accountants & paralegal staff that provides quality & affordable compliance services to startups & small businesses in India. The views, statements and recommendations expressed in this article or post are only for the sole objective of providing information, and it does not constitute professional advice or recommendation of the company. Neither the author nor the company or its affiliates accepts any liability for any loss or damage arising from any information in this article or any actions taken in reliance thereon.
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