Is your Company Incorporation Legal?

  • Setindiabiz Team
  • April 12, 2023
Certificate Incorporation
Incorporation or Registration of a business is the legal process by which a business gets a distinct legal identity from that of its . Since incorporated entities like a company or LLP are creations of law which are considered to be entirely different from its owners. In India, the Companies Act 2013 and rules framed under this Act have prescribed a set of procedures which need to be followed while incorporating a company.
The issuance of Certificate Incorporation is considered to be conclusive proof that incorporation of a company has been done legally. So the application filed must be 100% authentic and accurate, making correct disclosures of promoters and the first directors interests, who have been named in the Articles of Association, and the details of the practicing professionals who attest and certify these documents and applications to the Registrar of Companies.

However, to bring things into perspective these are the steps that are required to be followed while incorporating a company.

Before you begin the process of incorporation of your company, you must first decide upon certain relevant aspects without which the formation of the company will not be possible. These decisions cover all the relevant aspects of a company, including its name, its business address, its business structure, its promoters, and its capital. All such key decisions needed to be made before company incorporation have been listed below.
S.No. Key decisions to be taken before Incorporating a Company
What name will the company be incorporated with?
What will be the main location from where the company will conduct its business?
What will be the initial capital of the company?
What will be the capital sharing ratio among the shareholders?
Who will be the first directors of the company?
Once you have made all these decisions, you can finally begin the process of formation of the company. For incorporating your company, you can simply contact Setindiabiz. We have more than 18 years of experience in incorporating companies and other business structures like Partnership firms and Limited Liability Partnerships. Our services are provided by our dedicated team of CA, CS, and paralegal experts, who assist and guide you at every single step of company incorporation.
The incorporation of your company must be in accordance with the manner prescribed in the Companies Act, 2013, and Companies (Incorporation) Rules, 2014. We have briefly mentioned the legal process that needs to be followed for company incorporation below.
Step No. Steps to Incorporate your Company
Step 1
Obtain a Digital Signature Certificate of the director or promoter authorized to sign the registration application.
Step 2
Obtain a Director Identification Number for all directors of the company by the MCA
Step 3
Select a name for your company and reserve the name with the Registrar of Companies
Step 4
Arrange all the documents required to be submitted with the application for company incorporation
Step 5
Fill out & Submit the online application for Company Incorporation along with the prescribed application fee
After the submission of your application, the Registrar of Companies will examine and verify the details and documents in your application, and upon being satisfied that everything is accurate and authentic, the Registrar will issue a Certificate of Registration in the name of the company, as a conclusive document of proof of the company’s registration. The legality of the registration is only proven after the issuance of the Registration Certificate.

Penalty for illegally incorporating your Company

According to Section 448 of the Companies Act, 2013, which mentions provisions of penalty imposed for furnishing false statements in the application for company incorporation, states that punishment could be imposed for such actions by way of fines, or imprisonment which shall not be less than six months, or both. However, imprisonment imposed with fine cannot be extended beyond 10 years.
Section 449 of the Companies Act deals with false evidence, the filing of any wrong information under oath or affidavit, in the details and documents required for company incorporation. In this case, the minimum imprisonment shall be of 3 years, extendable up to 7 years with a fine that can extend up to Rs.10 Lakh.
Apart from these punishments and fines against furnishing false statements and information, the promoters should also be careful while selecting the name of the company. To ensure legality of the name selected, you must make sure that they are in line with the name selection guidelines mentioned in the Companies Act, and other relevant laws.
If at all during the reservation, it is found out that the name which has been selected for the company is legally invalid, then each officer who is responsible for selecting such a name shall be punishable with a fine of Rs.5 Lakhs.

We hope that this blog has been helpful for you to understand all the aspects and necessities which make the incorporation of your company legal. If you still have any questions, you can avail our consultancy services where our experts will guide you to resolve all your doubts and queries.


How can setindiabiz help?

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.
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