What Incorporating a Private Company Requires

The four sections

Section 3 says who may form a company and how. Section 4 governs the memorandum and the name. Section 7 lists what must be filed and what the Registrar does. Section 12 requires a registered office.

Section 3: formation

Two or more persons for a private company, one for a One Person Company, by subscribing their names to a memorandum and complying with the requirements of this Act in respect of registration.

Section 3(2) allows a company to be limited by shares, limited by guarantee, or unlimited. A private limited company is limited by shares.

Section 4: the memorandum

The memorandum states:

• the name of the company, with "Private Limited" as the last words for a private limited company;
• the State in which the registered office is to be situated;
• the objects for which the company is proposed to be incorporated, and any matter considered necessary in furtherance of them;
• the liability of the members, whether limited or unlimited, and in the case of a company limited by shares, that the liability is limited to the amount unpaid on the shares held;
• the amount of authorised capital and the division into shares of a fixed amount, and the number of shares each subscriber agrees to take, which shall not be less than one share.

On the name, section 4 sets two rules that decide a real application.

It must not be identical with, or too nearly resemble, the name of an existing company or a registered trade mark.

It must not be undesirable in the opinion of the Central Government, and must not contain a word or expression that requires previous approval, such as one suggesting the patronage of Government.

A name may be reserved on an application, and the reservation lasts for the prescribed period.

Section 7: what is filed

Section 7(1) lists seven items, and they are the whole application.

(a) the memorandum and articles of the company duly signed by all the subscribers to the memorandum in such manner as may be prescribed;

(b) a declaration in the prescribed form by an advocate, a chartered accountant, cost accountant or company secretary in practice, who is engaged in the formation of the company, and by a person named in the articles as a director, manager or secretary of the company, that all the requirements of this Act and the rules made thereunder in respect of registration and matters precedent or incidental thereto have been complied with;

(c) a declaration from each of the subscribers to the memorandum and from persons named as the first directors, if any, in the articles that he is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief;

(d) the address for correspondence till its registered office is established;

(e) the particulars of name, including surname or family name, residential address, nationality and such other particulars of every subscriber to the memorandum along with proof of identity, as may be prescribed, and in the case of a subscriber being a body corporate, such particulars as may be prescribed;

(f) the particulars of the persons mentioned in the articles as the first directors of the company, their names, including surnames or family names, the Director Identification Number, residential address, nationality and such other particulars including proof of identity as may be prescribed; and

(g) the particulars of the interests of the persons mentioned in the articles as the first directors of the company in other firms or bodies corporate along with their consent to act as directors of the company in such form and manner as may be prescribed.