There is something very exciting about opening your own company. The liberating feeling of being your own boss coupled with the thrill of uncertainty is what prompts a lot of people to quit their jobs and take the plunge into entrepreneurship. Company formations are lengthy processes and require a lot of paperwork for the correct verifications. However if you go about it in a systematic and organized way then the task will seem less daunting.
A company may be formed by individuals or corporate groups. However, for
company formations usually a minimum of two directors are required. These directors then decide what type of company they want to open- private, public or non- profit. Each director must necessarily have a Director Identification Number or DIN. In order to apply for a DIN number the director must make an application to the central government on the relevant DIN form. Only one DIN number is issued to one person and can be used multiple times in case the director joins other companies.
An important thing to remember about company formations is that the 2006 amendment to the Companys Act of 1956 makes it mandatory for all company documents to bear the digital signature of the director or secretary or other governing figure.
One of the most important aspects of
company formations is the proper drafting of the Memorandum of Association and the Article of Association. These two documents are vital as they provide the operational framework for the company. The Memorandum of Association includes the Authorized Capital clause which outlines the companys future expansion in terms of fresh share issuance.
The MoA also includes the object clause which details the objectives of the company and other areas of business it may enter in future.
One of the first steps of company formations is choosing and registering your company name. The name is first sent to the registrar of companies (RoC) for approval. There are several grounds on which your name may be rejected. If your proposed name is a direct vernacular translation of an existing English name, it can be rejected.
