Formation of a Company under Companies Act, 2013

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Formation of a Company under Companies Act, 2013- Demystifying the Process with a Comprehensive Guide

Company incorporation and the issuing of the company registration certificate are regulated under the Companies Act 2013 (‘Act’). Without being registered, it is practically impossible for a company established in India to conduct its business. During the Formation Of A Company Under Companies Act, 2013, the ROC will grant a registration certificate.

Company formation can be done by applying through the MCA website. Thus, on 23rd February 2020, MCA issued a new form for incorporating the company known as Spice form. Each of these newly formed companies should fill in the SPICe+ form.

Read on to learn the process of the Formation Of A Company Under Companies Act, 2013.

Formation of a Company

Section 3 of the Formation Of A Company Under Companies Act, 2013details the basic requirements of forming a company as follows:

  • A minimum of seven persons must be willing to subscribe their names to the memorandum before a public company can be formed and registered for any legal reason whatsoever.
  • Likewise, two or more people also form a private company.
  • It is referred to as a one-person company when one person forms it.

Prerequisite for Company Incorporation

Before filing the business formation form, the following prerequisites must be met by the company:

Digital Signature Certificate (DSC)

The entire business registration process is completed online. The SPICe+ form should be submitted on the MCA website. To file forms on the MCA website, a Digital Signature Certificate (DSC) is necessary. As a result, all potential directors of the firm must receive DSC before completing the company establishment form. Because the e-MOA and e-AOA (Articles of Association) must be filed with the SPICe+ form, subscribers to the MOA and AOA must also receive DSC.

Selection of Name

The firm's founders and potential directors must choose a suitable name for the company. If the business name is close to or identical to the name of an existing registered firm, the ROC will reject it. In addition, the firm name should not be identical to a registered brand. As a result, it is preferable to undertake a trademark search before deciding on a company name.

Additionally, it must not contain any terms or expressions that the Company (Incorporation) Rules, 2014 forbid using in company names. The founders or promoters of the business should first apply Part-A of the SPICe+ form to reserve the company name. The name will either be accepted or rejected by the ROC. The founders of the firm must reapply with a new name and obtain ROC permission for the new name if the ROC rejects the original one.

Members and Directors

When submitting an application for business registration, a One-person business (OPC) must have a minimum of one proposed director and a maximum of one member. A private limited corporation needs two directors and at least two members. Before applying for registration, a public limited company has to have a minimum of seven members and three directors.

The Process of Formation of a Company

The process of forming a corporation entails legally establishing a new corporate entity that is distinct from its owners or shareholders. This procedure consists of numerous procedures, which may differ based on the jurisdiction and kind of business being established. Here's an extensive outline of the steps in formation of a company under companies act 2013:

Choose a Business Structure

Choose the company structure that best meets your needs. Private limited corporations, public limited companies, one-person companies (OPCs), and other varieties are common. The decision is influenced by issues such as ownership, liability, and fundraising needs.

Select a Name

Choose a memorable and appropriate name for your business. Check to see if the name is legal and accessible for procedure for registration of company under companies act, 2013. Some governments provide online tools for determining name availability.

Draft a Memorandum of Association (MOA)

The Memorandum of Agreement (MOA) is a legal agreement that describes the company's objectives, scope of activity, and restrictions. It is a vital document that defines the company's external interaction.

Draft Articles of Association (AOA)

The AOA establishes the internal rules and regulations for managing the business of the firm. It addresses issues like director authority, shareholder rights, meetings, and more.

Appoint Directors and Promoters

Determine the original directors and promoters who will be in charge of the company's establishment. Directors are those who manage the firm, whereas promoters are those who promote and begin the registration of company under companies act 2013.

Obtain Director Identification Number (DIN)

Obtain a DIN from the appropriate regulatory body for each director. Directors must have this unique identification number in order to hold office lawfully.

Acquire Digital Signature Certificates (DSC)

DSCs are digital signature certificates that are used to sign documents required for incorporation of company under companies act 2013 throughout the business creation process digitally. They ensure the legitimacy of online documents.

File Documents with the Regulatory Authority

Prepare and submit the necessary documentation to the appropriate regulatory authorities in your jurisdiction. The MOA, AOA, and other incorporation documents are often included. Many jurisdictions provide online filing services.

Pay Fees and Stamp Duty

Pay the required fees and stamp duty for the incorporation procedure. The amount fluctuates depending on factors such as the authorised capital of the firm.

Certificate of Incorporation

The regulatory authority issues a Certificate of Incorporation when the paperwork has been inspected and authorised. This document certifies that the business has been founded and is legally recognised.

Issue Share Certificates

If the firm has shareholders, provide them with share certificates as proof of ownership for the

process of formation of company.

Comply with Post-Incorporation Formalities

Companies must comply with several post-incorporation formalities after incorporation, such as convening annual general meetings, publishing yearly financial statements, and complying with legal and regulatory obligations.


The incorporation of a company under the company registration act is an elaborate process that requires attention to detail and strict adherence to the law. To start with, entrepreneurs, as well as company heads, should be well-informed regarding the legalities involved during the launching period in such cases.

This helps to ensure that their businesses remain in line with the legal framework up to the point when they retire on the same. Corporations must stay updated with regulatory changes as the world continues to become globalised to succeed in their journey as well as sustainability purposes.

MKDA serves enterprises of all sizes, from small start-ups to huge corporations, with Company Registrations in India. Consult our experts today, and we have got you covered from incorporation to ROC compliance during the procedure for registration of company.

Frequently Asked Questions

What kinds of companies are formed under the Companies Act 2013?

The types of companies formed under the Companies Act 2013 include:

  • Private Limited Company
  • Public Limited Company
  • Section 8 Company (NGO)
  • Micro Companies
  • Small Companies
  • Medium Companies
  • Limited By Shares
  • Limited by Guarantee

What is the formation of a company under Section 3?

The fundamental conditions for establishing a corporation are outlined in Section 3 of the Companies Act, 2013 and are as follows: A public corporation is formed when seven or more persons sign the memorandum and register the business for any permissible purpose. Likewise, a private corporation can be formed by two or more persons.

What is Section 4 of the Companies Act 2013?

According to Section 4 of the Companies Act of 2013, a company that is a subsidiary of another business and is not a private company will be considered a public company for this Act, even if the subsidiary company's articles still list it as a private company.

Which companies are formed under Section 8 of the Companies Act 2013?

A Section 8 Company is a non-profit organisation established for the purpose of advancing business, arts, sports, sciences, research, social welfare, education, charitable giving, the environment, religion, or any other similar goal.

What is an incorporation form?

A certificate of incorporation is a legal document that attests to the formation of the business and verifies the name and date of incorporation under the Companies Act. After the necessary paperwork and information required by the Companies Act is submitted, the Registrar of Companies issues the certificate of incorporation in the format specified.