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Company Formation Non Resident

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Company Formation by Non Resident

In India, a 'Limited Company' is a business organisation registered under the Companies Act, 2013 for doing business in a particular jurisdiction. It is an association of persons (individuals or body corporate like Companies and LLPs) registered under the Act. It is one of the most accepted business structure in India.

The company registration in India is regulated by the Companies Act, 2013 and Rules made there under and is administered by the Ministry of Corporate Affairs (www.mca.gov.in) through offices of the Registrar of Companies (ROC) in each state.

Type of Companies Available to Foreign Nations

Private Company is the most common form of business structure available for incorporation. It is like LLC/Inc in US or Limited Company in UK.

Minimum members required for registration is two shareholders and two directors. Of directors, one must be resident in India

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Requirements of Public Company Registration

Company Registration start with indentifying the pre-requisites for incorporation and processing required documents for filing with concerned Registrar of Companies. Before starting the process, keep in mind the pre-requisites for public company registration as given below:

Shareholders (Members)

Minimum Seven Persons required. Only Natural or Artificial Persons such as registered Companies or LLPs can become members of Company. In Public Limited Company, there is no restriction on maximum number of Members.

Directors

Minimum Three Directors required. One of the directors must be Resident in India, ie, stayed in India not less than 182 in the previous calendar year. Proposed Directors must have a Director Identification Number (DIN) issued by the Ministry of Corporate Affairs.

Company Name

The name of a Public Limited Company shall end with words "Limited". Company Name has three parts, ie., 'The Name', 'Activity' and words 'Limited'. Proposed Company name is required to be approved by the Registrar of Companies.

Registered Office Address

A temporary address is required at the time of registration of Company. It could be an address including address of any of the Directors. After registration, the company has to file the permanent business address with documentary proof of address, ownership etc.

Company Objects

Objects of the Company refer to proposed business activities. Company can have any legal business activities that are legal. It is advisable to identify the main objects of the company in a particular line of business. The name of the company must be in line with the main objects of the company. If the name of the company is not describing a particular object, then the company can have multifaceted objects. The objects are described under a Clause in Memorandum of Association of the Company.

Digital Signature Certificate (DSC)

All documents are filed online with Registrar of Companies. Online Filing of documents to be authenticated by using a Digital Signature Certificate of the Director obtained from the Certifying Authority in India.

Professional Certification

Services of a Company Secretary, Chartered Account, Cost Accountant is required to make necessary Certifications and declarations for incorporation of a Company.


Who is a Shareholder?

Shareholder(s) or Member(s) are the persons who invest capital and holds shares in a company. Members are the ultimate owners of the company.

How many Shareholder(s) and Director(s) are required for registering a Public company?

Number of Shareholder / Directors required for registering a public company - 7 Shareholders and 3 directors.

Who can become a Shareholder in a company?

Shareholders could be Individuals, Companies or LLPs, but only individuals can become directors of the company.

Who is a Director?

Directors of company are responsible for company management and legal compliance under various laws.

Who can become a Director in a company?

Only an individual can be appointed as a director of a company. A director need not be a shareholder of the company and shareholders need not necessarily be the directors also.

What is Authorised Capital?

Authorised Capital or Registered Capital of a company is the upper limit of capital that a company can issue shares and collect money from shareholders.

What is the minimum Authorised Capital for registering a Company?

No minimum capital required for public company formation

Can authorised capital be increased?

Authorised Capital can be enhanced at any time by passing a resolution at a meeting of shareholders. Authorised capital can be any amount above the minimum limit. The fee payable to ROC will be calculated on the basis of Authorised Capital.

What is Subscribed Capital?

Subscribed Capital refers to the total amount of share capital agreed to be brought in by the shareholders to the company.

When the Subscribed capital has to be brought in to the Company?

For commencing the business by a Limited Company, the subscribers to Memorandum have to bring the agreed amount of capital to the company's account and the Company has to file a declaration to the Registrar of Companies. Only after filing the referred declaration, the company can start doing business. So the subscribers to MOA have to bring the entire amount of subscribed shares capital immediately after Incorporation. The maximum time available to bring the capital is 180 days from the date of registration of company.

What happens if the subscribed capital is not brought in within specified time?

If the subscribers are not brought the money within the specified time, the registrar can issue notice for closure of the company.

What is Paid Up Capital?

Paid up capital of a company refers to the amount of capital actually brought in by the shareholders to the company.

How the money can bring into the company?

The subscribed capital can be brought into the company in any accountable mode. The best practice is to open the bank account for the company and bring the money to company's account from the personal account of each subscriber by way of cheque or bank transfer.

What is meant by Objects of the Company?

Objects are the proposed business of the company. The objects can be any business that is legal. It is advisable to identify the main objects of the company in a particular line of business. The name of the company must be in line with the main objects of the company. If the name of the company is not describing a particular object, then the company can have multifaceted objects. The objects are described under a Clause in Memorandum of Association of the Company.

Whether the objects of the company can be changes later?

A company can change its objects by passing a resolution at the Shareholders meeting.

How to decide the Name of the Company?

A company must have a unique Name. The approval of Company Names is subject to Company Name Guidelines issued by MCA. The name of the company should end with the words 'Limited' . The name of a company should not be identical with or nearly resembling with the name of a company in existence and such a name is already approved by the Registrar of Companies or The name of a Limited Liability Partnership (LLP) in existence or a name already approved by Registrar of LLPs; or A registered trade mark or a trade mark for which an application is filed under the Trade Marks Act, 1999.

How to decide the State in which the company is to be registered?

The jurisdiction of the ROC will depend on the state in which the registered office is situated. Place of registration depends on the convenience to the promoters.

What is Registered Office of the Company?

The Registered office address is the official communication address of the Company. The Registrar of Companies shall send all the correspondence relating to the company to the registered office address

When the company must have a registered office?

At the time of Registration, a Temporary Address can be given as the company's registered office. From the 15th day of registration, company should have a permanent address as registered office receiving and acknowledging all communications and notices. Within 30 days of registration, the company has to file a return of verification of registered office with proof of registered office address with Registrar of Companies.

Whether registered office can be changed from one place to another?

The registered office can be changes from one place to another place within the city, or within the sate or state to state subject to compliance of requirements under Companies Act

Whether Administrative Office can be same or different from Registered Office?

Administrative Office refers to a place where general Administration of company happens. Administrative Office can be same or different from Registered Office.

What is a Digital Signature Certificate (DSC)?

DSC is a legally recognised method of signing documents electronically. A digital signature is a type of asymmetric cryptography used to simulate the security properties of a handwritten signature on paper. Digital signature schemes normally give two algorithms, one for signing that involves the user's secret or private key, and one for verifying signatures that involves the user's public key. The output of the signature process is called digital signature. Digital signature certificates are used by programs on the Internet and local machines to confirm the identity of a third party. Digital signatures have often confused with scanned copies of a physical written signature, which do not have any legal backing for authentication of electronic documents.

What is use of Digital Signature Certificate (DSC) in Company Registration?

All the applications, Documents and Returns filed to the Registrar of Companies (ROC) are submitted online through www.mca.gov.in. These forms need to be authenticated by a Digital Signature Certificate (DSC) issued by the Certifying Authority in India.

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