A Procedure To Become A Director In A Private Limited Company

A director is a person appointed to manage and supervise the affairs of a company and while a business may start with two individuals taking up the responsibility but as the organization grows, it becomes necessary to bring in more professionals who can look after the different facets of the expanding operations. Here some light will be shed on the procedure to become a director in accordance with the Companies Act,2013.

 

Digital Signature Certificate (DSC) Application

The whole procedure is online and therefore it becomes mandatory to have a DSC for signing the virtual documents. The application can be made to the Certifying Authority, details of which can be obtained from Ministry of Corporate Affairs (MCA). 

 

Director Identification Number (DIN) Application

The e-form DIR-3 has to be filled and submitted to the MCA for obtaining the DIN by a person intending to become the director in a company.

 

Documents Required For DSC & DIN

• PAN Card (Self- attested copy)
• Address Proof (Passport/ Driving License/ Voter ID or Utility Bill like Electricity/ Telephone/ Water/ Piped Gas)
• Photograph

 

Consent

The procedure to become a director requires the person intending to do so to furnish a written acquiescence by filling Form DIR-2.

 

Form DIR-8  

This document is needed to be filled by the person in order to declare that he/she is not disqualified under Section 164(2) of the Companies Act. It is important for the management of an organization thinking of adding a director to the limited company to ensure that the individual in question is of sound mental faculties, solvent, never been convicted by a court of law apart from fulfilling a few other conditions stipulated in Section 164.

 

Board Meeting

A board meeting needs to be called with the agenda of appointment of the new director listed clearly in the notice. The resolution to make the addition to the list of directors should be presented and if passed a letter confirming the appointment should be issued to the candidate. All the minutes of the meeting must be recorded. 

 

Form DIR-12

The e-form DIR-12 needs to submitted to the Registrar of Companies (RoC) along with DIR-2, DIR-8, letter of appointment and a certified copy of the resolution passed at the board meeting. It must be noted here that the process of filling this form has to be undertaken within 30 days of the appointment of the new director. The RoC on finding the application satisfying all conditions may direct the addition of the new member to be displayed in the company’s section on the MCA website.

 

Conclusion

The procedure to become a director may seem lengthy but it is important to do so for the smooth functioning and secure future of the organization.The fortunes of all the employees are linked to the prosperity of the enterprise and therefore each and every process and action associated with its functioning has been developed with checks and balances. It is the duty of the people entrusted with the task of running such corporations to follow due diligence and observe every rule while conducting day to day operations.

Major Difference Between Private Limited and LLP Company in India

You need to know the difference between Private Limited and LLP Company in India if you want to start a business sector over here.  Entrepreneurs have the chance to form two modern forms of organizations. But first things first, and it starts off with registration procedure. It is mandatory to get some clear ideas on private limited company registration procedure or that of an LLP firm. Once you are through with the legalities of the registration, you can start planning for your all-new venture in the business world in India.

 

Start it off with registration:

The LLP and Private Limited registration procedures are quite similar with some basic differences in forms and documents. The steps to be addressed while registering for the Private Limited Company are listed for your reference.

• You have to procure Digital Signature Certificate for proposed directors. After that, you need DIN for proposed directors and name approval from MCA. 
• Next stop, you need to fill for incorporation.

The basic steps are similar for the LLP firms too. Let’s just learn a bit more about its registration.

• Procure DSC for proposed partners and procure DIN or DPIN for the partners, as well.
• After that, you need to get name approval from MCA, just like with the private limited companies.
• For the last step, just fill for incorporation.

Both these firms are registered with Ministry of Corporate Affairs and they have to get Certificate of Incorporation. The processing time might vary a bit and it will take on an average of around 20 days for incorporating.

Advantages of LLP:

Before you head for LLP Company in India, it is time to get a clear idea of its advantages.  LLP Registration is a new form of business for corporate and partnerships to exist side by side. It is solely registered under LLP Act 2008 and also under the Ministry of Corporate Affairs.

• LLP is formed based on the capital amount. You don’t have to worry about LLB over here.
• It takes around 2 partners for setting things up without any limit on maximum partner numbers of LLP.
• The LLP registration cost is somewhat low when compared to another firm.
• Other limited companies have to get their accounts audited but that is not required for the LLP.
• LLP needs to file two options under Annual returns and statements of accounts and solvency

 

Advantages of private limited:

Once you are through with the basic limited companies and services, it is time to go for the private limited companies now. These companies are able to capture and maintain shares privately. They are able to operate businesses all by themselves and get to hire directors for managing companies on their behalf.

• The liability of private limited shareholders is only limited to extent of shareholding personal assets, and are not taken for repaying company’s debts.
• You will come across restricted trades of sharers, which is also an advantage to shareholders not willing to sell shares to outsiders. 
• This forms a separate legal entity, with its own liability and assets.  Some shareholders are available to take quick and prompt decisions. These are solely governed by Companies Act 2013, where the norms and procedures are followed well. 

Get down to compliances:

In terms of private limited and LLP, the tax compliances are more or less same. But, when it is about compliance relating to Ministry of Corporate Affairs, LLP is known to have some advantages over limited liability company registration anytime.

• LLP will not have to get the accounts audited in case the annual turnover is less than 40 lakhs rupees and capital contribution falls below the mark of 25 lakhs rupees. 
• On the other hand, you have the private limited firms, which are cordially invited and asked to file annual returns audited based financial statements within the Ministry of Corporate Affairs on a yearly basis.

 

For the penalties and fines:

The penalty associated with the non-compliance or the late filings of the documents are most of the time higher for LLP with a flat fee of 100 bucks on a daily basis. It is mostly levied whenever the non-compliance continues without the cap on liability. So, LLP is known to incur higher penalty prices or fines from MCA because of the non-compliance.

Important Tips for Company Registration for Small Businesses

A company registration is something which gives a legal existence to our business venture. It is a very important aspect of any business for it ensures a smooth functioning of business activities under a proper registered name. This also ensures that the company takes a life of its own and can only be closed by a legal intervention and not by any other means. The main benefits of a company registration are:

• Protection against any accidents or financial loss
• Investors are more inclined towards registered companies
• Creates a Legacy

Registering a company is a fairly long and tedious process with some sequence of procedures to be followed. Let’s have a look at some of the company registration tips for small businesses in India.

1. Director Identification Number (DIN) and Digital Signature Certificate (DSC):

Every director of the company needs to acquire a Director Identification Number (DIN) as per the Amendment Act 2006. To obtain the same one needs to fill up the DIN-1 e-Form available on the website of Ministry of Corporate Affairs (MCA) and paying the fees applicable for the same.

One needs to obtain a Digital Signature Certificate from an MCA authorized agency. A digital signature ensures the authenticity of documents filed using electronic mode. This is mandatory as per the Information Act 2000. The Controller of Certification Agencies (CCA) has appointed agencies like TCS, NIC, MTNL etc. to issue DSC. One should not acquire DSC from agencies which are not approved by the CCA.

2. Company Name Approval and Certificate of Incorporation:

In order to get a name approved, one needs to submit Form 1A and wait until the name gets approved by the Registrar of Company (ROC). Earlier there was a provision for submitting six names during the submission of the form but nowadays we can only submit one name. Although we can go through the names of the already registered companies on mca.gov.in to ensure that we have a unique name. The significance of the name also needs to be written down in one or two sentences in the Form 1A. This approval process takes about 2 days.

Certificate of Incorporation requires us to fill up Form 1, Form 18 and Form 32. This process should ideally be done once the name of the company is approved by the ROC. The documents required for filling up Form 1 include the following:

• Form 32 along with consent letter from Directors
• Memorandum of Association (MoA): The document which explains the ways to raise capital through the allocation of shares and the usage of this capital, both in present and in future.
• Articles of Association (AoA): Clauses of the company are defined here.
• Power of Attorney and Identification of subscribers
• The MoA and AoA are to completed and sent to the registrar for verification which is duly stamped post verification to be sent to the registrar office for further processing and issue of the Certificate of Incorporation.

3. Permanent Account Number and Tax Account Number

One needs to apply for a Permanent Account Number (PAN) and a Tax Account Number (TAN) for the registered company. This process takes close to a week.

There are other procedures to be followed which include registering for GST, getting a rubber stamp for the company, registering for professional tax and Employee Provident Fund which are also to be completed. These can be completed simultaneously with the business proceedings of the company once the Certificate of Registration has been issued. 

End-note

These are some of the steps which are required during the company registration in India. The list of documents and process may vary from one state to other. There can also be some other permissions like Consent from the Pollution Control Board required if the business pertains to such a category. With most of the forms available in electronic mode, the process has become fairly straightforward. It is to be kept in mind that the process of registering a company is time taking and it may take somewhere close to 30-40 days for the entire process to get completed. Once should carefully go through all the forms and ensure that none of the required document or information is missed. It is recommended to go for expert advice by hiring experienced professionals if required to ensure that there is no mistake in documentation and the registration process gets completed at the earliest.  

Easy Steps To Section 8 Companies Registration In India

Section 8 of the company act 2013, is for the organizations which are registered as Non-Government Organization, name as Section 8 Company. These companies have their objectives, rights, and obligations. It works same as Limited companies but they cannot use the words like 'Limited' or 'Private Limited'.

In India, a Non-Profit organization can be registering under the Society Registration Acts. The process of registration section 8 companies is same as other companies but the requirement of a license is a must. 

Here are the easy steps to section 8 Registration in India:

1) Apply for DSC and DPIN

In India, the very first step to incorporate while registering for the section 8 company is to apply for DSC(Digital Signature)  and DPIN( Directors PIN Numbers). DSC is basically the Digital Signature used for form filling online. DPIN is the PIN Number provided by the MCA. If any of the partners have already completed these documents, then they will move a further step.

2) Approval of the Name

The second step should be the approval of names suggested to the MCA. Names should be unique and selective. MCA will choose one name from them.

3) Other Authorities Approval

Any of section 8 companies require the approval from any department, regulatory body and Ministry of State government for registration. So you need to take this approval first.

4) Section 8 Additional License

If the company name is approved by all the authorities you have approached, you should apply for section 8 company license from MCA. It will take at least 30 days. It will grant the license with some terms. Also, give the way to the company to add to its memo and articles.

5) Submit the MOA and AOA

After the license, the next step should be the submission of MOA (Memorandum Of Association) and AOA (Articles Of Association). It will be filled with the subscription of a statement by the MCA.

6) Incorporation Certificates

These certificates are proof of the existence of the company and it will take at least twenty days. The other one is CIN (Company Incorporation Number). Such license has its own conditions complied by the Registrar.

7) Application for PAN and Account of Company

After all of this, apply for PAN and TAN. After getting all the other documents such as MOA and AOA, you need to open the bank account.

MCA issues a integrate Incorporation Form INC-32 with the OPC is kind of performance for the incorporated company.

Conclusion

These steps show the identity of a company with legal and proper documents. Always remember section 8 companies are Non-Profit Organizations, whose functions will always be same as the limited company. Central government provides them incorporation with some terms and conditions, which makes the process of registering them quite simple.

Advantages & Disadvantages Of One Person Company Registration

The Companies Act, 2013 introduced the concept of One Person Company in India for the entrepreneurs to start their own venture by allowing them to create a single person economic entity. One of the biggest advantages of a One Person Company (OPC) is that there can be only one member in an OPC, while a minimum of two members is required for incorporating and maintaining a Private Limited Company or a Limited Liability Partnership (LLP). Similar to a Company, a One Person Company is a separate legal entity from its promoter, offering limited liability protection to its sole shareholder, while having continuity of business and being easy to incorporate.

If you are the only one who wants to start your company and want to avoid the issues of partnership then you must go with One Person Company registration in India. It is one of the business formations introduced to help individuals in running a business.

How To Register A Private Limited Company In India

At a time when major economies of the world are witnessing an economic slump, layoffs, cut in employee's salaries, etc, India seems to be performing well. Despite all negative media propaganda, India's economy is performing well in terms of tax collection, elimination of black money, export of agricultural products, software, highly talented professionals, goods and services, generation of new jobs, ease of doing business, etc. The government of India has allowed 100% FDI in several private sectors. That is why, business individuals from all over the world has been arriving India to start their business activities and earn handsome revenues every day, week, month, and year.

Although, the process to register a private limited company in India is simple and straightforward, but can be quite stressful for unfamiliar individuals. If you want to register your business as a private limited company and do business legally, here are the essential steps that you need to follow:

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