Is your Company Incorporation Legal?

A Company or LLP incorporated in India is an "Artificial Judicial Person" and a "Separate Legal Entity" that is created through the Companies Act, 2013, or Limited Liability Partnership Act, 2008. A proper and legally valid Company Incorporation or LLP Registration in India is completed only by properly following the Companies Act, 2013 and other relevant Acts. When the documents that are filed for incorporation are not executed as per the Act or fraudulently, it can lead to criminal prosecution and winding-up of the entity. Therefore, startups and other Entrepreneurs involved in the process of company or LLP incorporation must understand the process of company incorporation and complete the incorporation procedures properly to ensure there are no complications in the future.

Process for Incorporation

Company or LLP Incorporation has four main stages. Obtaining Digital Signature Certificate for the proposed Directors, obtaining Director Identification Number for the proposed Directors, obtaining Name Approval and filing for incorporation. The promoters of the entity must provide various information and documents during the four stages. Some of the documents required during incorporation include: the promoters of the entity must provide the various information and documents during the four stages

PAN Card of the Promoters
Address Proof of the Promoters
Signed & Notarized Form DIR-4, Form DIR-2, INC-9, INC-10, Consent Letters and Affidavits
MOA & AOA Subscriber Sheet

It is important that the promoters provide the above documents correctly and ensure the correct information pertaining to the promoters is being filed with the MCA.

Incorporation Documents Notarization

During the incorporation, the Companies Act, 2013 mandates that certain documents be executed on Non-Judicial Stamp Paper and the same be notarized by a Notary Public. It is important for promoters to note that legally, notarization of a document can be done only with the physical presence of the signee. Therefore, the person signing the documents must appear before the Notary and sign the documents in his/her presence to ensure the legal validity of the documents filed with the MCA. In case of filing the documents without Notary seal or improper execution, the Directors of the Company can be held later for furnishing false evidence.

Know the Penalty & Risks

The penalty for providing false evidence under the

Companies Act, 2013, is imprisonment, which is not less than three years and fine, which may extend to ten lakhs. Further, providing false evidence can jeopardize the legal existence of a business and lead to further complications under the following section: Section 449 – Punishment for false evidence: Section 449 states that if any person intentionally gives false evidence— (a) upon any examination on oath or solemn affirmation, authorized under this Act; or (b) in any affidavit, deposition or solemn affirmation, in or about the winding up of any company under this Act, or otherwise in or about any matter arising under this Act, he shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to seven years and with fine which may extend to ten lakh rupees.

Key Points to Remember during Incorporation of Company or LLP

Company or LLP Incorporation in India is simple and easy to understand the process. So Entrepreneurs must take the time to ask a question about the process, understand the procedures, and ensure the Company is formed without any legal defects. The following are some of the major points to remember during incorporation:

Understand the process of incorporation
Understand the documents being filed by your service provider for obtaining DSC, DIN, Name Approval and Incorporation
Properly execute the documents filed for incorporation
Appear before a Notary Public and get notarization of legal documents to avoid unnecessary complications in the future
Submit proper and valid identity and address proof

A company or LLP incorporation is a tool for the Entrepreneur on which a great amount of time, energy, and resources that make it an asset. Therefore, while starting on this wonderful journey, it is important to follow the rules and procedures and avoid shortcuts to ensure the asset being created is without any defect.

To register a Company or Start an LLP, visit IndiaFilings.com

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Frequently Asked Questions

Common questions about Company Incorporation Legalities in India.

A company or LLP incorporated in India is considered an "Artificial Judicial Person" and a "Separate Legal Entity" created under the Companies Act, 2013 or Limited Liability Partnership Act, 2008. It is crucial to follow the proper legal procedures during incorporation to ensure the validity of the entity.

The four main stages of company or LLP incorporation in India are: obtaining a Digital Signature Certificate for the proposed Directors, obtaining Director Identification Numbers for the proposed Directors, obtaining Name Approval, and filing for incorporation with the required documents.

Some of the key documents required during incorporation include PAN Cards and Address Proofs of the Promoters, signed and notarized Forms (DIR-4, DIR-2, INC-9, INC-10), Consent Letters, Affidavits, Memorandum of Association (MOA), Articles of Association (AOA), and the Subscriber Sheet.

Under the Companies Act, 2013, certain incorporation documents must be executed on Non-Judicial Stamp Paper and notarized by a Notary Public. Proper notarization requires the physical presence of the signee before the Notary to ensure legal validity and avoid furnishing false evidence.

Providing false evidence during incorporation can lead to imprisonment of not less than three years and a fine of up to ten lakh rupees under Section 449 of the Companies Act, 2013. It can also jeopardize the legal existence of the business.

Some key points to remember during incorporation include understanding the process thoroughly, properly executing and notarizing required documents, submitting valid identity and address proofs, and avoiding shortcuts to ensure the legal validity of the entity.

A company or LLP incorporation is a valuable asset that requires significant time, energy, and resources. Following the rules and procedures during incorporation ensures that the asset is created without any legal defects, avoiding potential complications in the future.

Obtaining a Digital Signature Certificate and Director Identification Number for the proposed Directors are crucial steps in the incorporation process. These digital identities facilitate secure online filings and establish the identity of the Directors, respectively.

Yes, if the documents filed for incorporation are not executed as per the Companies Act, 2013, or other relevant Acts, or if they are executed fraudulently, it can lead to criminal prosecution and the winding up of the entity.

Understanding the process of company incorporation thoroughly is essential for startups and entrepreneurs to ensure they complete the incorporation procedures properly, provide correct information and documents, and avoid potential legal complications in the future.