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Incorporation of a Private Company

Formation Of A Private Limited Company

A private Company can be formed either by

  1. incorporation of a new company for doing a new business , or
  2. conversion of existing business of a sole proprietary concern or partnership firm into a company.

A sole proprietary or partnership business can be converted into a company in any of the following ways:

  1. By outright sale of the business as a going concern. It may be a block sale where the following takes over all the assets and liabilities of the firm or it may be partial take over of certain assets and liabilities. The consideration may be based on itemized sale or it may be on slump sale basis.
  2. A company becoming a partner of the firm which will be dissolved thereafter by making partners of the firms the only shareholders of the newly incorporated company for which the following steps should be taken:
  3. Form a private company as per the procedure.
  4. The proprietor of the existing business along with some other persons (generally, family members and friends) or the partners of the existing firms, are the subscribers to the Company Memorandum of Association
  5. Make the newly formed company a partner with the sole-proprietor or the partners of the existing business. For this purpose a fresh partnership deed is to be executed.
  6. Make a provision in the new partnership deed for the transfer of all assets and liabilities of the firm to any one of the partners who will pay off to the other partners.
  7. Dissolve the partnership with the whole business going to the company as the sole continuing partner.
  8. Every other partner of the firm (or the proprietor) gets shares in the company in lieu of his interest in the firm on dissolution.

Name The name of a corporation is the symbol of its personal existence. Any suitable name may be selected subject, however, to the following instructions:

  1. No company can be registered with a name which in the opinion of the Central Government is undesirable.
  2. The name of the company should not be identical with or should not too nearly resemble, the name of another registered company, for such name may be declared undesirable by the Central Government.
  3. Whatever be the name of the company if the liability of the members is limited the last word of the name must be ‘Limited’ and in the case of a private company ‘Private Limited’
  4. Name of the Company must be printed on the outside of every place where the business of the company is carried on. Such name including the address of the registered office, must also be mentioned on all business letters and other official publications, on all negotiable instruments issued or endorsed by the company and on all other orders, receipts, etc.

Application for Availability of Name

  • The promoters should select three to five alternative names, quite distinct from each other.
  • The names should suggest, as far as possible, the main objects of the proposed company.
  • The names should not too closely resemble with the name of any other registered company.
  • The official guidelines issued by the Central Government should be followed while selecting the names. Besides, the names so selected should not violate the provisions of the Emblems and Names (Prevention of Improper Use) Act, 1950.
  • The Dept . Of Company Affairs has advised the ROCs to make arrangements for allowing the promoters and their representatives to ascertain the availability of proposed names. This will ensure that the names applied for would be made available promptly when an application for this purpose is made subsequently by the promoters
  • Apply in form 1-A to the Registrar of Companies have jurisdiction along with a filing fee of Rs. 500, to ascertain which of the selected names is available .The fee can be deposited in cash at the counter of the office of the Registrar or by postal order.

Company to be Registered within 6 Months of Approval of the Name

  • After scrutiny of the application for availability of name and finding no objection to the proposed name, the Register of Companies informs the promoters to the incorporation of company by that name within 7 days of receipt of application.
  • The promoters should complete all other formalities for registration within 6 months from the date of approval of name by Registrar.
  • Various documents required for the registration of company must be filed sufficiently well before the period of six months so that the company obtains the certificate of incorporation on a date which is within 6 months of approval of name, after these documents are vetted by ROC.
  • If, for any reason the formalities cannot be completed, the promoters should apply for revalidation of name by filling Form 1A afresh along with a request letter on plain paper stating the reason together with a fee of Rs. 500 giving complete reference to the letter of the Registrar.
  • If none of the names suggested is available, the promoters should apply again selecting fresh names, or removing the objections raised , within a period of one month from the date of the letter.
  • If no action is taken within this period, on the rejection of the name, name availability application is to be made afresh along with a fee of Rs. 500 .

The promoters may, however, make representation the Registrar’s refusal to the following authorities:

List of Authorities to Whom Representation against Refusal of Name can be made with Addresses/Jurisdiction

Address Jurisdiction
Central Government
  • Secretary
Department of Company Affairs,
Shastri Bhawan , 5 th floor, ’A ’ Wing,
Dr. Rajendra Prasad Road New delhi-110 001 Regional Directors
  • Regional Director, Eastern Region
Nizam Palace, II M.S.O Building,
3 rd Floor, 234/4
Acharya Jagdish Chandra
Bose Road ,Calcutta –700 020
  • Regional Director, Northern Region,
10/499-B, Allenganj , Khalasi Line,
Kanpur-208 001
  • Regional Director, Southern Region,
5 th floor, Shastri Bhawan,
26, Haddows Road
Chennai- 600 006
  • Regional Director, Western Region, “Everest”, 5 th floor, 100,
Netaji Subhash Road
Mumbai – 400 002
West Bengal, Orissa, Bihar , Assam, Tripura, Manipur, Nagaland, Mizoram , Arunachal Pradesh.
Delhi , Haryana , Uttar Pradesh, Punjab , Himachal Pradesh, Chandigarh , Rajasthan,
Jammu & Kashmir Tamil Nadu , Andhra Pradesh, Karnataka, Kerala , Pondicherry
Maharashtra, Gujarat , Goa, Daman & Diu , Madhya Pradesh

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