The Companies Act of 2013 or the Limited Liability Partnership Act of 2008 create companies and limited liability partnerships in India as “Artificial Judicial Persons” or “Separate Legal Entities”. It is only through following the Companies Act, 2013 and other pertinent acts that a company or limited liability partnership registration in India can be completed legally. If the documents that are used for incorporation are not executed in accordance with the Act or fraudulently, criminal prosecution can result and the company can be wound up. Startup companies and entrepreneurs who are involved in the process of incorporating a company or LLP should be aware of the process of incorporation and follow the incorporation procedures properly, so they will not face complications in the future.
The Incorporation Process
Incorporating a business or LLP goes through four main stages. It is necessary to get a Digital Signature Certificate for the proposed Directors, a Director ID number for the proposed Directors, name approval, and to file for incorporation. During the four stages, the promoters of an entity must submit various documents and information. Documents required during incorporation include: the promoters of the company must submit various documents during the four stages
- Promoters’ PAN cards
- provide proof of address
- Form DIR-4, Form DIR-2, INC-9, INC-10, Consent Letters, and Affidavits signed and notarized
- MOA & AOA Subscriber Sheet.
In addition, it is paramount the promoters provide the above documents accurately and make sure the proper information regarding the promoters is submitted to the MCA.
Documents for incorporation that must be notarized
As part of the incorporation process, the 2013 Companies Act requires that certain documents be executed on non-judicial stamp paper and that they be notarized by a Notary Public. Legally, a document cannot be notarized without the person signing it being physically present. If they are not present, the document cannot be notarized. Therefore, for the documents to be considered valid, the signing party must appear before the Notary and sign in his/her presence. The Directors of the Company can be held accountable for fabricating evidence if the documents are not notarized or executed properly.
Educate yourself on the risks & penalties
If you provide false evidence, you may face imprisonment of not less than three years and a fine as high as ten lakhs under the Companies Act, 2013. False evidence can further jeopardize the legal existence of a business and lead to further complications as outlined in the following sections:
Section 449 – False evidence:
If anyone intentionally gives false evidence in violation of Section 449:
If the oath or solemn affirmation is taken under the authority of this Act;
A person who affidavits, deposes, or makes any solemn affirmation about the winding up of a company under this Act, or otherwise relates to any matter arising under this Act, shall be liable to imprisonment for not less than three years and not less than seven years, and to a fine of not less than ten lakh rupees.
Important Points to remember during Company or LLP Incorporation
An Indian company can easily be incorporated. In order to protect themselves, Entrepreneurs must ask questions about the process, understand the procedures, and ensure their Company is formed legally. Following are some important things to remember during the incorporation process:
- Learn about the incorporation process
- Know the documents that your service provider will file for you to obtain the DSC, DIN, name approval, and corporation
- Incorporate your business according to the incorporation documents
- Make sure all legal documents are notarized by a Notary Public to avoid unnecessary complications
- Submit proper and valid proofs of identification and address
Incorporating a corporation or LLP serves as a tool for Entrepreneurs that requires extensive time, energy, and resources. Therefore, it is important to follow the right procedures and avoid shortcuts when beginning this wonderful journey in order to ensure the asset being built is error-free.