Capital Subscription

        3.CAPITAL SUBSCRIPTION.

 Under the capital subscription stage comes the task of obtaining the necessary capital for the company. Since a private company having a share capital prohibits, by its articles, any invitation to the public to subscribe for its securities, it has not to pass through this stage, namely, 'capital subscription stage'. 

A private company may offer securities to a select group of persons through 'private placement' as per Section 42 (other than by way of public offer). A public company may opt to invite public to subscribe its securities and offer its shares to the public through a prospectus. 

The Securities and Exchange Board of India (SEBI), which was established in terms of SEBI Act, 1992, regulates the issue of capital to the public. SEBI has been conferred wide powers to make rules and regulations to protect the interests of investors in securities and to regulate the securities market. 

With a view to ensuring protection of investors, Securities and Exchange Board of India had issued "SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009" for compliance by the companies making capital issues to the public. Accordingly, these Regulations, as amended from time to time, must be complied with before making a public offer for sale of shares and debentures.

After conforming to the "SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009" regarding public issues of capital, the directors file a copy of prospectus with the Registrar and invite public to subscribe to the shares of the company by putting the prospectus In circulation. Applications for shares are received from the public through the Company's bankers and if the subscribed capital is at least equal to minimum subscription of 90 per cent of the capital issue,' and other conditions of a valid allotment are fulfilled, the directors pass a formal resolution of allotment.

 Allotment letters are then posted, return of allotment is filed with the Registrar and share certificates are Issued to the allotters In exchange of the allotment letters. If the subscribed capital is less than minimum subscription or the company could not receive minimum subscription of 90 per cent of the offer to public including devolvement of underwriters within 60 days from the date of closure of the issue, all moneys will be refunded forthwith to the applicants and no allotment can done.

 It is after raising the necessary capital that the process of formation of a company is complete and the company becomes competent to commencer business. 

It may be mentioned that prior to the enforcement of the Company (Amendment) Act, 2015, there existed a requirement (under Section 11) of obtained the 'Certificate of Commencement of Business' before any company becomes emitted to commence business. The Companies (Amendment) Act, 2015 has done awa with this requirement by omitting Section 11. 

ONLINE REGISTRATION OF COMPANY 

Incorporation or registration of a company is the most important stage in the formation of a company. It is effected by registration with the Registrar of Companies of the State in which the registered office of the company is to be situated. E-governance : 

MCA 21 project of the Ministry of Corporate Affairs has made the online registration of companies in the country, which was once considered dream, possible. The following steps need to be taken for online registration companies :

 1. Application for a Director Identification Number (DIN). 

2.Acquire and register a Digital Signature Certificate (DSC), 

3. New User Registration. 

4. Get the proposed name of the company approved. 

5. Incorporate the company. The above steps are described in brief below :

           Step 1. Application for DIN

 For Online Registration of a company, firstly, Director Identification Number (DIN) is to be obtained. All existing and intending directors have to obtain DIN within the prescribed time by following the notified procedure in this regard. One needs to file e-Form DIR-3 in order to obtain DIN.

     Step 2. Acquire and Register a Digital Signature Certificate (DSC)

 The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically. 

As such all filings done by companies under MCA 21 e-governance programme are required to be filed with the use of Digital Signatures by the person authorised to sign the documents. For obtaining the Digital Signatures Certificates (DSC) for its authorised signatories, a company has to make an application to the licensed Certifying Authority which issues the Digital Signatures. Certifying Authority means a person who has been granted a license to issue a Digital Signature Certificate under Section 24 of the Information Technology Act, 2000.

 The Certifying Authority may, after making such enquiries as it may deem fit, grant the Digital Signature Certificate under Section 35 of the I.T. Act, 2000. 

Upon obtaining the Digital Signatures Certificates for its signatories, the proposed company through its representatives has to register the Digital Signatures Certificates in the Ministry of Corporate Affairs (MCA). The MCA performs a role check only after the signatories have registered their Digital Signature Certificates (DSC) with it. 

           Step 3. New User Registration

 To file any e-Form or to avail any paid service online on MCA portal, the authorised representatives of the proposed companies are first required to register themselves, as a user in the relevant user category, such as registered user (one who has access to basic e-services of MCA portal) or business user. 

     Step 4. Get the Proposed Name of the Company Approved

 Before a company can be incorporated, the persons desirous of forming a company should find out the availability of the proposed name from the Registrar of Companies (ROC). Any suitable name can be chosen for the company, subject, however, to the following restrictions : 

1. Every company shall have either the word "Limited" or "Private Limited" as the last word in the name of a public or private company respectively. In case of unlimited companies only the name is to be given.

2. The name chosen must not be undesirable in the opinion of the Central Government or a name which is identical or too nearby resembles to that of any other firm or body corporate. The reason for this rule is that reputation of a company or a firm may be injured, if new company adopts an allied name. 

Keeping in view the above restrictions, the users (applicants) have to apply for the approval of the name of the company to be registered by filing Form INC.1 for the same. 

        Step 5. Incorporate the Company

 After the name is approved, then depending upon the proposed company type, users (applicants) have to file the required incorporation forms listed : 

 e.Form INC-7 : Application for incorporation of a company.

 e.Form INC-22 : Notice of Situation or change of situation of registered office. 

e.Form DIR-12 : Particulars of Appointment of directors and the key managerial personnel and the changes among them.

 Once the Forms have been approved by the Officials of the Ministry of Corporate Affairs, the users or applicants will receive an e-mail regarding the same and the status of the Forms will get changed to 'Approved'. With this approval, Corporate Identity Number (CIN) is generated and the new company stands incorporated by way of an online process.

       Integrated Process of Incorporation 

The Ministry of Corporate Affairs has introduced integrated process for Company Incorporation through Form INC-29 In order to reduce the overall time in incorporation. In Form INC-29 all the steps of company incorporation have been merged in single Form. After processing the completely filled E-Form, once the Registrar of Companies is satisfied, company would get registered and Certificate of Incorporation will be issued to the newly incorporated company.

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Incorporation or Registration