1. FORMATION OF A COMPANY

2. PRIVATE LIMITED COMPANY
Section 3(1) (iii) defines a private company as one which:-
(a)has a minimum paid-up share capital of Rs.1 Lakh or such higher capital as may be prescribed ;and
(b)by its Articles Association:
1.restricts the right of transfer of its share;
2.limits the number of its members to 50 which will not include:-
A. members who are employees of the company; and
B. members who are ex-employees of the company and were members while in such employment and who have continued to be members after ceasing to be employees;
3.prohibits any invitation to the public to subscribe for any shares or debentures of the company; and
4.Prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives.

3. Public Limited Company
The Company defined under section 3(1)(iv) of the Companies Act, is a public company which-
1.is not a private company;
2.has a minimum paid-up capital of Rs. 5 lakhs or such higher capital as may be prescribed;
3.is a private company but subsidiary of a public company.
Private Companies deemed to be Public Companies
Certain private companies are deemed to be public companies by virtue of section 43 A, viz.-
1.when 25% or more of its paid-up share capital is held by one or more body corporate;
2.when its average annual turnover (during the last 3 years) exceeds Rs. 25 crores;
3.when it holds 25% or more of the paid-up share capital of Public Company; or
4.when it accepts or renews deposits from the public after making an invitation by an advertisement.
However, as per the Companies (Amendment) Act, 2000 effective from 13th December 2000 such deemed public limited companies are required to intimate to the Registrar to revert back to their original status as a private limited company.

4. STEP BY STEP FORMALITIES FOR formation OF A NEW COMPANY
1.Selection of type of the company.
2.Selection of name for the proposed company.
2.1 Applying for ascertaining the availability of the selected name
2.2 Approval of the name
3.Apply for Directors Identification Number and Digital Signatures.
3.1 Requirement for having digital signatures
4.Drafting of Memorandum and Articles of Association.

5. STEP BY STEP FORMALITIES FOR formation OF A NEW COMPANY
5.Stamping, digitally signing and e-filing of various documents with the Registrar.
6.Payment of Fees.
7.Obtaining Certificate of Incorporation.
8.Preparation and filing of Prospectus/Statement in lieu of Prospectus and e-Form 19/20 (in case of public companies) for obtaining the certificate of commencement of business.
9.Obtaining Certificate of Commencement of business (in case of public limited companies).

6. Legal formalities for starting a new business
Name approval The first step in getting your company registered is the approval of name for the Company. Generally, it takes about seven days to get the approval. The following steps are required for name approval:
You have to file an application in Form No. 1A with the Registrar of Companies (ROC) of the State in which the Registered Office of the Company is proposed to be situated. The application is to be signed by one of the promoters and must contain the following details:
Minimum 2 alternative names for the proposed Company. (The name can be coined names from the objects of the Company or the names of the directors, etc. but should definitely be indicative of the main object of the Company. Justification for the name needs to be specified along with the application).
Names and address of the members (minimum 7 for a public Company and 2 for a private Company).
Authorized Capital of the Company (Minimum Rs.5 Lac for a public Company and Rs. 1 lac for a private Company)

7. Legal formalities for starting a new business
Main objects of the Company On submitting the application, the ROC scrutinizes the same and sends the approval/objections in about 10 days to the applicant.
Director Identification Number (DIN) Directors for an Indian company, both Indian and foreigners, must register and get identification number under the new requirements. It is called Director Identification Number (DIN). The application needs to be filed online.
The form along with the supporting documents (PAN Card & Residence proof duly attested by CA, Notary or Gazette Officer) is to be sent to the offices designated by respective ROCs.
The fee for obtaining DIN can be deposited online or deposited in banks authorized for this purpose.
Digital Signature Certificate (DSC) Directors for an Indian company, both Indian and foreigners, are also required to get Digital Signature Certificate (DSC). DSC is required for all Directors or authorized representatives of any Company as well as the professionals who will sign ROC forms or documents.

8. Legal formalities for starting a new business
Memorandum and Articles of Association (Memorandum and Articles respectively) While the Memorandum states the main, ancillary/subsidiary and other objects of the Company, the Articles contain the rules and procedures for the routine conduct of the Company. The Memorandum also states the authorized share capital of the Company and the names of its first directors.
Memorandum and Articles also need to be stamped. The stamp duty depends on the authorized share capital.
Documents Required to be Filed with ROC The following documents are required to be submitted to the ROC :
Memorandum and Articles - These are required to be executed by the promoters in their own hand in the presence of a witness in quadruplicate stating their full name, father’s name, residential address, occupation, number of shares subscribed etc.
Form No. 1 - This is a declaration to be executed on a non-judicial Rs 20 stamp paper by one of the directors of the Company or other specified persons such as attorneys or advocates stating that all the requirements of the incorporation have been complied with.
Form No. 18 - This is to be filed by one of the directors of the Company informing the ROC of the registered office of the Company.
Form No. 29 - This is the consent obtained from all the proposed directors of the Company to act as directors of the Company. (Not required in case of private Company).
Form No. 32 - This states the appointment of the proposed directors on the board of directors from the date of incorporation of the Company and is signed by one of the proposed directors

9. Legal formalities for starting a new business
Name approval letter in original.
Power of Attorney signed by all the subscribers to Memorandum authorizing one of the subscribers or any other person to act on their behalf for the purpose of incorporation and accepting the certificate of incorporation.
Power of Attorney in case of a subscriber who has appointed another person to sign the Memorandum on his behalf.
Applicable filing fees.
These documents need to be filed online first and then a physical copy should be submitted to the ROC.
Certificate of Incorporation After the above documents are filed, the ROC calls the attorney on a specified date for scrutiny and making corrections, if any in the Memorandum and Articles filed. On complying with the same, the certificate of incorporation is sent by post to the registered office of the newly registered company.

10. Legal formalities for starting a new business
Income Tax related compliance
Permanent Account Number (PAN) After incorporation, the Company must obtain its PAN. For this purpose, an application needs to be filed with the Income Tax Department in Form 49A with the necessary documents. PAN is mandatory for opening of Bank Account, filling of Income Tax returns and various other financial transactions.
Tax Deduction Account Number (TAN) After incorporation, the Company must also obtain a TAN. For this purpose, an application needs to be filed with the Income Tax Department in Form 49B with necessary documents. TAN is required for depositing of TDS/TCS.
Other Tax compliance Value Added Tax VAT registration is required for a trading business. This is to be applied for to the local Sales Tax Department in the prescribed forms along with specified fees and necessary documents. On completion of the formalities, a Tax Identification Number (TIN) is granted.
Professional tax It is a tax on profession (including employment). Professional tax is applicable in some states in India and the rate of tax also varies from State to State.
Service Tax Service tax is applicable on an entity which is engaged in providing prescribed services. There are more than 100 services on which service tax is currently applicable. The rate of service tax presently is 10%.

11. Legal formalities for starting a new business
Labor Laws The Shops & Establishment Act The Shops and Establishment Act is a State legislation and, thus, each state has its own rules for the Act. The objective of this Act is to lay down statutory obligation and rights of employers as well as the employees. Registration of shop/establishment is mandatory within 30 days of commencement of work.
Employees Provident Fund Organization Provident fund registration is compulsory if the size of your workforce is 20 or more. The employer is required to provide necessary information to the concerned regional Provident Fund Organization (EPFO) in the prescribed form for allotment of Establishment Code Number.
Employees State Insurance Corporation (ESIC) Employees’ State Insurance Scheme of India is an integrated social security scheme tailored to provide social protection to workers in the organized sector and their dependents in contingencies such as sickness, maternity or death and disablement due to an employment related injury or occupational disease.
The ESI Act, (1948) applies to the following categories of factories and establishments in the implemented areas:-
Non-seasonal factories using power and employing ten (10) or more persons.
Non-seasonal and non-power using factories and establishments employing twenty (20) or more persons.
The employer is required to provide necessary information to the concerned regional ESI department in the prescribed form for allotment of Establishment Code Number.
Miscellaneous Importer Exporter Code (IEC) IEC Code is mandatory for doing import or export.

12. Conversion of a Private Company into a Public Company
The Companies Act (Sections 43, 43A,44), contains two procedures for such a conversion.  Conversion by default
The Companies (Amendment) Act,2000, stipulates that the Articles of a private company shall provide for four restrictions:-
Restrictions on transfer of shares;
Restrictions on invitation to public to subscribe to the shares or debentures of the company;
Restrictions on the maximum number of members which should not exceed 50 excluding members who are employees or ex-employees of the company; and
Prohibition on any invitation or acceptance of deposits from persons other than its members, directors or their relatives.
If default is made by any private company in complying with any of the above restrictions, such a private company shall cease to be entitled to the privileges and exemptions conferred on a private company by the Act and all the provisions which are applicable to a public company shall apply to such a private company.

13. Conversion of a Private Company into a Public Company
However, it is provided that the company or any person interested may file a petition before the Central Government along with the requisite fee, to grant relief in committing the default. The petition shall be accompanied by the following documents:-
Copy of the Memorandum and Articles of Association;
Copy of the documents showing that the default has been committed in complying with the conditions laid down under the Act;
Affidavit verifying the petition;
Bank draft evidencing the payment of requisite application fee;
Memorandum of appearance with copy of the Board Resolution or the executed Vakalatnama, as the case may be.
The Central Government on being satisfied that the failure to comply with the conditions envisaged under the Act was accidental or due to inadvertence or due to some other sufficient cause, or that on other grounds it is just and equitable to grant relief, may order that the company or any other person interested be relieved from the consequences of default, on such terms and conditions as seem to the court just and expedient.
From the date of the order, the company will again be entitled to all the privileges and exemptions available to a private company. But during the intervening period, the provisions of the Act as are applicable to a public company shall apply.

14. Conversion of a Private Company into a Public Company
Conversion by an act of Volition
A private company may get itself converted into a public company voluntarily by following the procedure for conversion:-
Convene a Board meeting and decide the time, place an agenda for convening a general meeting to alter the Articles of Association and consequently, the name, by Special Resolutions. It is, however, advisable to adopt a new set of Articles applicable to a public company. This is necessary as there are other Articles like quorum for general meetings; number of directors and the period of service of notice of a general meeting, etc. which are also to be changed.
Send notice for the general meeting proposing the Special Resolutions along with suitable Explanatory Statements.
If the quorum of two members personally present exists, then convene the general meeting and pass the Special Resolution to the following effect:-
To delete those articles which are required to be included in the articles of a private company only. Such other articles which do not apply to a public company, should be deleted and those which apply should be inserted.
Consequent to the above changes, delete the word "private" from its name.
To raise the paid-up capital to minimum Rs. 5 lakhs. In case the authorised capital is less than Rs. 5 lakhs than it shall also require to be increased.
To raise the capital from public.

15. Conversion of a Private Company into a Public Company
File either the prospectus in the Form as prescribed under Schedule II or the Statement in lieu of prospectus in the Form as prescribed under Schedule IV within thirty days of passing of the above special resolutions.
Director's consent to act as such in e-Form 32 is not required to be filed by a private company converted into a public company.
File the Special Resolutions passed and the Explanatory Statements with the concerned Registrar of Companies(ROC) in e-Form 23 within thirty days of their passing, along with the requisite fee.
Apply to the concerned ROC for the issue of a fresh certificate of incorporation in the changed name i.e. the existing name with the word "private" deleted. On issue of such a certificate, the change of name of the converted company shall be final and complete.
If the company has less than three directors, then increase the number of directors to atleast three. If the company has less then seven members, then increase them to atleast seven.
Although the company becomes a public company as soon as the Special Resolution to change the Articles to make it a public company is passed, the change in its name becomes effective only on the issue of the fresh Certificate of Incorporation by the concerned Registrar of Companies(ROC) in the changed name.
When a private company is converted into a public company, it is not required to obtain a certificate of commencement of business.
A statutory meeting must be held if such a conversion is before six months of the incorporation of the company.