Steps required for obtaining certificate of commencement of business

Steps required for obtaining certificate of commencement of business:

The company having a share capital has issued prospectus:

certificate

  • Allot the shares at least equal to the amount of minimum subscription
  • Have the application and allotment money paid by the directors on the shares taken or contracted to be taken by them having been paid in cash at least to the extent such moneys are payable by the public.
  • Obtain or apply for permission for dealing in the shares or debentures on the recognized stock exchange so that the moneys of the applicants for shares or debentures do not become refundable.
  • File a declaration in form no 19 duly verified by one of the directors or the secretary or where the company has not appointed a secretary, by a secretary in whole time practice with the registrar of companies to the effect that the aforesaid three conditions have been compiled with.
  • Pay the stamp duty as prevalent in the state in which the company is registered according to the Indian stamp act.
  • Attach a treasury Challan to the declaration evidencing the payment of the requisite fees prescribed under the companies act and in accordance with the rule of the Companies general rule and forms.
  • The registrar will then issue the certificate of commencement of business.

The company having a share capital has not issued prospectus:

  • Have the application and allotment moneys paid in cash by your directors, which they are liable to pay in cash on the shares taken or contracted to be taken by them.
  • File the statement in lieu of prospectus according to the form and requirements of schedule III.
  • Do not allot any share or debenture at least for three days after filing the above statement.
  • File a declaration in Form No. 20 duly verified by one of the directors or the secretary or where the company has not appointed a secretary, by a secretary in whole time practice with the registrar of companies to the effect that the first mentioned condition has been compiled with.
  • Pay the stamp duty as prevalent in the state in which the company is registered according to the Indian stamp act.
  • Attach a treasury Challan with the declaration evidencing payment of the requisite fees prescribed under schedule X to the companies act and in accordance with the rule of the companies General Rules and Forms.
  • The registrar will then issue the certificate of commencement of business.

Solubilis Corporate Services” with a team of professional experts are always there to support the clients in a way they can avail the services. Company registration could be done by providing excellent customer support to the clients throughout the registration process.

 

 

Appointment of Directors and the terms associated with that

Appointment of directors and the legal concept behind that will be discussed here. Have an eye on this to know the basic things about the how the process will be carried out.

Appointment of Directors:

appointment

Directors may be appointed in the following ways:

  • By subscribers to the memorandum (First directors) section 254.
  • By members in general meeting
  • By board of directors
  • By central government
  • By third parties,  if the articles provide
  • By small shareholders,  if the articles provide.

Appointment of First Directors:

Appointment

  The first director means the director of the company who assumes office from the date of incorporation of the company. The first directors of a company may be named in its articles of association. In case no directors are so named in the articles, the articles may authorize the subscribers to the memorandum to appoint the first directors.

As per section 254, which provides that any absence of a provision in the AOA, the individual subscribers mentioned in the memorandum will be considered as the director until the new directors appoint in accordance with the section 255.

If the articles provide for any share qualification, only such of the subscribers as possess the necessary share qualification shall be deemed to be directors. This provision is applicable only to a public company and not to a private company unless the articles make it applicable.

 If the subscribers who are all in the memorandum are bodies corporate, then none can be deemed to be the directors, and obviously, the company will not have any directors until the first director who will be appointed under the section 255, with the absence of provisions in the AOA. The articles may contain the first director name during the registration time until the new directors appoint at the first AGM.

How to appoint the directors?

appointment

A person who is intended to become a director must obtain DIN (Director Identification Number). The prospective director must declare to the company that he holds a DIN, if not he will be disqualified to be a director. The appointed director needs to notify his consent to the company and as well to the registrar within 30 days from his appointment.

What will happen if the person doesn’t notify his consent to the registrar?

Appointment

If the person who appoints as a director in a particular company need to notify his consent to the registrar within the specified date. If not, it will be taken as an offense and punishable in a way that he will be imprisoned for a period of six months or need to pay the fine amount which may extend up to fifty thousand rupees. If the non-compliance continues, for each day he will be fined the amount of Rs.500.

Terms to be followed for the appointment of directors:

Appointment

Generally, a director will be appointed in the Annual General Meeting (AGM) he can hold the post till next AGM. In the articles of the company, it has been clearly mentioned about the appointment of directors and the permanent directors. In public companies or a subsidiary of a public company, only one-third of the persons will be permanent directors, rest will retire by rotation.

An independent director can act as a director for the consecutive five years. In this case, if the director wants to stay in his position, special resolution can be passed by the board in order to extend his time period. After the two consecutive terms, there should be a gap of three years. In those 3 years, there shouldn’t be any association with that company. After those 3 years, he can be reappointed as a director.

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Concept of Company Directors and the types of directors

There are different types of directors. The directors of a company are eyes, ears, brain, hands, nerves and other essential limbs, upon whose efficient functioning depends the success of the company. In order to enable a company to live and to achieve its objectives, the director acts as an agent to en route in a right way.

why Directors?

types

  • The directors formulate policies and establish organizational setup for implementing those policies and to achieve the objectives as contained in the Memorandum.
  • Muster the resources for achieving the company objectives and control, guide, direct and manage the affairs of the company.
  • Directors as a body, frame the general policy of the company, direct its affairs, appointing the suitable company employees, and ensuring that they carry out their duties and responsibilities. Recommend to the shareholders about the distribution of dividend.

Types of Directors:

Two important directors are there, they are (i) executive directors or whole-time directors with the designation as managing directors, executive directors, and technical directors. (ii) Non-executive or part-time directors who are professionals and do not depend on their company rather they serve on the board of directors of a number of companies.

The Broad classification of “Directors”:

Inside Directors:

types

Those directors are the one who is in the whole-time employment of the company. It includes a technical, executive, managing director etc.

Outside Directors:

types

Those directors who are not in the whole-time employment of the company and they will not be associated with day-to-day working. They will be called in different types as nominated directors, professional directors, statutory directors.

Professional Directors:

types

They are specialized in different fields of management with extensive knowledge and experience in assisting and improving the given organization. They are in a position to offer suggestions for formulating a company’s policies and their income is derived principally which they receive from the companies on whose boards they serve.

Nominee Directors:

types

Those directors are appointed by financial institutions or banks which extend to financial assistance/term loans or working capital assistance to companies. They are mainly used for project supervision, monitoring, and control, particularly following the issue of government guidelines.

Special Directors or executive Directors:

types

Those are the full-time employee of a company and is given this designation in order to appreciate his merit and his usefulness to the company. Such directors will not be a board member and cannot be considered as a director within the provisions of the companies act.

Independent Directors:

types

They are the one who is apart from the director’s remuneration and do not have any pecuniary relationship or the transactions with that concern. Since because the promoters, management, or its subsidiaries who are in the judgment of the board may affect the independence of the directors.

Interested Directors:

types

Those are the ones who are used purposely for the quorum meeting with the board members for any discussion or any matter.

Government Directors:

types

The central government is the authoritative power to appoint the directors under section 408 of the act.

Whole-time director:

types

Whole-time directors are the one who devotes all his time and attention to the management of the company. He will act as a sale, technical, legal and work director since he is the whole-time director of the company.

Managing director:

types

Managing directors are the one, by virtue of an agreement with the company or the resolution which is passed by the company in the general meeting or by its board of directors or by virtue of its memorandum or articles of association entrusted to the managing power of the company.

The managing director’s power is substantial so that he can decide matters such as the appointment of the employees, selling and buying, control and direct the company’s board of directors.

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