Compliance for Newly Incorporated Company

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Page 1 VALUE ADDED PROFESSIONAL SERVICES LLP

Corp Office: 404 I, 4th Floor, Devika Towers I Chander Nagar I Ghaziabad, U.P. -201011, Telephone: +91 120 4264301

Compliances of a Newly

Incorporated Company

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Company Incorporation

Common Seal and Company Stamp

Company Stationery and Name / details Display

PAN Number

Bank Account

Shop and Establishment Act Registration

TAN allotment

Statutory Auditors' Appointment

Allotment of Securities

Disclosure of Director's interest e-Form MGT 14

Non Statutory Activities

Statutory Activities

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Before we go to these activities, let us understand what constitutes an Incorporation of a Company

What Constitutes Incorporation of Company Once all the Forms are duly approved by RoC, the digitally signed “Certificate of Incorporation” is emailed to the Directors.

As part of the Green Initiative by the MCA (Ministry of Corporate Affairs), few Certificates including “Certificate of Incorporation” are now issued only in the

electronic format i.e. softcopy (having digital signature of RoC Registrar). Once the

Incorporation Certificate is received, Company can start its operations.

How to validate a Digital Signature on the Incorporation Certificate? The Certificate of Incorporation (CoI) received in the .pdf (which opens in “Adobe

Reader”) format, may display “Validity Unknown” for the Digital Signature. Please

follow the steps mentioned here. Please note that the version of Adobe Acrobat reader should be 9 or higher.

Non Statutory Activities

Click on the Digital Signature

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Click the “Signature properties” button

Click “Show certificate”

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Click the “TRUST” tab

Click the “Add Trusted

Identities” button

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Click “OK”

Tick Mark “Certified

documents”

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Click “OK”

Click “Validate

Signature”

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Signature will turn Valid as above

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Common Seal and Company Stamp

Common Seal Company being an artificial person does not have a physical presence therefore it

acts through its Board of Directors for carrying out its activities and for entering into

various agreements. The Company uses Common Seal as its Signature. Common Seal means, the metallic seal of a company which can be affixed only with the

approval of the Board of Directors of the Company. It is the signature of the company

to any document on which it is affixed and binds the company for all obligations undertaken in the document.

Affixing of Common Seal under the Act: Articles of Association of a Company

Limited by Shares specifies: Article 2 (ii) of Table F - every certificate shall be issued under the seal of the

Company.

79 (i) & (ii) of Table F and 30 (i) & (ii) of Table H (i) The Board shall provide for the safe custody of the seal.

(ii) The seal of the company shall not be affixed to any instrument except by

the authority of a resolution of the Board or of a committee of the Board authorised by it in that behalf, and except in the presence of at least two

directors and of the secretary or such other person as the Board may

appoints for the purpose; and those two directors and the secretary or other person aforesaid shall sign every instrument to which the seal of

the company is so affixed in their presence.

Relevant Sections of Companies Act, 2013 Section 9: Registration of Memorandum of Association of the Company with

Registrar of Companies, enables the Company to exercise all the functions of as

incorporated company and have a perpetual succession and Common Seal with the power to acquire, hold and dispose of property, both movable and immovable,

tangible and intangible, to contract and to sue and be sued, by its name.

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Section 12(3)(b): Every company shall have its name engraved in legible characters

on its seal.

Section 22 (1): A bill of exchange, hundi or promissory note shall be deemed to have been made, accepted, drawn or endorsed on behalf of a company if made,

accepted, drawn, or endorsed in the name of, or on behalf of or on account of, the

company by any person acting under its authority, express or implied. Section 22 (2): A company may, by writing under its common seal, authorise any

person, either generally or in respect of any specified matters, as its attorney to

execute other deeds on its behalf in any place either in or outside India. Section 22 (3): A deed signed by such an attorney on behalf of the company and

under his seal shall bind the company and have the effect as if it were made under

its common seal. Section 46(1): A certificate, issued under the common seal of the company,

specifying the shares held by any person, shall be prima facie evidence of the title of

the person to such shares. Rule 5(3) of Companies (Share Capital and Debentures) Rules, 2014 regulates:

“Every share certificate shall be issued under the seal of the company, which shall

be affixed in the presence of, and signed by- (i) Two directors duly authorized by the Board of Directors of the company for the

purpose or the committee of the Board, if so authorized by the Board’; and

(ii) The secretary or any other person authorised by the Board for the purpose. Section 105: The instrument appointing a Proxy shall

(a) Be in writing; and

(b) Be signed by the appointer or his attorney duly authorised in writing or, if the appointer is a body corporate, be under its seal or be signed by an officer or an

attorney duly authorised by it.

Section 223: The report of any inspector shall be authenticated either (a) By the seal of the company whose affairs have been investigated; or

(b) By a certificate of a public officer having the custody of the report, as provided

under section 76 of the Indian Evidence Act, 1872 (1 of 1872), and such report

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shall be admissible in any legal proceeding as evidence in relation to any

matter contained in the report.

Section 290: The liquidator has been granted a power to use the common seal of the company wherever necessary in case of winding up of the Company.

Summary: Documents on which common seal is mandatory:

A certificate of shares or stock; A power of attorney for execution of deeds;

A power of attorney authorizing a person to use its official seal at a place outside

India; An instrument of proxy executed by a body corporate;

A report of the Inspector under Section 223 of the Companies Act 2013;

Any document as required by Liquidator in the event of winding up. Every company should maintain a register containing particulars of documents on

which the official seal of the company has been affixed.

Company Stamp Keep 2 rubber stamps – one in the name of the company (Generally Round Stamp with Company Name and Place of office i.e. City) and the other one in the name of

company director (Generally Rectangle Stamp with Company Name and space for

signature thereafter Director or Authorised Signatory). Company stamp is required to be affixed at every document which is signed on

behalf of Company. It mandatorily need to be affixed while applying for PAN / TAN /

other registration as well as while opening a bank account.

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Display registered address with other details

As per section 12(3) of Companies Act, 2013, every private limited company is required to:

Paint or affix its name and the address of its registered office and keep the

same pained or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous manner, in legible letters, and of the

characters employed therefore are those of the language or of one of the

language in general use in that locality, also in the characters of that language or of one of those languages;

Have its name engraved in legible characters on its seal;

Get its name, address of its registered office and the corporate identity number along with telephone number, fax number, if any, email and website

address, if any, printed in all its business letters, bill-heads, letter papers and

in all its notices and other official publications. Every private limited company is required to comply with this provision. On failure to

do so penalty of Rs. 1000 per day shall be imposed on the defaulting company and

on every office in default for every day during which such default continues up to a maximum limit of Rs. 100000.

Permanent Account Number (PAN):

PAN is a mandatory document required for almost every registration including but

not limited to getting a Bank account opened, VAT / CST, Service Tax, Shop and Establishment registration, TAN registration etc.

PAN is required for opening an account [other than a time-deposit and a Basic

Savings Bank Deposit Account] with a banking company or a cooperative bank to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or

banking institution referred to in section 51 of that Act)

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Bank Account Opening:

Persons other than Individual or Proprietorship entities are required to get a Current Account opened with a Bank. Cash payments beyond certain limits are disallowed in

Income Tax and hence getting a Bank Account opened is one of the mandatory

requirements for any business entity. A company should get a current account opened within 30 days after getting company incorporation.

Shop and Establishment Act Registration Although Shop and Establishment Act registration requirement is a state subject and

the conditions for need to Registration varies from State to State and the conditions

mentioned below are in respect of Delhi, the conditions don’t vary too much. What is an Establishment: Includes a shop, commercial establishment, residential

hotel, restaurant, eating house, theatre, or other place of public amusement or

entertainment to which this Act applies and includes such other establishment as the State Government may, by notification in the Official Gazette, declare to be an

establishment for the purposes of this Act.

What is a Shop: Shop means any premises: • Where goods are sold, either by retail, wholesale, or

• Where services are rendered to customers.

• It includes an office a store-room, godown, warehouse or work place, whether in the same premises or otherwise, used in connection with such trade / business

Statutory Activities

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A shop does not include a factory, a commercial establishment, residential hotel,

restaurant, eating house, theatre or other place of public amusement or

entertainment; Registration of Shops & Establishments: As a business owner of a shop or

establishment, you are compulsorily required to get the same registered under the

Shops and Establishment Act by submitting an application in the prescribed form to the Inspector of the area within 30 days of starting any work in your shop /

establishment.

Tax Deduction and Collection Account Number (TAN) The ten digit alpha numeric number is mandatory for people responsible for

deducting tax at source or collecting tax on behalf of Income Tax Department.

Section 203A of the Income-tax Act has made it compulsory to quote TAN in TDS / TCS return (including electronic media), TDS / TCS payment challan as well as TDS

/ TCS certificates. TDS/TCS returns are not received if one fails to mention TAN.

Banks too deny challans for TDS / TCS payments if TAN is not quoted. Penalty for failure to apply or quote TAN in the specified documents is Rs.10,000/-.

TAN is allotted by the Income Tax Department on the basis of the application

submitted to Tax Information Network or TIN Facilitation Centres. The TIN Facilitation Centres are managed by National Securities Depository Limited (NSDL).

TAN Application is to be submitted in Form 49B at any of TIN Facilitation Centres

set-up for receipt of e-TDS return. No document is required to be filed along with the application. One has to pay the processing fee of Rs. 50 plus service taxes as

applicable for TAN. One can also opt for online application via the website

http://tin.nsdl.com. In online application, the acknowledgement generated after filing up the form is required to be forwarded to NSDL. TAN can be used for all type of

deductions like salary, interest, dividend etc. The same number can be used for all

returns, challans and certificates.

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Statutory Auditor’s Appointment Section 139(6) of the Companies Act, 2013 requires a private limited company to appoint its first auditor in its board meeting by the board of directors within 30 days

from the date of incorporation.

If board of directors failed to do so then they shall inform to the members or shareholders of the company and members are required to appoint company auditor

within 90 days at an extra ordinary general meeting.

After such appointment, the company auditor has to hold office from the date of incorporation to the completion of first annual general meeting

Time limit is the most important factor in appointing company auditor. A private

limited company can appoint a chartered accountant who is in whole time practice as company auditor and file e-Form ADT1 within 15 days from the date of appointment

with registrar of company.

Disclosure of director’s interest in form MGT14 As per section 184(1) of Companies Act, 2013, present and new directors are

required to disclose their concern or interest to companies and there after the

company has to file form MGT14 with the registrar of companies.

Allotment of share capital and issue of share certificate to subscribers of MOA As per section 56(4) (a) of Companies Act, 2013, every company is required to allot

and deliver share certificates to all subscribers to the memorandum of association

within 2 months from the date of incorporation. To comply with above requirements a private limited company after incorporation

has to first open a bank account. Subscribers to the memorandum of association are

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required to deposit subscription money of shares as agreed to be taken from their

respective bank account to company’s bank account either through a cheque or net

banking. In failure to do so company shall be punishable with fine to the extent of Rs. 5000 up

to a maximum limit of Rs.25000 and every officer in default shall be punishable with

fine which shall not be less than Rs. 10000 but which may extend to Rs. 100000.

File e-Form INC21 – Declaration of Director after getting COI (Provision removed w.e.f 29th May 2015) A Private limited company having share capital cannot consider the date of incorporation as date of commencement of business. As per section 11 of

Companies act 2013, all private and public limited companies having share capital

are required to file declaration in Form INC21 for commencement of business with Registrar of Companies before commencing business or exercise of borrowing

power. In failure to do so, registrar of companies may remove name from the

Registrar.