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INCORPORATION OF A COMPANY IN INDIA 1. Status of the Company A new company (NewCo) may be incorporated as a private limited company or a public limited company, pursuant to the provisions of the Companies Act, 1956 (Act) in India. A private limited company is required to be incorporated with a minimum of 2 members i.e. shareholders/subscribers, while a public limited company requires a minimum of 7 shareholders/subscribers. 2.
2.1.

Minimum Capitalisation Requirements As per the Act, the minimum paid up capital of a private limited company is Rs.100,000 and accordingly, its authorised capital has to be at least Rs. 100,000. For a public limited company, the minimum capitalisation is Rs. 500,000. A differential amount of stamp duty and registration fees will have to be paid as and when the authorised share capital is increased. Further, if the word India is used in the name, the applicable rules prescribe a minimum authorized capital (described below) requirement of Rs. 500,000 (capitalization norms on use of certain key terms is attached hereto as Annexure 1).

2.2.

PROCEDURE FOR INCORPORATION STEP I Initial Subscribers 1. Initial subscribers are persons who agree to subscribe to a certain number of shares. The initial subscribers to the Constitutional Documents (as defined below) may be individuals or corporate bodies. If a corporate entity is an initial subscriber, appropriate board resolutions (draft copy of the resolution is enclosed as Annexure 2) will have to be passed by it for the following:
2.1. 2.2.

2.

Authorization for subscribing to specific number of shares of the NewCo; and Authorization for the execution of a power of attorney in favour of the PoA holder which could be a person from our office for making corrections to the incorporation documents and for making any other filings with the Registrar of Companies (RoC).

3.

If any of the initial subscribers is an individual residing outside India or a foreign shareholder, he will have to execute a power of attorney, authorising persons to file such applications as may be necessary on his behalf. We have attached herewith a draft of the power of attorney as Annexure 3.

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4.

The board resolution and the power of attorney should be notarised and attested by the consulate (if the initial subscriber is an individual or corporate entity based outside India).
STEP II Approval of the Name Form 1A is the form required to be filed with the Registrar of Companies (RoC) of the state in which the NewCo is proposed to be incorporated. We have separately attached a copy of Form 1A. This form is filed for obtaining an approval for the name of the NewCo. The particulars required to be filled in Form 1A are as follows:

1.

DETAILS OF THE APPLICANT Form 1A can be filed by either the subscribers or anyone who has been authorised by them to file such applications. Any one of the initial subscribers or its attorney can sign and file Form 1A.

2.

PROMOTERS Names of the initial subscribers of the NewCo will be mentioned as Promoters of the company.

3.

NAME Application in Form 1A requires the applicant to give the proposed name of the company proposed to be incorporated. In addition, Form 1A also provides for the applicant to suggest five alternative names for the company in the order of preference. While choosing the name of the NewCo, consideration to the following will have to be given: 3.1.1. The proposed name of the NewCo will have to be in consonance with its main objects. Recently, the RoC has rejected names which do not reflect the business or the objects of a company. (a) Further, the proposed name of NewCo should not be too identical with or too nearly resemble the name of a company, which is already in existence and registered since the same may not be approved by the RoC. The proposed name of NewCo should also not violate the provisions of Emblems and Names (Prevention of Improper Use) Act, 1950. NewCo will have to state whether the proposed name is based on a registered trade mark or is the subject matter of any application for registration of a trade mark, which is pending. In the event, NewCo uses in its name any or part of the name of its parent company or any other entity, the RoC would require a no-

(b)

(c)

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objection certificate from these entities or the other entity as regards the use of such a word by the New Co. We attach herewith as Annexure 4 a format of the said no-objection certificate for your ready reference. (d) 4. Once the name is approved, the NewCo will have to be incorporated within sixty (60) days.

DETAILS OF THE DIRECTORS 4.1. 4.2. 4.3. 4.4. In terms of the provisions of the Act, a private limited company is required to have a minimum of two (2) directors. Details of the directors, including the Directors Identification Number (DIN), are required for filing of Form 1A. DIN is a mandatory requirement under the Act to be obtained by all persons desirous of being appointed as directors in Indian companies. It is mandatory to mention DIN of the directors of the NewCo for the purposes of filing Form 1A. Therefore, it is necessary for the directors to obtain DIN prior to filing Form 1A. Please confirm the names of the directors. The procedure for obtaining the DIN has been set out in Annexure 5. The entire process typically takes about 1 week after submission of the completed Form DIN1 to the DIN Cell at Noida, subject to the documentation being in order. Further, Digital Signature Certificate (DSC) will have to be generated for the directors of New Co., if they do not, already have an existing DSC. This is not a mandatory requirement for all directors, but at least one director must have a DSC, since all filings are in electronic form and for signing the same, the directors would require a DSC. The procedure for obtaining a DSC has been set out in Annexure 6. STEP III Constitutional Documents 1. Constitutional Documents include the memorandum of association (MOA) and the articles of association (AOA), collectively referred to as the Constitutional Documents). 2. Once the name of the New Co is approved, New Co. will have to file its Constitutional Documents with the RoC. 3. The Constitutional Documents should be suitably drafted and divided into paragraphs numbered consecutively. The AOA should include provisions as applicable for a private company, including restrictions contained in Section 3 of the Act. 4. The MOA states the objectives of a company. The MOA is divided into various heads, namely, main objects, objects ancillary to the main objects and other objects.

4.5.

4.6.

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5. The subscribers to the shares of New Co named in Form 1A or each of their respective attorneys will be required to sign the Constitutional Documents. Further, each of them will also be required to write in his own hand, his father's name, occupation, address and the number of shares subscribed for. At least one witness to these signatures is required who has to sign and write in his own hand, his father's name, occupation and address. 6. The Constitutional Documents of New Co. will have to be stamped with appropriate stamp duty. The stamp duty payable on the Constitutional Documents varies from one state to another. 7. The Constitutional Documents are then required to be filed with the RoC along with the prescribed fee. The registration fees for incorporation of a company payable to the RoC are uniform across the country. Please find attached a tabular statement indicating the registration fees payable for incorporation of a company as Annexure 7. 8. The RoC vets the Constitutional Documents and at time suggests certain changes which are then required to be incorporated in the Constitutional Documents. STEP IV Filing of Forms 1, 18 and 32 1. Form 1 is a declaration of compliance with the Act. 2. Form 18 is a notice for situation of the registered office. The registered office has to be within the jurisdiction of the RoC where the NewCo is sought to be incorporated. 3. Form 32 contains the details of the persons proposed to be the first directors of the NewCo. STEP VI Certificate of Incorporation 1. Once the RoC has approved the MOA and the AOA of New Co. and Form 1, 18 and 32, as mentioned above have been filed, the RoC shall issue a certificate of incorporation to New Co. This typically takes between 1 to 2 weeks after filing of the documents with the RoC although in cases of emergency this time frame can be shortened. 2. The entire process of incorporation takes around 3 to 4 weeks after obtaining the name approval. 3. The date mentioned on the certificate of incorporation of the New Co. will be the date of incorporation of New Co. and on that date, New Co. will come into being as a separate legal entity. Once the certificate of incorporation is issued to New Co., New Co. shall be entitled to start its business.

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Step VII Opening of the Bank account 1. Once NewCo is incorporated, NewCo will be required to open a bank account. the initial subscription amount should be remitted by the initial subscribers to the bank account of NewCo. Procedure for transfer of shares If the initial subscribers are Indian individuals nominated by foreign shareholders, pursuant to incorporation of NewCo, shares of NewCo, held by the Indian individuals will be required to be transferred to the foreign shareholders. Transfer of shares from a resident shareholder to a non resident shareholders, is required to be in accordance with the provisions of the circular of Reserve Bank of India, dated October 4, 2004 (Circular). In terms of the Circular, the non resident shareholders are required to file a prescribed Form FC-TRS with the authorized dealer of the resident shareholders. The Form FC TRS has to be filed along with certain documents, in quadruplicate (4 original sets of the documents will be required). Set out below is a summary of the steps involved in transfer of shares: (i) Execution of Form FC TRS: On execution of the Forms FC-TRS, the non- resident shareholders would have to wire transfer the share purchase consideration to the bank accounts of the Indian individuals. Further, there are certain KYC requirements to be fulfilled when any money is remitted to an Indian bank account. The bank through which the non- resident shareholders would make their remittance would have to forward their KYC information to the bank in which the Indian individuals have their bank accounts. Such KYC information has to be made via swift in the prescribed format. On receipt of the acknowledgement from the bank (in the form of foreign inward remittance certificate) that the share purchase consideration has been received in the account of the Indian individuals, the foreign shareholders will be required to submit the Forms FC-TRS along with the supporting documents. The authorized dealer, thereafter, will affix its stamp, evidencing that the remittances have been duly received by the transferor and the payment has been made. Pursuant to receipt of the acknowledgement of the authorised dealer, the foreign shareholders and the Indian individuals will be required to effect share transfer forms, evidencing the transfer of shares from the Indian individuals to the foreign shareholders.

(ii)

(iii)

(iv)

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Annexure 1 GUIDELINES FOR USE OF KEY NAMES Key words Minimum Authorised Capital Rs. 50 million Rs. 10 million Rs. 5 million Rs. 5 million Rs. 500,000 Rs. 10 million Rs. 1 million

1 2 3 4 5 6 7

Corporation International, Globe, Universal, Continental, Inter-Continental, Asiatic, Asia, being the first word of the name. If any of the words at (2) above is used within the name (with or without brackets). Hindustan, India, Bharat, being the first word on the name. If any of the words at (4) above is used within the name (with or without brackets). Industries/Udyog Enterprises, Products, Business, Manufacturing.

US$ 1 = INR 50 (approx) Authorised capital is the capital provided in the constitutional documents and not necessary the capital which is subscribed to. In other words the paid-up and issued capital may be different, but not more, than the authorised capital. However, the RoC fees and stamp duty is payable in the authorised capital.

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Annexure 2 FORMAT OF BOARD RESOLUTION [On letter head of the foreign corporate entity] CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF [name of the foreign corporate entity] HELD ON [date] IN ACCORDANCE WITH PROCEDURES MANDATED IN THE ARTICLES OF INCORPORATION AND THE BY-LAWS OF [name of the foreign corporate entity] Whereas [name of the foreign corporate entity] is desirous of subscribing to the Memorandum and Articles of Association of New Co., in the name and style of [Proposed Name of New Co.] or such other name as the Registrar of Companies, Maharashtra may approve (the Company) in which we propose to hold equity shares; RESOLVED THAT [name of the foreign corporate entity] do hereby act as promoter and subscriber to the Memorandum of Association of the Company proposed to be incorporated in India by the name of [Proposed name of New Co.], and that [name of the foreign corporate entity] hold 9999 equity shares, amounting to 99.99 of the Company. RESOLVED FURTHER THAT [name of the foreign corporate entity] shall execute a power of

attorney under the hand of Mr. _____________, [President & CEO] authorizing certain persons in India to act on behalf of [name of the foreign corporate entity] and to sign the Memorandum and Articles of Association and all other such related papers pertaining to the formation of the proposed Company, including further authorisation in favour of any person for carrying out corrections at the office of the Registrar of Companies, on behalf of [name of the foreign corporate entity]; and RESOLVED FURTHER THAT the certified true copy of the resolution be submitted to the Registrar of Companies, [name of the State] at [name of the city]. Certified to be true For ______________________ DIRECTOR [Note: To be signed before the High Commissioner, Indian Consulate of the country in which the foreign corporate entity is situated]

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Annexure 3 FORMAT OF POWER OF ATTORNEY TO ALL TO WHOM THESE PRESENTS SHALL COME, We [name of the body corporate], a corporation organized and registered under the Laws of [name of the country], having its principal office at ______________________[Please indicate the complete address] ([short name]) SEND GREETINGS: WHEREAS 1. We wish to subscribe to the Memorandum and Articles of Association of a company proposed to be incorporated in the name and style of _________________Limited or such other name as the Registrar of Companies, __________ may approve (the Company) in which we along with [name of the other body corporate], having its principal place of business at ______________________ [Please indicate the complete address of the other body corporate] proposes to hold 100% of the equity. We are therefore desirous of appointing [], an Indian inhabitant having his office at [] as our true and lawful attorney to act for us and/or on our behalf for the purposes set out hereinbelow.

2.

NOW KNOW YE ALL AND THESE PRESENTS WITNESSETH THAT, We, [], do hereby appoint, nominate and constitute the said Mr. _________, to be a true and lawful attorney in our name and/or our behalf to do the following: 1 To subscribe to the Memorandum and Articles of Association of the Company and to liaise on our behalf with the Government authorities including the Registrar of Companies, ________ for the purposes of incorporating the Company including by attending to and appearing before the Registrar of Companies, _______ or any other officer, authority appointed under the Act and/or the stamp authorities for subscribing to the Memorandum and Articles of the Company and to do all acts deeds and things necessary for giving effect to such company incorporation. To sign on our behalf, Form No.1A, the Memorandum and Articles of Association and all other such related papers pertaining to the formation of the proposed company, as the subscriber of the proposed company. To present the Memorandum and Articles of Association of the Company and other connected documents for purposes of registration and also to make any corrections in the said documents under their hands and signature. To make any corrections or rectifications to the above mentioned documents as may be requested by the Registrar of Companies from time to time. AND to appoint attorneys, advocates on our behalf and in our name to do all the acts and things herein provided which our attorney is lawfully empowered to do.

4 5

AND WE HEREBY AGREE TO UNDERTAKE that the matters which shall be done by the said attorney for the aforesaid purposes shall be as good valid and effectual to all intents and

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purposes whatsoever as if the same has been done by us in our own proper person and we hereby agree at all times to ratify and confirm whatsoever our said attorney shall lawfully do or cause to be done by or concerning the purposes set out hereinabove by virtue of these presents. IN WITNESS WHEREOF, We, [short name], have hereunder set our hand this ____ day of ________ 2009. Signed and delivered by [full name] IN THE PRESENCE OF____________ ) )

[Note: To be signed before the High Commissioner, Indian Consulate of the country in which the foreign body corporate is situated]

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Annexure 4 FORMAT OF NO-OBJECTION LETTER

Date : [] To: The Registrar of Companies Sir, Re: Availability of Name [] We refer to the application for availability of Name in Form No.1A, in respect of the above name. In this connection, please note that our Company has no objection to incorporating a company in India with the name [] by using the words [] in the name or any other name as may be approved by the Registrar of Companies. Yours sincerely For [] Director

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Annexure 5 OBTAINING A DIRECTOR IDENTIFICATION NUMBER The Ministry of Company Affairs (MCA) has launched a major e-Governance initiative MCA 21. It envisages efiling of all documents related to company matters on the MCA portal. Director Identification Number (DIN) is a unique identification number for an existing director or a person intending to become the director of a company. In the scenario of efiling, DIN will be a prerequisite for filing of certain company related documents.The DIN application form has to be submitted to the MCA. Following steps are to be followed for obtaining the DIN for a director: 1. Visit the MCA portal (www.mca.gov.in) and fill the DIN application, available on the link Apply for DIN online. On submission of the application, a Provisional DIN is generated by the system and is displayed on the screen. Save and take a print out of the filled form, affix your photograph and send the same by normal post, along with photocopies of proofs of identity and residence, duly attested by Notary/ Gazetted Officer/ Certified Professionals (CA/ CS/ ICWA) to the following address: MCA DIN Cell, P. O. Box No. 03, Noida 201301, Uttar Pradesh, India. The MCA DIN Cell will process the form. Once approved, the DIN confirmation and activation letter will be sent to the applicant. An e-mail in this regard will also be sent to the applicant on the e-mail ID provided in the DIN application. 2. Information required for a DIN registration is as follows: Directors Full Name Fathers Full Name (even married women must give fathers full name) Citizenship (whether Indian or foreign) Nationality (if foreign) Date & Place of Birth Gender Passport Number Permanent Residential Address, Phone Nos., Fax Nos. Present Residential Address E-mail Address (only a valid and active e-mail address)

(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x)
3.

The Documents to be attached with the DIN Registration Form are as follows: (i) 1 Passport Size Photograph (ii) Copy of Identity Proof Passport (mandatory) Copy of Residence Proof (any one) Driving License (should contain validity period) Passport (if contains residential address) Voter Identity Card Water Bill ) Telephone Bill ) Should be not more

(iii)

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Electricity Bill Bank Statement

) than two months old )

Note: The documents mentioned in (ii) and (iii) above are to be notarized by a Foreign Public Notary of the country in which the director is a resident. Further, scanned copies of these should be sent by email prior to making the DIN application. After submitting the form a provisional DIN number will be generated. We will send you the document with provisional DIN. You are then requested to get the forms signed by the concerned directors, affix the latest photograph, which is also notarised along with the proof of residence and sign at the required places in the DIN application. Please note that the notary stamp should be affixed in such a manner, that it is partly on the form ad partly on the photograph. Alternatively the proposed directors could fill the forms directly by following the procedure laid down below: Step 1: Visit the Hyperlink Mentioned Below http://www.mca.gov.in/DCAFODINPortal/dca/MyMCALogin.do?method=setDefaultProperty &mode=21 If you cannot access the hyperlink above then log on to www.mca.gov.in for further information. Step 2: Complete the form by filling the required details. Step 3: After submitting the form a provisional DIN number will be generated. Save a copy of this form and take a print of the form which has provisional DIN number. Step 4: After taking the print please sign the form (one below the photograph and one at the end of the form) and affix a photograph (latest) on the first page of the form, the photograph needs to be consularised. As mentioned above, the proof of residence, identity will have to be consularised.

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Annexure 6 OBTAINING A DIGITAL SIGNATURE 1. The Office of Controller of Certifying Authorities (CCA), issues Certificate only to Certifying Authorities (CA). CA issue Digital Signature Certificate to end-user. You can approach any one of the seven CAs for getting Digital Signature Certificate. The website addresses are given below. (i) www.safescrypt.com (ii) www.nic.in (iii) www.idrbtca.org.in (iv) www.tcs-ca.tcs.co.in (v) www.mtnltrustline.com (vi) www.icert.gov.in (vii) www.e-Mudhra.com (viii) www.ncodesolutions.com Please download and print a copy of the DSC form from any of the above websites. Page 1: Please attach a recent passport size photograph of the form and sign across the photograph and fill in the relevant details in BLOCK letters. Page 2: Please sign above Signature of the Applicant. Further, Annexure A needs to be duly filled, signed by you and by your bank manager along with their bank seal affixed on the form. Page 5: As mentioned in para 1(c), please provide a duly notarised (by a notary public in home country of the applicant) copies of the proof of identification and residence proof of the applicant. Please note that only one notarised copy of any one document listed therein for each head is required to be provided. Please sign above Signature of the Applicant.

2. 3. 4.

5.

6.

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Annexure 7 REGISTRATION FEES AMOUNT IN RUPEES AUTHORISED CAPITAL (In Rupees) 100,000 500,000 1,000,000 2,000,000 2,500,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 10,000,000 20,000,000 50,000,000 90,000,000 100,000,000 200,000,000 250,000,000 2,500,000,000 3,500,000,000 4,000,000,000 4,500,000,000 FEES (In Rupees) 4,000 16,000 26,000 46,000 56,000 66,000 86,000 106,000 116,000 126,000 136,000 146,000 156,000 206,000 356,000 556,000 606,000 1,106,000 1,356,000 12,606,000 17,606,000 20,004,000 20,004,000 FEES FOR DOCUMENTS (In Rupees) 200 300 300 300 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500

One hundred thousand Five hundred thousand One million Two million Two million and five hundred thousand Three million Four million Five million Six million Seven million Eight million Nine million Ten million Twenty million Fifty million Ninety million One hundred million Two hundred million Two hundred and fifty million Two and a half billion Three and a half billion Four billion Four and half billion

The fees payable are uniform regardless of the State in which the company is sought to be incorporated. In addition, additional fees are levied by each State in the issuance of Shares which vary from State to State.

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