The Companies (Authorized to Register) Rules, 2014 were introduced under the Companies Act, 2013 to lay down the framework for the types of companies that are eligible to be registered under the Act. The purpose of these rules is to clarify which companies are authorized to be registered with the Registrar of Companies (RoC) in India, and to ensure that companies follow the prescribed procedure and comply with regulatory requirements while registering with the authorities.
These rules focus on specifying the requirements for the registration process of various types of companies under the Companies Act, 2013, such as private companies, public companies, and other specific entities. The rules provide guidelines for who is eligible to register a company, the procedure for registration, and the documents required for such registration.
1. Types of Companies Authorized to Register
Under these rules, any person, group of persons, or entities who wish to incorporate a company in India can apply for registration, provided they meet the eligibility criteria. The types of companies authorized to register under the Companies Act, 2013, include:
- Private Companies:
- Private companies are companies that have a minimum of two members and a maximum of fifty members (excluding employees).
- Private companies cannot invite the public to subscribe to their shares or debentures.
- Private limited companies are the most common form of incorporation for small businesses and startups in India.
- Public Companies:
- Public companies are companies that have seven or more members.
- They can raise capital from the public through the sale of shares or debentures and are required to meet stricter regulatory requirements compared to private companies.
- Public companies can be listed on stock exchanges.
- One Person Company (OPC):
- A One Person Company is a new form of company introduced under the Companies Act, 2013, where a single individual can be the sole shareholder.
- OPCs are available only for private companies and are meant for solo entrepreneurs.
- Producer Companies:
- Producer companies can be registered by individuals or groups engaged in the production, marketing, or processing of goods.
- These companies are typically registered by agricultural producers and small-scale industries working together to streamline operations.
- Section 8 Companies (Non-Profit Organizations):
- A Section 8 company is one that is formed for the promotion of commerce, art, science, religion, charity, or any other useful object.
- These companies operate as non-profit entities and apply their profits towards the objective for which they are established.
- Limited Liability Partnerships (LLPs):
2. Eligibility Criteria for Company Registration
The eligibility criteria to register a company under the Companies Act, 2013, and the Authorized to Register Rules, 2014 are as follows:
- Incorporators:
- A company must have at least two individuals for a private limited company and seven individuals for a public limited company as its incorporators.
- The incorporators can be Indian citizens or foreign nationals, but at least one director in a company must be a resident of India (someone who has stayed in India for at least 182 days in the previous year).
- Director Requirements:
- Every company must have at least two directors for a private company and three directors for a public company.
- Directors should be of legal age (at least 18 years old).
- They must possess a Director Identification Number (DIN) issued by the Ministry of Corporate Affairs (MCA).
- Registered Office:
- Every company must have a registered office in India, where all official communications will be sent. The address of the registered office must be provided during the registration process.
- Minimum Capital Requirement:
- A company must meet the minimum capital requirements based on the type of company:
- Private Companies: No minimum capital requirement.
- Public Companies: Typically require a minimum paid-up share capital of ₹5 lakh (for public limited companies), though this requirement has been removed in certain cases as per updated rules.
3. Procedure for Registration
The process of registering a company under the Companies Act, 2013 involves the following steps:
- Obtain Digital Signature Certificate (DSC):
All the proposed directors must obtain a Digital Signature Certificate (DSC) for submitting forms electronically to the MCA.
- Obtain Director Identification Number (DIN):
All proposed directors must also obtain a Director Identification Number (DIN). This can be obtained by filing Form DIR-3 with the MCA.
- Choosing a Name for the Company:
- The name of the company should be unique, and it should not be similar to any existing company or trademark.
- The proposed company name is checked for availability by submitting Form RUN (Reserve Unique Name) to the MCA for approval.
- Filing of Incorporation Documents:
- After name approval, the company can file Form SPICe+ (INC-32) with the Registrar of Companies (RoC) to initiate the registration process.
- Along with Form SPICe+, the applicant must submit documents such as:
- Memorandum of Association (MOA) and Articles of Association (AOA) of the company.
- Proof of the registered office address (e.g., utility bill, rental agreement).
- Identity and address proof of the directors and shareholders.
- Declaration of compliance with the provisions of the Companies Act.
- Payment of Fees:
The necessary fees must be paid for the registration process. These fees depend on the type of company and its authorized capital.
- Issuance of Certificate of Incorporation:
If the application is found to be in order, the Registrar of Companies will issue a Certificate of Incorporation (COI), which serves as the official proof of the company’s existence.
4. Post-Registration Compliances
After the company is registered, it must adhere to the following statutory compliance requirements:
- Maintain Books of Accounts: Every company is required to maintain proper books of accounts and financial records.
- Annual Filings: Companies must file annual returns, such as Form MGT-7 and Form AOC-4 (financial statements) with the RoC.
- Board Meetings: Companies must hold regular board meetings as required by law.
- Tax Compliance: Companies must comply with tax laws, such as GST, income tax, and other relevant tax obligations.
5. Penalties for Non-Compliance
Failure to comply with the registration requirements, such as failure to submit documents or provide accurate information during the incorporation process, can lead to:
- Fines imposed on the company and its directors.
- Striking off the company’s name from the register if the company does not comply with subsequent filing requirements.
- Penalties for improper maintenance of statutory records and filings.
6. Conclusion
The Companies (Authorized to Register) Rules, 2014 provide a structured process for the registration of companies under the Companies Act, 2013. These rules ensure that only eligible persons or entities can form companies and that the companies that are registered comply with necessary legal provisions. By outlining clear criteria for registration and post-registration compliances, these rules help maintain the integrity and transparency of the corporate sector in India.
The rules also promote ease of doing business by simplifying the registration process while ensuring that companies meet the required legal standards. These provisions safeguard the interests of shareholders, creditors, and other stakeholders, ensuring a fair and accountable business environment.
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