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process of incorporation of a company under Companies Act 1956?

process of incorporation of a company under Companies Act 1956?

Process of incorporation of a company under the Companies Act 1956?


For enterprises and startups in India, incorporating a company under the Companies Act, of 1956, is an essential step. The establishment of businesses is governed by this legal framework, which outlines the crucial legal prerequisites, registration procedures, and regulatory compliance needed to create a lawful corporate entity. This blog post will lead you through the Companies Act of 1956 incorporation process while also examining how Neusource Startup Minds India Ltd. may make the process easier. We'll discuss a number of topics, including the articles of association, share capital, nomination of directors, and more.


The Companies Act 1956: A Regulatory Framework

The Companies Act of 1956, which came before the current Companies Act of 2013, established the legal framework for businesses in India. Even though the Act is no longer in effect for new incorporations, it is important to comprehend its requirements, particularly for businesses incorporated under it before 2013.


Understanding the Basics

  1. Legal Documents: Memorandum of Association and Articles of Association: A key document that outlines the company's goals, authority, and range of activities is the Memorandum of Association. The internal policies and procedures governing the company are set forth in the Articles of Association.
  2. Registrar of Companies (RoC): The Registrar of Companies is a key authority overseeing the incorporation process. Businesses must submit the necessary documents to the RoC in their jurisdiction.
  3. Share Capital Share capital represents the ownership structure of a company. It defines the number and value of shares that a company can issue. The Companies Act 1956 stipulated the minimum capital requirements for companies.
  4. Director Appointment: The Act outlines the criteria for director appointment, specifying the qualifications and disqualifications of directors.
  5. Shareholders Shareholders, also known as members, are the owners of the company. The Act establishes the rights and responsibilities of shareholders.
  6. Certificate of Incorporation: This certificate is issued by the RoC upon successful incorporation, indicating that the company is a legally recognized entity.
  7. Public vs. Private Company: Public and private enterprises were distinguished by the Enterprises Act of 1956. Compared to private corporations, which were constrained in their ability to raise capital from the public and were subject to fewer regulatory requirements, public companies could raise cash from the public.
  8. Limited Liability: The idea of limited liability was one of the main benefits of forming a company under the Companies Act of 1956. The personal assets of shareholders were protected, and their liability was restricted to their shareholdings..


The Incorporation Process

  • Name Approval: The process begins with the selection and approval of the company name. The name should be unique, not resembling any existing companies, and must comply with the naming guidelines outlined by the RoC.

  • Memorandum and Articles: Prepare the Memorandum of Association and Articles of Association. These documents must adhere to the Act's provisions and should be drafted with care, considering the company's objectives and internal regulations.

  • Share Capital: Decide on the share capital structure, specifying the number and value of shares. The Act sets the minimum capital requirement for different types of companies.

  • Director Appointment: Appoint directors who meet the eligibility criteria and comply with the Act's regulations.

  • Shareholders: At least two shareholders are required for a private company and seven for a public company. These shareholders may be individuals or corporate entities.

  • Filing Documents: Submit the necessary documents, including the Memorandum, Articles, and the application for registration, to the RoC in your jurisdiction. This step involves the payment of registration fees.

  • Certificate of Incorporation: Upon approval, the RoC issues a Certificate of Incorporation. This document signifies the company's legal existence.


Statutory Compliance and Corporate Governance

Incorporation is just the beginning; ongoing compliance is vital. The Companies Act 1956 set the foundation for statutory compliance, outlining the obligations companies must meet, such as annual filings, conducting general meetings, and maintaining financial records.

Corporate governance practices, including board meetings, financial transparency, and shareholder rights, play a critical role in ensuring that the company operates ethically and efficiently.


How Neusource Startup Minds India Ltd. Can Help

Neusource Startup Minds India Ltd. is a professional service provider that specializes in assisting businesses and startups throughout their incorporation journey. They offer comprehensive support, including:

  1. Name Search and Approval: Neusource can help you select and secure a unique company name.

  2. Document Preparation: They assist in drafting the Memorandum and Articles of Association, ensuring legal compliance.
  3. Director and Shareholder Services: Neusource can help with director appointments and shareholder-related matters.
  4. Filing and Registration: They handle submitting documents to the RoC, reducing the administrative burden on the business owner.
  5. Compliance Services: Neusource can assist in staying compliant with the Companies Act 1956 and other relevant laws.

  6. Corporate Governance Guidance: They provide advice on best practices for corporate governance.



Under the Companies Act of 1956, incorporating a corporation included a clear process involving legal requirements and regulatory compliance. Understanding the Legacy Act is crucial for businesses incorporated under it, even though the Companies Act 2013 has taken its place for new incorporations. The procedure may be made simpler with the aid of qualified service providers like Neusource Startup Minds India Ltd., guaranteeing a seamless transition into a legal corporate entity. To maintain compliance and achieve long-term success, it's essential to keep up with the most recent regulatory frameworks as the business landscape changes.

23 Oct

Santosh Dantani
Santosh Dantani

To start a new business is easy, but to make it successful is difficult . So For success, choose the best." Be compliant and proactive from the beginning and choose NEUSOURCE as your guidance partner.

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