What is the Certificate of Incorporation of a Company and Why Do We Need it?

The Need for a Legal Business Personality

In a country of 1.35 billion potential clients, legitimacy to do business is a must for serious entrepreneurs wanting unhampered profit flow.

India’s Ministry of Corporate Affairs, the government-designated implementing agency of the company laws, sees to it that entrepreneurs are made to comply with stiff requirements.Only then, they could secure a Certificate of Incorporation.

MCA Information Access Online

MCA, which governs concerns of the rapidly growing business sector, maintains a website where entrepreneurs can access information related to a wide array of doing business in India. However, not even its built-in pages seemed enough to address many questions.

As such, MCA has made sure its website is equipped with a tab directly answering frequently asked questions.

What is a Certificate of Incorporation?

Among the frequently asked questions pitched in online include definition of government regulation terms.

Questions, mostly from start-ups include — What is a Certificate of Incorporation?

MCA’s answer — A Certificate of Incorporation or Letter of Incorporation is a proof that a company has been duly registered with the Registrar of Companies.

Web sources define a certificate of Incorporation as:

  • A legal document that MCA issues upon request by a company. However, such certificates would only be secured after successful registration with the agency.
  • A license to form a company, issued by the state government. 

Compliance before Issuance

Before MCA issues a Certificate of Incorporation, entrepreneurs are required to comply with the following pre-requisites in the incorporation of a company in India:

  • Application for Director Identification Number and Digital signature Certificate
  • Applying for availability of the name selected
  • Draft of Memorandum of Association and Article of Association
  • E-forms with Registrar of companies
  • Payment of fees and stamps for Registrar of Companies
  • Clearance from the Register of Companies which verifies authenticity and truthfulness of documents and forms

On then will the company would be issued a Certificate of Incorporation

What’s in the Certificate of Incorporation?

A Certificate of Incorporation basically provides validity and legal personality to do business to the company. It is also proof that the company exists.

  • Certificate of Incorporation’s distinct attributes include:
  • Name and abbreviation of the corporation
  • Business Purpose Statement
  • Registered office address
  • Company Registration Agent for the address
  • Number of the shares of stock authorized to be issued
  • Description of the different types of stocks which may be issued by the Company in the event that there are more than one type
  • Name and address of the incorporated company

Certificate of incorporation is divided into different articles. Interestingly, there are many other things in a Certificate of Incorporation that serious entrepreneurs should know.

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