Certificate of Incorporation (COI): What It Is and Why It Matters?

Registering a company includes several steps, and one such vital step is obtaining a certificate of incorporation. It is the most important legal document that states the date on which the company came into existence. The certificate of incorporation designates the company as a separate legal entity from its owners and founders.

Given this, whether you are forming a startup or seeking investor funding, this document serves as legal proof of your company's existence. Want to know more about it? Read the blog; it explains what a certificate of incorporation is, what it includes, how to obtain it, and why it matters. 

What Is a Certificate of Incorporation?

A certificate of incorporation can be defined as a legal document issued by the government or any other designated authority that represents the legal existence of the company. It serves as proof that, under the appropriate pieces of legislation, the company has registered. It also showcases when the company come to an existence. 

Apart from this, the certificate of incorporation enables the start as a public company, private limited company, or non-profit. Section 7 of the Companies Act 2013 deals with the incorporation process of the company. The final steps of the incorporation include getting a certificate of incorporation issued by the Ministry of Corporate Affairs (MCA) or the state government. Additionally, it makes them able to conduct business activities, open a bank account, and enjoy other legal and financial advantages. 

Further, the certificate provides an independent legal entity to the company, away from its owners. It limits the liability of shareholders and provides the corporate structure with an official status. Before regulatory bodies, stakeholders, and customers, it offers legitimacy to the company.

This was all about the certificate of incorporation. Moving ahead, let's know about the contents of the certificate of incorporation. 

Contents of Certificate of Incorporation

According to the Companies Act, 2013, some of the contents included in the certificate of incorporation in the context of Indian companies are as follows:

• Company Name: The name of the company is unique and follows the naming guidelines stated by the law. 
• Corporate Identity Number (CIN): It is a unique 21-digit alphanumeric number assigned by the Registrar of Companies (ROC). It serves as the registration number of the company.
• Incorporation Date: It states the date on which the company was legally incorporated and recognized.
• Registered Office Address: The official address of the company to which legal, correspondence notices, etc. will be received.
• Type of Company: It defines the structure of the company. That is as follows:
  • Private Limited Company (Pvt Ltd)
  • Public Limited Company
  • One Person Company (OPC)
  • Section 8 Company (Non-profit organization)
• Authorize Share Capital: As stated in the Memorandum of Association (MOA), the total share capital that the company is allowed to issue. 
• Name and Details of the Directors/ Promoters: Name, address, and other details of the first promoters/ directors involved in starting a company.
• Objects of the Company: As mentioned in the MOA, a short memorandum mentioning the business activities that the company intends to perform. 
• Declaration of Limited Liability: It denotes that in case of winding up of the company, the liability is limited only to shareholding or guarantee.
• Stamp and Signature of the Registrar: The certificate is generally stamped and carries the physical and digital signature of the Registrar. It ascertains the incorporation is valid.

These are the contents included in the certificate of incorporation. Moving further, let's know how to obtain a certificate of incorporation. 

How to Obtain a Certificate of Incorporation?

Here is how you can obtain a certificate of incorporation:

• Step 1: Obtain a Digital Signature Certificate (DSC) and Directors Identification Number (DIN)
  It is the first step for incorporating a company. The DSC validates the SPICe+form used for registration. Additionally, it is required for e-filing and file MOA and AOA. Further, DIN is a unique identification number issued by the MCA. It is the identity of the director. 
• Step 2: Application for Name Approval
  The next step is to choose and submit the proposed name of the company to the Registrar of Companies (ROC) for approval. This step involves certifying that the suggested name of the company is unique and complies with regulations. Generally, the approval is provided within 14 days of the submitted application. 
• Step 3: Preparation of Memorandum of Association (MOA) and Articles of Association (AOA)
  Draft and finalize the MOA and AOA. These are one of the vital documents for the company. The MOA defines the operations and scope of the company. The AOA states how the business activities of the company will be carried out, its rules and regulations. 
• Step 4: Filing the e-Forms and Payment of Fees with the Registrar
  Fill out the SPICe form with the asked details. It includes information about the company, details of directors, and share allocation. Submit the form to the registrar with post verification and pay the requisite fees. 
• Step 5: Issuance of Certificate of Incorporation
  Upon successful verification and document approval, a certificate of incorporation is issued by the Registrar. This states the legal commencement of the company. Additionally, it confirms the existence of the company as a separate legal entity. 

This is how you can obtain a certificate of incorporation. Moving forward, let's know how you can modify the certificate of incorporation. 

Modification of Certificate of Incorporation

Once you obtain the certificate of incorporation, it becomes the identity of your company. Later on, if you wish to modify the name of the company, then you can do so. For this first, you need to check the availability of the new name of the company, conduct an EGM, and pass a special resolution. After that, apply to the Registrar for approval of the new name as per Rule 29 of the Companies (Incorporation) Rules, 2014. Post-approval, a fresh certificate of incorporation will be issued by the Registrar.

However, if you want to modify the address of the company, then you do not need to modify the certificate. For address modification, you need to fill out the relevant forms and do modification in the master data of the company. The address mentioned on the certificate is on the date of incorporation, so no changes can be made to it.

Further, a certificate of incorporation serves as proof of your company's existence. It contains all the details, such as the date of incorporation. In simple terms, it is a birth certificate of the company. 

This was all about the modification of the certificate of incorporation. Moving ahead, let's know why it matters for a business. 

Why Certificate of Incorporation Matters?

Here is why the certificate of incorporation matters for businesses:

• Recognition in Law: Once incorporated, your company becomes a separate legal entity from its founders and stakeholders. 
• Liability Protection: The certificate of incorporation provides a shield to shareholders and owners against personal liability. In case your company faces debts or lawsuits, the personal assets of the shareholders and founders generally remain safe. 
• Access to Banking Services and Loans: A Certificate of Incorporation is a document that financial institutions and banks need for opening a business account or credit. Additionally, approve the loan. 
• Forced Observance of Law and Taxation System: It helps a company to be compliant with the tax and regulatory laws governing its business activities.
• Global Expansion Opportunities: A registered company can easily expand its business all over the world.

These are some of the key reasons why a certificate of incorporation matters in a business. 

Final Thoughts

Lastly, a certificate of incorporation is a vital step for any business enterprise. It makes the company official and recognized as a separate legal entity from its founders and stakeholders. This legal recognition opens up avenues in terms of business and financial undertakings that help in its development and growth. Additionally, the certificate also provides liability protection to the company. 

Further, need help in obtaining a certificate of incorporation? Connect with Savetaxs and let our experts help you ease the whole process. They can also help you in smoothly setting up your business in India and fulfilling your tax obligations on time.