X

Importance of Certificate of Incorporation

When we are born, the government issues a birth certificate that legally establishes our birth. Similarly, when you Register a company or a limited liability partnership (LLP), the government issues a certificate of incorporation. This certificate is legal proof of the date of incorporation of your company/LLP. Apart from this essential fact, the certificate also carries some important information about the company. In this article, we will talk about the importance of certificate of incorporation and things that you must check on your certificate.

The Ministry of Corporate Affairs (MCA) issues the certificate of incorporation to all companies registered with the Registrar of Companies (RoC).

Importance of Certificate of Incorporation
Importance of Certificate of Incorporation

Importance of Certificate of Incorporation

Here are some points highlighting the importance of certificate of incorporation in India:

  1. It is a legal proof of identity of the existence of the company.
  2.  A company is a separate legal entity. Hence, the MCA issues a certificate of incorporation with a distinct Corporate Identification Number (CIN) or LLP Identification Number (LLPIN). This is the company’s /LLP’s unique identity.
  3. This certificate establishes the fact that the company has registered itself with the RoC. Therefore, it is authorised to begin the business as specified in the Memorandum of Association.

It is important to note that according to section 7(7) of the Companies Act, 2013, if a company furnishes false or incorrect information during incorporation, then the Tribunal may:

  • Pass an order that it deems fit for the regulation of the management of the company. Further, this can include changes to the Memorandum of Association.
  • Instruct the company to make the liability of all members unlimited.
  • Remove the name of the company from the RoC. Hence, revoking the certificate of incorporation.
  • Pass an order to wind up the company.

Since a certificate of incorporation acts as legal proof of the identity of your company, you get to avail all the benefits offered by the legal structure of your company. These include tax benefits, perpetual existence, etc.

Further, you need the certificate of incorporation for the following things:

  1. Opening your company’s bank account.
  2. Issuing shares to investors.
  3. Applying for a loan for the company.
  4. Selling the company to someone, etc.

Check these details on the Certificate of Incorporation

To avoid any potential issues later, ensure that you check the following details on your certificate of incorporation at the time of issue:

For a Company

  1. The name of the company.
  2. CIN or the Corporate Identification Number of the company.
  3. PAN or the Permanent Account Number of the company.
  4. TAN or the Tax Deduction and Collection Account Number (TAN) of the company.
  5. The date of issue of the certificate which also becomes the date of Incorporation of the Company.
  6. The mailing address as per the record available with the Registrar of Companies.

For LLP

  1. The name of the LLP.
  2. LLPIN or the LLP Identification Number of the LLP.
  3. The date of issue of the certificate which also becomes the date of Incorporation of the LLP.
  4. The mailing address as per the record available with the Registrar of Companies.

When can you apply for a new certificate of incorporation?

These are the situations under which the RoC issues a new certificate of incorporation to a company:

  • There is a change in the name of the company.
  • There is a change in an object with respect to the change in the name of the company.
  • The company converts from one type to another. For example, private to public, public to private, etc.
  • There is a change in the registered office of the company. Further, this is NOT applicable if the change is within the same city, state or town. Also, the RoC does not issue a new certificate if the jurisdiction of the RoC remains the same.

Here is a sample certificate of incorporation:

Certificate of Incorporation
Certificate of Incorporation

Summing Up

As mentioned at the beginning of the article, the importance of a certificate of incorporation for a company is similar to that of a birth certificate for an individual. It is the legal proof of its existence. We hope that this article helped you understand why you need a certificate of incorporation. Please feel free to explore our company registration services and allow our team to help you get started with the right foot forward. Good Luck!

2 thoughts on “Importance of Certificate of Incorporation

Leave a Reply

Your email address will not be published. Required fields are marked *