Common Myths about Company Incorporation

Some of The Common Myths for The Incorporation of A Company

1. It is Expensive to Register A Company

Registering a Company is one thing and running the company success is the other aspect altogether. We, here at Manish Anil Gupta & Co. as CA in Dwarka, Delhi, help the businesses to choose the best form of company structure based on their nature of business and work style which improves your business efficiency and reach the desired targets at a meagre cost.

2. Anyone can Register A Company

There are few restrictions on who can be appointed as a director of a company. Nonetheless, directors must be a person having a minimum age of 21 years and must not be disqualified under the Companies Act. 

It Takes Sufficient Time to Register A Company

The recent amendments brought by the MCA have made it simple to register companies of any nature, provided that you have all your documents in place. Usually, it takes between 10 – 15 days to register a company Normally. 

All Personal Information will be Made Public

Nevertheless, there are specific details that need not be publicly available for various security reasons. The registered office address of a company and the service address of a director or PSC is displayed on the public register.

It is Better to Issue Many Shares

The number of shares in a private limited company is used to characterize the ownership structure. Two equal shareholders may have one share each with a nominal value to reflect their equal ownership.

Any Company Name can be Used

It is not possible to register a name that is too similar to an existing company name, to use a protected term or phrase without the proper permissions or to register a name that could be seen as offensive.

Some of The Common Myths for Regular Statutory Compliances Right After The Process of Incorporation

1. Appointment of Auditor Every Year

A private limited company would need to incorporate an individual auditor or a firm to handle all the financial filings on an annual basis, who shall hold the office from the conclusion of that particular meeting till the conclusion of its sixth annual general meeting (AGM) and after that, till the conclusion of every sixth AGM.

2. Maintaining Registers is a Burdensome Task

All Private Limited Companies are expected to have statutory records-maintained and regularly updated for the members, loans, charges and investments. This is important as it would give an overview of how active the company has been every year.

3. Statutory Audit of The Accounts is Not Compulsory

Every Private Limited Company has to develop its financial records on an annual basis. Once the financial records and statements are prepared, they must be produced before the Registrar and is done to comply with the legal provisions.

4. Preparation of Board's Report Requires Technical Skills

A report is prepared by the Board of Directors (BOD) as it is mandatory to be laid before members in AGM. The meetings need to be logged; thereafter, the signed minutes of the meetings need to be sustained at the Registered Office, respectively.

5. Copy of the Annual Return and Financial Statement to be Filed with Registrar in Hard Copies

Every company shall file with the Registrar - a copy of the annual return within sixty days from the date on which the AGM is held. In cases, where no AGM has taken place in any year within sixty days from the date on which the AGM should have been held (i.e. on 30th September) along with the statement quoting the reasons for not holding the AGM and all private limited companies shall file a copy of their financial statements in the E-form AOC-4 within 30 days from the date on which AGM is held.

6. Holding Board Meeting and Annual General Meeting Monthly

Every company should hold a meeting with the board members at least twice a year. The lag between both the meetings should not exceed 90 days and every company other than a One Person Company (OPC) shall in each year hold AGM on or before 30th September by providing not less than clear 21 days notice to all the respected members, directors and auditor where no AGM is held in any year within 30 days from the date on which the AGM should have been held.

In conclusion, there are several misconceptions surrounding company incorporation and statutory compliances. Registering a company is not as expensive or complicated as commonly believed. Working with a professional consultant can help you choose the right company structure and streamline compliance processes. Additionally, there are common myths about ongoing statutory compliances, such as the appointment of auditors, maintaining registers, and conducting regular meetings. Understanding the facts behind these misconceptions will help business owners navigate the incorporation process and fulfill their obligations with ease.

Unlock the truth about company incorporation and compliance. Consult with us at info@manishanilgupta.com to register your company hassle-free and debunk common misconceptions!

Disclaimer:The information provided in this blog is for general purposes only and should not be considered as professional advice