What kind of lease deed should I make for a new private limited company before incorporation?
This is one of the practical question, promoters and professionals facing at the time of incorporation.
Unlike the regime of the Companies Act, 1956, present regime “*almost*” require the address of the registered office of the company. But it actually does not force promoters to disclose the address of the registered office but it is advisable to save cost and time to be consumed in the process of incorporation. This is also required to get the correct address at the Permanent Account Number (PAN card) account number be recorded and the card to be delivered at the correct address.
Presently, the company incorporation rules and the incorporation form (known as the SPICe) gives two option:
1. Just give a correspondence address for the time being and search a good office space within 15 days and inform the government; and
2. Inform the registered office address at the time of incorporation with all documentary requirement.
Let us discuss these options:
Correspondance Address at Incorporation:
If promoters opt this option, they have a breather for selecting a good office and get it in the legal name of the company. Promoters and first directors of the company shall have 15 days time from the date of incorporation of the company to finalize the office space. They may execute the leave and licence agreement; the lease deed or the sale deed in the name of the company as it will be a legal entity by that time.
Once, they finalize the location and address of the registered office they will file the relevant form for verification of the address of the registered office of the company.
In this option, there is no requirement of a lease deed, leave and licence agreement, lease deed or no objection certificate.
Registered Office at Incorporation:
If promoters offer to make available any of their own premises or any premises for which they have the right to use under any agreement or arrangement, this option may be good. This condition is not a written condition but practically, it is there.
The benefit of this option (i) no further compliance required; (ii) Same address on Income Tax – Permanent Account Number record and other government registrations opted along with the incorporation of the company.
To exercise this option, promoters should provide the following documents:
a. document showing ownership or possession of the premises;
b. any written agreement, arrangement or at least a ‘no objection certificate’ from the person having possession of the premises; and
c. one utility bill – mobile, telephone, electricity or a bank statement of not earlier than 2 months from the date of its submission.
The document as mentioned in clause (a) above is not insisted upon by authorities but I strongly advise it.
The promoters may require at least one ownership documents, sale deed, lease deed, rent agreement, leave and licence agreement or at least a no objection certificate to use such premises for commercial purpose and for the use of the premises as the registered office of the company.
None of these documents could be in the name of the company itself as it is not still in existence. However, where promoters have a name of company reserved for their use, no objection certificate may refer to the name of the proposed company.
For further reading:
VERIFICATION OF REGISTERED OFFICE
Please explain the meaning of leave and licence agreement.
I am hearing first time this word. I can understand license agreement but leave is new to me.
Ask any Mumbai resident. This term is not familiar here in Delhi also. In this a person receive a leave to remain on the property and receive license to use it too.
This believe to a bypass of rent control laws.
The owner gives mere permission to the licensee without the transfer of interest of property by the owner. In case the property is sold to the third party the agreement comes to an end immediately. If the licensee tends to occupy the property longer than the time mutually accepted by the parties, they are believed to be unlawful occupants of the property.