Should We Issue Offer Letters Before Our Factory License Gets Approved? Seeking Advice

Good Evening All, I have a question. Our company applied for the Factory License. It is going to be a Pvt. Ltd. soon. My question is: Some of the employees joined in September 2020. Shall we give him/her an offer letter of ABC Pvt. Ltd. before the Factory License approval or not? Kindly help me.

If ABC PVT LTD is approved by the Registrar of Companies and if the forms pertaining to the registration of the name are processed by the Central Registration Centre (CRC), you can issue an offer letter in the name of the new company.

Formation of a Private Limited Company

A private limited company is formed under the Companies Act through the Registrar of Companies (ROC).

Issuing Appointment Letters Before Registration

If you are not registered and have not formed the company, how can you issue appointment letters in the name of a private limited company?

Understanding the Factories Act Registration

A company registered under the Factories Act only specifies the type of business you are in, and the license thereof only states that yours is a factory and the factory will abide by the rules and regulations therein.

Hi Umesh, are you ready with your letterheads for ABC P. Ltd with the logo, etc.? If yes, you can issue the offer, mentioning the fact (as 'in the process of registration'). There is no harm. After all, some employees are required to carry out the formalities of registration itself, isn't it? Such advance preparations, such as the preparation of documents like Memorandum & Articles of Association, the formation of the Board, share capital mobilization, PAN, address & ID proof, readying the premises, pre-production arrangements, etc., have to be arranged before filing the application for registration and get regularized once the ROC certificate is received and commencement of operations. There is no impropriety or illegality in doing so. All these expenses, fees, etc., will be treated as "Preliminary Expenses" and amortized in due course. Even for filing the application for the grant of a factory license, so many documents have to be filed. Who will do all the formalities without engaging the required personnel?