step by step guide to registering a company in india

Starting your own company is a great idea. Nothing beats the feeling of working for yourself even if you have to struggle in the initial phase. Despite the majority of the population in India being qualified graduates, the current situation looks somewhat bleak when coupled with the rfoising rates of unemployment in our country.

The answer you seek can be becoming an entrepreneur yourself. It is very lucrative once you manage to establish your business. You can create your own opportunities and the risks you take wholly depend on you.

If you already have the perfect idea for your business, then you have to register it to be legally recognized by the Government of India. It is obviously easier for an Indian citizen to register a company in India compared to a foreign citizen.

There are a few business structures that you must specify for your business to register it. After deciding the business structure, you will need to go through a few steps like obtaining the application form, undergoing the registration process itself and finalizing the registration of your company by paying the registration fee.

Although the process has become easier owing to the online application system, the registration process can be confusing and overwhelming at times for someone new to this. Hence, I decided to write this article to simplify the procedure and help you register your company conveniently.

BUT FIRST, WHAT IS A COMPANY?

Any entity that engages in business can be termed as a company. A company is an association, which is organized and involved in operating a business enterprise. A company is a legal entity that is classified and should be registered under the Company Act of 1956.

I will now list all the official procedures required for registering a company through an e-Filing portal in India. The first decision should be regarding selecting the business structure for your company.

COMPANY BUSINESS STRUCTURES IN INDIA

Picking the right business structure is an acutely important decision before registering and beginning business-related activities. So, let’s take a brief glimpse into the multifarious business structures that you can choose in India. There are four types of business structure; let’s look at them one by one.

ONE PERSON COMPANY

One Person Company or OPC, in short, is the newest form of business structure introduced in India. If your business has only one owner or proprietor, OPC is the best structure for you. It allows self-employed entrepreneurs to be part of the corporate groundwork while still being able to work in any role as per the company.

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LIMITED LIABILITY PARTNERSHIP

A limited liability partnership or more popularly referred to as LLP is a separate legal entity. In this model, the liabilities of partners are only limited to their agreed contribution.

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PRIVATE LIMITED COMPANY

Here are the features of a private limited company as follows:

  • A Private company can have a maximum of 50 members.
  • It restricts to transfer his or her shares to anyone.
  • Not eligible to invite public to subscribe regarding a company share.
  • A private company should have a minimum capital of 1 Lakh INR or capital may vary from time to time.
  • The private company should only have two board members and may also have two directors.
  • Once a private company is incorporated, it can start conducting business.

For more details on private limited company registration in India, continue reading below this section.

PUBLIC LIMITED COMPANY

The characteristic of a public limited company is as follows:

  • There is no limit to the number of members in a public limited company.
  • It can transfer his or her shares to their shareholders.
  • It allows inviting the public to subscribe regarding company shares.
  • The public limited company should have a minimum capital of 5 Lakh Rupees, or the capital may vary from time to time.
  • The minimum number of board members required in a public company is seven and must have at least three directors.
  • The company can start its business only after receiving its commencement certificate.

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WHY SHOULD YOU REGISTER YOUR COMPANY?

The main reasons to register your company are –

  • Protection
  • Transferable ownership
  • Retirement funds
  • Taxation
  • Raising funds through the sale of stock
  • Durability
  • Credit rating

WHERE CAN I REGISTER A COMPANY IN INDIA?

Every state has an office for Registrars of Company (ROC) who are responsible for the registration process of a company. A duration of 15 days to a month or more is required for registering a company in India.

The whole process can be carried out over e-Filing portal of the official MCA website. To find out all about the step by step procedure for registering a company in India, continue reading this article.

HOW TO REGISTER A COMPANY IN INDIA

1. OBTAINING DIN (DIRECTOR IDENTIFICATION NUMBER)

The first and foremost step in registering a company is to acquire a DIN for directors. The government has set new requirements under which directors for an Indian company, in which both an Indian and a Foreigners must register and get a unique identification number; called as DIN(Director Identification Number). The Ministry Of Corporate Affairs (MCA) issues DIN, which is a unique identification number for an existing director or to the person who is intended to become a director of the company.

Even if a person serves as a director at many companies, only one DIN is allotted to a particular individual. DIN is a necessary prerequisite for every Director according to the Amendment Act, 2006.

The Ministry Of Corporate Affairs (MCA) identifies the directors of the company by using this DIN. The process takes approximately one or two days with a registration fee of INR 100.

Here are the Mandatory Documents required:-

  • Identity Proof
  • Passport
  • Driving license
  • Voter ID
  • PAN card
  • A recent photograph
  • Address Proof
  • Ration card
  • Bank statement
  • Electricity Bill

Steps to fill the E- form for obtaining DIN:-

  • Create a login ID with a username and password on the MCA website.
  • After creating an account with MCA, log in to your account and fill the E- Form to generate your DIN.

DIR-3 Form

Application for obtaining DIN should be conducted through Simplified Proforma for Incorporating Company Electronically(SPICe) form. Here, the DIR-3 e-form is to be filled for allotment of DIN to any person intending to become director of a new or existing company.

To view the form, Click here.

DIR-6 form

Any changes to the submitted details of the director like a change of address, email id, and the like, should be updated by using the DIR-6 e-form.

Click here to download the DIR-6 e-form.

Both the DIR-3 and DIR-6 forms should be attested with the digital signature of the applicant. Depending on the company structure type, the minimum number of directors also differs.

One Person Company – 1 Director

Private Company –  2 Directors

Public Company –  7 Directors

2. HOW TO OBTAIN A DIGITAL SIGNATURE CERTIFICATE (DSC)

how to obtain a digital signature certificate (dsc)

The documents should be submitted in an electronic format for Digital Signature Certificate. Digital Signature ensures the security and authenticity of the documents. Directors of Indian companies are required to get a DSC.

The agencies that have been appointed by the Controller Of Certificate (CCA) should authenticate the Digital Signature Certificate. The digital signature validity is for a period of one or two years. Once it expires, we should renew it.

The time taken to complete this process is a minimum of 1 to 6 days. The registration fee may vary from 400 to 2650 INR.

3. RESERVE THE COMPANY NAME WITH ROC

First, you have to decide a unique name to register your company in India and get it approved from ROC. The company name registration process starts with filling the application Form-1A, which is available at the ROC office of every state.

The necessary documents you should provide are the address proof of the company that you have to register, name and signature of one of the directors. You will need to file at least four different names in the order of preference, up to a maximum of 6 titles.

The Indian Ministry of Corporate Affairs maintains a website where you can check whether the name you want to use for your company is available or already taken. The link here will guide you in checking company name availability.

Here are the steps to fill Form 1A:-

  • Select from the two options, whether the application is meant for incorporating a new company or changing the name of the existing company.
  • Provide the details of the applicant like DIN or PAN card number or Passport number. Click the pre-fill button. Then the system will automatically display the name and the address of the applicant if you have provided your DIN number. If you provide your PAN or Passport number, then you have to fill in the details.
  • From the given categories, select the type of your company, state whether the company proposed is private or public.
  • Select whether the proposed company has a share capital or not.
  • Enter the state in which the proposed company is to be registered.
  • Enter the name of the office of the registrar of the companies in which the proposed company is to be registered.
  • Enter the number of promoters and details of the promoters like his category, DIN and Name.
  • Suggest six alternative names for the company to be registered. Please give the name in the order of preference.
  • Explain the significance of the proposed name of the company in a few words.
  • Enter the primary objects of the proposed company to be included in MOA.
  • Enter the proposed authorized capital.
  • Enter the particulars of 2 directors like their DIN, name, father’s name, nationality, PAN number, and address.
  • Verify it and upload the form.

You will need to pay an amount of INR 500 while submitting Form-1A to ROC for approval. The process usually takes about two days, and your company name will be approved based on availability, preference, and relevance. Once a company name is approved, you are allowed a period of 6 months for completing the registration of your company.

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4. MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION (MOA AND AOA)

The Memorandum Of Association contains information about the company’s main objectives. The document should include the information regarding the capital amount that you want to raise by issuing shares and the purpose for which the capital will be used on present and future.

The Articles of Association contains information regarding the company’s daily operation. In the form INC-29, both the Memorandum Of Association and Article Of Association should be attached.

For vetting the MOA and AOA, you can file these drafted documents online to the ROC. Then print the documents and get notarized once the ROC approves your MOA and AOA. This process has to be done within six months of company name approval. There is no registration charge.

5. THE COMPANY DOCUMENTS SHOULD BE STAMPED AND SIGNED

The company documents should be stamped either by a superintendent or an authorized bank. It is mandatory to pay all the stamp duties for all the incorporated company forms and documents online via www.mca.gov.in website. The charge may differ from state to state, and it may take one day to complete this process.

Each document of Memorandum Of Association and Articles Of Associations should have the signature of at least two members of the company in their handwriting, and one witness should also give their signature. It may take a day to complete the process.

6. OBTAIN CERTIFICATE OF INCORPORATION

The next step is to get the Certificate Of Incorporation from MCA to complete the registration process with ROC. You will need to tender these three forms for obtaining the Certificate of Incorporation for your company.

Form -1

Form-1 is the application or declaration for incorporation of a company. In this form, you have to submit the same name which was chosen during the filing of form-1A.

msme form 1

Form -18

This form is to be submitted for presenting a notice of the situation of a new company office or for updating a change of status of a previously registered office. For a new company, you will have to fill the form with actual office address and submit.

Form -32

Form-32 is the incorporation form used as notice for appointment of new or change of directors, managers, secretary or company head. This form can be downloaded from the MCA website.

You need to include the company’s PAN and TAN numbers compulsorily along with this form while submitting. If you do not have PAN or TAN, then you can apply for them along with this. eMOA and eAOA also need to be uploaded as linked forms along with Form-32.

The procedure for obtaining the Certificate of Incorporation may take a week or more, and the cost may differ depending upon the company’s authorized capital. Once a company is registered under the Registrar of Companies, the Certificate of Incorporation (COI) is issued by the MCA, and you can start doing business as a company.

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CONCLUSION

Setting up and starting a company can be a potential life changer. Registering a company with ROC is mandatory before beginning business operations. It is highly recommended to follow all the guidelines so that legal complications can be avoided in the future.

The annual returns and forms need to be filed as dictated by the Indian Companies Act, 2013, by the directors and promoters for maintaining the active status of the company.

In case you don’t want to go through the whole process yourself, you can always seek the help of a professional consultant who will help you with the process. The process has become more streamlined and quick due to the easy accessibility of e-Filing portal over which registration of a company with ROC is viable.

Now that you know how to register a company in India, what are you waiting for? If you already have the ideal notion for your business, go ahead and register it with the Ministry of Corporate Affairs. If not find the things you are passionate about and think about how you can turn it into a business. Either way, this will be a journey that is definitely worth riding.

FAQs

  • How do we adhere to the legal formalities when we are not stationed in India?

Power of Attorney can be transferred to any person you choose for signing the documents on your behalf in India. You can also designate Alternate Directors once the company is incorporated to serve on your behalf while you are not in India.

You will need to visit India at least once within one month after the incorporation of the company. All formalities including appointing Alternate Directors can be completed during a meeting with the Board of Directors at the time of your stay in India.

  • Is it possible for two foreign nationals to register a company in India?

Yes, two foreign nationals can register a Company in India. However, in a private company wherein there are 2 directors and both of them are foreign nationals, one of them has to be a resident in India for a period of at least 182 days in the calendar year as per Companies Act, 2013.

Also, when both the directors are foreign nationals, then disclosure has to be made whether 100% FDI is allowed in the desired sector or not.

  • What is Authorized Capital and what is the minimum authorized capital for registering my company?

Authorized Capital or Registered Capital is the maximum ceiling limit of the capital up to which a company can issue shares and collect money from its shareholders. The authorized capital can also be enhanced by passing a resolution at a meeting of the shareholders.

When you register a Private Limited Company, the promoters of your company need to decide on the amount of authorized capital and the share value they will get in return if they invest in your Company.

The minimum Authorised Capital of a Private Limited Company is INR 1 lakh and the Ministry of Corporate Affairs charges an amount of INR 5,000/- as a fee for allotting this minimum authorized capital.

  • What are the advantages I will get if I incorporate a company in India?

The advantages of incorporating a company in India are as follows.

  • Liability of the Members’ (the directors and shareholders) is limited to the amount of money they have paid for shares. Thus Stakeholders are not typically liable for corporate debts and liabilities.
  • Additional capital can be raised by selling shares either privately or in the market. Members can leave or join without any restrictions.
  • The death, bankruptcy or withdrawal of capital by one member does not affect the company’s ability to trade.
  • The disposal of the whole or part of the business is easily arranged.
  • Enjoys high credibility as the books of accounts and other documents are available for public vigilance.
  • ESOPs sweat equity and other incentives can be issued, which help attract and attain the best of talents.
  • Overall transparency at various levels.
  • Can LLPs be incorporated using SPICe forms?

No, Limited Liability Partnership (LLP) cannot be incorporated using the Simplified Proforma for Incorporating Company Electronically (SPICe) form. LLP, being fundamentally a partnership, is being governed by a different act of law whereas another act regulates companies.

  • How many resubmissions are permitted for SPICe forms?

Two resubmissions are permitted for SPICe forms.

  • What is a Limited Liability Company?

A Limited Liability Company is governed by the Limited Liability Partnership Act, 2008. It is a corporate structure that summarises the flexibility of a partnership and benefits of limited liability to the owners at a low cost. In other words, it’s a combination of a company and partnership, where one partner is not responsible for the misconduct or negligence of another partner.