India offers immense opportunities for businesses across a world-wide range of sectors, driven by its large and diverse market, rapidly growing economy, and a skilled labour force. As the world’s largest democracy and the fifth-largest economy on the basis of GDP (Gross Domestic Product), India’s population of over 1.4 billion people represents a significant consumer base. This dynamic environment presents considerable potential for success, regardless of the industry. However, achieving success in India requires comprehensive market research, strategic planning, and a deep understanding of the local regulatory framework, business culture, and market dynamics. With the right approach, businesses can capitalize on India’s vast growth prospects. However, it also presents several challenges related to its complex regulatory environment, cultural diversity, and infrastructure gaps. Starting an entrepreneurship in India would fetch you great success.
The first and foremost step is to decide on the type of company to establish. The choice of company type depends on various factors such as the structure, management, liability, and taxation of the company. The most prevalent types of companies that can be registered in India are:
- Private Limited Company: Incorporating a Private Limited Company (Pvt Ltd.) is one of the most popular forms of business structure in India. It is a legal entity separate from its owners (shareholders), offering limited liability protection. This means that the personal assets of the shareholders are protected from the company’s debts or liabilities. A private limited company is ideal for small to medium-sized businesses and startups due to its advantages in terms of limited liability, better access to funding, and credibility. A private limited company is governed under the Companies Act, 2013 in India and is registered with the Ministry of Corporate Affairs (MCA). The act mandates that a minimum of two shareholders are required to start such a company, while the limit for maximum number of members is fixed at 200.
- Public Limited Company: A company that can offer shares to the public, typically larger enterprises. These companies are typically larger, with a broader shareholder base, and are subject to strict regulatory requirements, including regular financial disclosures, audits, and adherence to corporate governance standards. They raise capital by issuing stocks or bonds to the public, providing opportunities for growth and expansion. Shares are available investment through an Initial Public Offering (IPO) and Further Public Offer (FPO). The act mandates that a minimum number of seven members as shareholders for enlisting for the company formation.
- One Person Company (OPC): A type of business entity that allows a single individual to own and operate a company, offering the benefits of a corporate structure while being managed by a single shareholder. It is a relatively new concept in certain legal jurisdictions, like India, and is designed to encourage entrepreneurship by simplifying the incorporation process for solo business owners. OPC allows one person to hold 100% ownership and control of the company.
- Section 8 Company: Section 8 company is a type of non-profit organization in India that is formed under Section 8 of the Companies Act, 2013. These companies are established with the primary objective of promoting a charitable purpose, such as education, social welfare, art, science, religion, or any other similar activity. They do not distribute profits to their members or shareholders, as the profits, if any, are reinvested into furthering the organization’s objectives.
- Dormant Company: Company that is registered and legally recognized but is not currently conducting any business or has no significant accounting transactions during a specific period. In essence, it is a company that is “inactive” but still exists in a legal capacity.
- Limited Liability Partnership (LLP): A flexible legal and tax entity where every partner has a limited personal liability for the debts or claims of the partnership. Partners of an LLP can benefit from economies of scale by working together while also reducing their liability for the actions of other partners.
Registering a company in India is an essential step for anyone looking to start a formal business and enjoy the benefits of legal recognition, liberal environment, limited liability, and tax advantages. Company registration in India is a systematic and legal process governed by the Ministry of Corporate Affairs (MCA). The process might seem complicated, but it can be broken down into simple, easy-to-follow steps. This post will take you through everything you need to know about registering the company in India. There are about 17,80,128 companies registered in India as per the bulletin released by the MCA for October, 2024. Section 2(20) of the Companies Act, 2013 provides the definition of the term “company.” It states that “Company” means a company incorporated under this act or any previous company law. A company is an artificial person, created by law that has a separate legal entity, perpetual succession, and common seal also has a limited\ liability.
Step-by-Step Guide to Registering a Private Limited Company in India
The portal that manages the entire company incorporation process is “MCA V3”.
1. Filing of Application for Reservation of Name
- Before registering a company in India, one should decide the name of the company. The name should be unique and comply with the rules set by the MCA. Choosing a unique name for the company is a crucial step in the incorporation process. The name should reflect the company’s mission, values, and the services or products you offer, while also adhering to legal guidelines and being easily recognizable. The name must be unique, and it should not be identical or too similar to an existing company name.
- Once a name is selected, the next step is to verify its uniqueness. To facilitate this, the Ministry of Corporate Affairs (MCA) introduced the “RUN – Reserve Unique Name” web service on 26th January 2018. This service allows founders to check and reserve the chosen name for a period of 20 days upon payment of a fee of Rs. 1,000/- along with the application. The service is accessible through the SPICe+ PART A form. Additionally, an extension for the name reservation can be requested through the RUN service on the MCA portal, subject to the payment of an additional fee, which varies depending on the duration of the extension requested. A company may propose two names to the Ministry of Corporate Affairs (MCA) at a time, and the MCA will provide only one opportunity for re-submission for name application. Object clause can also be attached along with the application but the same is not mandatory by MCA.
- Another available option for the founder is to directly fill out the company incorporation form without utilizing the RUN web-service. This option helps save the fees typically associated with the RUN service. However, it is important to note that if the chosen name is found to be a duplicate or already in use, the entire application will be rejected. In such cases, the founder will be required to submit a new application for company registration in India, selecting a different name. MCA will provide only two opportunity for re-submission of form of SPICe+ Part B.
2. Obtaining a Digital Signature Certificate (DSC).
Once the name of the proposed company is approved by MCA, then next step to apply for DSC if proposed first director/subscriber doesn’t have a DSC for signing the forms/documents. In order to ensure the security or authenticity of documents filed electronically, the Information Technology Act, 2000 demands a valid digital signature on the documents submitted electronically during the company registration/incorporation process. It ensures the authenticity and integrity of the documents submitted online. The digital signature certificate should be acquired only from government approved agencies who has been granted a license to issue a digital signature certificate under section 24 of the Indian-IT Act, 2000.
3. (A) Preparation of Incorporation information & documents.
The necessary documentation for advancing the incorporation process is prepared in compliance with the Companies Act, 2013. The details and documents required from the proposed first director(s) and subscriber(s) serve as the basis for drafting the requisite incorporation documents.
Details required are as below:
- Authorized Capital and Paid-up Capital: The total capital authorized to be issued by the company and the capital that has been paid by the shareholders at the time of incorporation.
- Shareholding Pattern: The distribution of shares among the proposed shareholders, outlining their respective ownership percentages.
- Class of Shares (Equity/Preference): The type of shares to be issued by the company, whether equity or preference shares, and the rights associated with each class.
- Name of the Proposed Director/Subscriber: The full legal names of the individuals who are being appointed as the first directors and subscribers to the Memorandum of Association (MOA).
- Whether Already Holds a DIN or Not: A declaration regarding whether the proposed director(s) already holds a Director Identification Number (DIN) or if they need to apply for one.
Additionally, a DIN can be applied for along with the company incorporation form for individuals who are being appointed as directors for the first time in the newly incorporated company through the SPICe+ form. If the proposed director does not already possess a DIN, one will be generated and issued upon the successful submission of the incorporation form. This provision streamlines the process of both company incorporation and director appointment, ensuring efficiency and ease of compliance with the legal requirements for both founders and directors. Only 3 DIN can be generated through the form SPICe+. - Drafting the Memorandum of Association (MOA) and Articles of Association (AOA): The MOA and AOA are two essential documents that outline the company’s objectives, scope of activities, internal rules, and regulations. The MOA defines the company’s external activities and powers, while the AOA governs the internal management and operations of the company. They both help the company’s owners and founders to run the company efficiently and streamline its business. Hence, they are vital documents in company incorporation.
Documents required in case of Indian Subscribers and Directors-
3. (B) Filing of e-forms for incorporation documents.
The following e-forms are commonly used for incorporation.
- SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus)
- A comprehensive form used for incorporating a company in India. It replaces multiple forms that were previously required for various registration tasks.
- The form contains two parts i.e., SPICe+ Part A and SPICe+ Part B. Part A of the form can be either be submitted individually at the time of name reservation or can be submitted together with SPICe+ Part B for both name reservation as well as incorporation and for availing other integrated services.
- When a new company seeking to reserve its name shall apply for reservation by filing form SPICe+ Part A with Central Registration Centre (CRC). The proposed name applied should not be undesirable as per the relevant provisions of the Act and rules dealt with in this matter. The Central Registration Centre (CRC) may on the basis of information and documents provided, reserve the name for 20 days from the date of approval and on the other hand form SPICe+ Part B simplify the process of incorporation of a company and its registration with the Registrar of Companies (RoC). The following services can be availed by the user through this webform:
- Application for issuance of Corporate Identification Number / Registration of Company with Registrar of Company.
- Apply for license (only applicable for section 8 companies).
- Application for allotment of Director Identification Number (DIN) / Registration of Director
- Application for PAN / TAN allocation.
- Application for allotment of GSTIN.
- Application for allotment of ESIC number.
- Application for allotment of EPFO number.
- Application for allotment of PTEC / PTRC (For Maharashtra, Karnataka and West Bengal only).
- Application for registration of Shops and Establishment – (Delhi / Mumbai)
- Request for Bank Account Opening.
- Following attachments annexed while filing the form SPICe+ on MCA portal.
- Memorandum of Association and Articles of Association.
- Copy of the utility bills (not older than two months), Proof of Office address along with NOC, if applicable.
- Proof of Identity & Residential Proof of the person authorized by the non-individual identity.
- Proof of Identity & Residential Proof of the person(s) by individual First Subscriber, Subscribers & First Directors & Directors.
- Optional attachments (if any).
- Proof of Identity & Residential Proof of the nominee person. Applicable only in case of incorporation of OPC company.
- Copy of certificate of incorporation of the foreign body corporate and resolution passed by foreign company or authority given through constitutional document.
- A resolution passed by promoter company (Applicable if name a body corporate is promoter)
- Optional attachments (if any).
- The maximum available space for attachments is limited to 10MB due to the inclusion of various documents.
- E-Memorandum of Association (e-MOA)/Form INC-33.
The e-form is used to file Memorandum of Association (MOA) for any company other than Section 8/ Part I Section 8 companies, along with SPICe+ Part B e-form for company incorporation or with other e-forms such as SH-7, MGT-14, INC-27, INC-6, INC-18 and INC-20 in case of any subsequent alteration. This e-form is filed as a linked form to SPICe+ Part B in case the total number of subscribers is less than or equal to 7. However, in case the number of subscribers is more than 7 and / or non-individual subscribers are based out of India and / or Individual subscribers with nationality other than India are not having valid business visa, then MOA needs to be attached in SPICe+ Part B e-form. For any subsequent alteration, this e-form is filed as a linked form to SH-7, MGT-14, INC-27, INC-6, INC-18 and INC-20, as applicable. - E-Articles of Association (e-AOA)/Form INC 34: –
Applicable if (total number of subscribers) is less than / equal to 7. In case the number of subscriber is more than 7 and / or non-individual subscribers are based out of India and / or Individual subscribers with foreign nationality are not having valid business visa then AOA needs to be attached in SPICe+ form. The Signature and address of the subscriber shall be duly notarized / apostillised / consularised, as applicable. In case of section 8 companies e-MOA is also applicable. The said form shall be accompanied with application of Incorporation. - AGILE-PRO-S (INC 35): –
It is an application for registration of Goods and Service Tax Identification Number (GSTIN), Employee State Insurance Corporation (ESIC), Employees’ Provident Fund Organization (EPFO) Registration and Professional Tax Registration (in Maharashtra, Karnataka and West Bengal), Opening of Bank Account and Shops and Establishment Registration Number (for state of Delhi). The said form shall be accompanied with application of Incorporation.
Attachments for AGILE-PRO-S are as below:
Form No. INC-9: –
This form is for declaration by Subscribers and First Directors. In case of foreign companies and individuals without a fixed place of business in India are required to submit the INC-9 declaration along with the SPICe (Simplified Proforma for Incorporating Company Electronically) Part B form. This ensures compliance with Indian regulatory requirements for foreign entities and individuals conducting business in India.
4. Issuance of certificate of incorporation for company registration
Once the documents are processed and approved by the ROC, then the Certificate of Incorporation for company registration will be issued within 2 to 7 working days after the submission of a complete application. The exact time frame can vary depending on the complexity of the application, the type of company being incorporated, and the accuracy of the submitted documents. In some cases, it may take longer if additional information or clarifications are required. This is the legal proof that your company has been registered. It will also include the Company Identification Number (CIN). After this, the company officially exists as a legal entity.
Conclusion
The company registration process in India is quite streamlined, especially with online portals like the Ministry of Corporate Affairs (MCA) website. The process involves choosing the right company structure, reserving a name, filing required forms, and ensuring compliance with tax regulations. Proper legal and financial planning is crucial, so it’s advisable to consult with professionals such as Chartered Accountants or Company Secretaries during the process.
