Mandatory provisions to register a company in India have been given under the Companies Act, 2013. Before we move on to the company registration process in India, let’s first understand certain basics.
This article is a comprehensive guide to registering a company in India. It covers the following aspects:
The meaning of a Company in India is any business, established as an artificial person under the law. A group of individuals form a company with the mutual goal of engaging in business for profits or any other such common purposes.
The Indian Companies Act, 2013, defines a company as:
A registered association which is an artificial legal person, having an independent legal entity with perpetual succession, a common seal for its signatures, a common capital comprised of transferable shares and carrying limited liability.
Company Registration is a process of incorporating a company and give it a legal status under the Indian law. The legal document called the Certification of Incorporation received at the end of the registration process is the legal proof of the existence of the company.
Both pre and post-incorporation formalities are governed by the provisions of the Indian Companies Act, 2013. The same is regulated by the Ministry of Corporate Affairs (MCA), Government of India.
Any association or company of more than 50 members must be compulsorily registered under the Companies Act or any other India Law.
Failure to do so will go against Section 464 of the Act, and the company will be seen as an ‘Illegal Association’.
The Companies Act allows different types of companies to be registered in India. Based on the need and requirement, you can choose any business structure for the registration of a company in India.
Here is a brief note on the different structures available for company registration.
This is a type of company that is held by ‘private individuals’, such as the friends, relatives and associates of the founder. They are called members of the company of shareholder.
Read More: Advantages of Private Limited Company
A public company is almost the same as a private company, except regarding the ownership of the company.
This is a fairly new form of business that was introduced in 2013. This structure gives the advantage of running a sole-proprietorship but with the benefits of a corporate framework.
More on: Advantages of One Person Company
LLP also enjoy limited liability but are registered under the Limited Liability Partnership Act, 2008. The partners are the owners and the management of the company.
There are Non-profit companies set up under the Companies Act.
Other forms of business structures in India include Sole proprietorship, Partnership firms Hindu Undivided Family business. However, it is important to note that, these structures do not fall under the purview of the Companies Act.
Read More: Types of Non-Profit Organization in India
Choosing the right business structure will define the way your business functions and would also affect the yearly compliances that the business is to follow.
Here is a look at why you should choose the appropriate business structure before you register your company:
The company registration is process is governed by the provision and guidelines of the Companies Act 2013. The Act specifies certain minimum requirements for incorporating a company in India.
While you have a choice of incorporating any type of company, the least requirements for company registration is for a Private Limited or One-Person Company.
Here are the minimum requirements for registering a private limited company or one person company:
To incorporate a company, you need to choose a Unique Name. The MCA would not approve any name which already exists or is similar to an existing company or a registered trademark.
The primary requirement for choosing a company name for registration is that is it unique.
The application for name approval is made using the MCA authorised RUN (Reserve Unique Name) online web service. After the application has been submitted, the Central Registration Centre (CRC) examines the application and decides of the approval and rejection of the name.
The MCA has given certain guidelines for choosing a company name. They are as follows:
The shareholder of the company refers to the owners or the members of the company.
For instance, one shareholder can hold 99% of the shares, and the other can hold the remaining 1%.
The directors of any company are responsible for the management of the company. While they are separate for the shareholders of the company, the common practice is that the promoters of the company elect to be the first directors as well.
Therefore, if three people what to start a company, a minimum of 2 people should have a DIN to be listed as the proposed director of the company. The other one can be the shareholder of the company. They can apply for a DIN later and be appointed as the director after the company can be incorporated.
Read More: How to Register for a DIN Number?
Capital is the amount of money that is required for the existence and functioning of the company.
Under the provisions of the Companies Act, there is no minimum capital requirement for registering a company.
There is no fixed cost for company registration, and it might vary based on several factors.
Here is a look at the factors that affect the total cost of registration
The Ministry of Corporate Affairs is taking steps to simplify the registration process for a new company. This is being done in an endeavour to promote the ease of doing business in India and encourage an entrepreneurial culture.
The Ministry promotes a very fast-track registration process, which is easily done through an online process. The process involves an online registration form, supported by scanned copies of the relevant documents and validated by the digital signature (DSC) of the applicant.
More on: Checklist documents required for Company Registration
The members of the company who will be involved in the incorporation of the company would need to have a DSC. The DSC of the first shareholders would be required to sign the e-MOA and e-AOA of the company to upload the same with the Registrar of Companies (Roc). This makes DSCs for the first subscribers or promoters mandatory. Additionally, the proposed director would have to obtain a DIN, for which the DSC is compulsory.
Documents for DSC:
The DIN numbers of the proposed directors are required to be intimated to the Ministry in the incorporation forms. Therefore, DIN is mandatory for the proposed directors of the company.
Documents for DIN registration:
Before incorporating a company, the name of the company is to be reserved. To reserve the name of a new company or change the name of an existing company, a simple online service called RUN (Reserve Unique Name) is used.
The application for the company name is processed by the Central Registration Centre(CRC) under Non- Straight-through Processing mode. The CRC will conduct a comprehensive check and give its approval or rejection of the name. Each name submission is to be accompanied by fees of INR 1000.
Once the name is approved, it is valid for:
The Memorandum of Association and Article of Association are essential documents for the incorporation of any company. Both of these documents define the internal and external relations of the company with its stakeholders.
Both these documents are drafted by professionals and must be submitted along with subscribers’ sheet, which contains the DSCs of all the founding members.
Once the necessary documents have been prepared, the following form will have to be filed to incorporate the company.
SPICe-32: Application for company incorporation
The following supporting documents would also have to be attached to these forms
Note that, Form INC-22: Details of registered office address (might be required later if proof of address is not filed with the SPICe form)
Once all the procedures for company registration are complete, the Certificate of Incorporation will be issued to the company.
The Ministry has ensured that not only the incorporation process is simple, but has also expedited the time of company registration in India.
Usually, a company is registered within a period of 15-20 working days - Subject to the fact that all the documents are in order.
There are multiple reasons to register your company as opposed to running your business as a sole proprietorship or partnership entity.
Registration gives the company a positive public image. It creates a professional persona and builds credibility. Banks, financial institutions and investors also prefer a corporate set up for giving loans and investment, rather than a single-person run business structure.
In a sole-proprietorship and partnership models, the liability of the proprietor or partners is unlimited. In a company, however, the liability of the members is limited to their investment. This protects their personal assets in the event of loss or debit of the company.
An incorporated company is a separate legal person in the eyes of the law. This means that the company would be responsible for its own actions and the owners cannot be held liable unless a criminal action is found.
Since the company is established as a separate legal entity, it also means that it doesn’t rely on its stakeholders for its survival. For instance, the company started by Dhirubhai Ambani is continuing as Reliance Industries today, year after his death.
In a sole-proprietorship and partnership models, the owner and the management of the company are one and the same. However, a unique feature of a company is that the ownership is held by the shareholders and the management is done by the Board of Directors. This distinction allows the owners to hire competent people to run the affairs of the company.
Since the liability and gain of the business are not directly tied to the owners, it makes investors keener on investing in the company. Also, since the capital of the company of the company is entitled in shares, the ease of accumulating and distributing capital holdings to the members also becomes easier.
As easy as it is to incorporate the company, it is also easy to dissolve the company and liquidate it. Unless and otherwise there are debts or judicial proceedings, a company can be would-up by making a request to the Registrar of Companies. In such a situation, the assets and the surplus capital will be distributed amongst the shareholder in accordance with their ratio of holdings.
In this article, we have covered all the aspects to register a company. If you need help registering a company in India our team of experts are just a call away.
At QuickComapny.in, we have extensive experience with company registration and related compliance. When you choose to register a company with us, we take care of almost all the compliance formalities, guiding you through each step.
Let’s take a quick look at the company registration process that we follow and also a look at the basic documents that we need from you.
Once you book a company registration package with us, our representative will get in touch with you to understand your requirement, such as the type of company you wish to register, the number or first members and directors, the amount of paid-up capital, etc.
We would also help you apply for your various documents such as DSC and DIN for the proposed directors, PAN and TAN of the company. However, note that depending on the package cost, the cost of applying for these additional documents would vary.
To ensure that you are able to register your company with the name of your liking, our representative will conduct a search to ascertain name availability. Six names would be submitted to the MCA for the process of name approval.
Once the name has been approved, we will proceed to arrange the necessary documents such as e-MoA, e-AoA, SPICe form, etc. Upon your approval, the application is submitted by our representative on your behalf.
Once the company is incorporated, we will send all the documents. We will also help you with any other post incorporation compliance if required.
We will require the following documents for registering your private limited, one-person company or limited liability partnership.
It is to be noted that, additional documents might be required, in case you would want to incorporate a Nidhi company, or register your business using Udyog Aadhar or as an MSME.
For incorporating a company in India, one scanned copies of the documents are required. This includes but is not limited to:
Although the company registration process set by the MCA is simple, it’s always best to seek professional help while registering your company. There are various decisions to be made while incorporating a company, and in certain areas, experience goes a long way in simplifying the nitty-gritty of the process.
Click Here: Company Registration Online