How to register a company in India? If you are looking for an answer to this question, then you must have clarity about the type of company registration you want.
You can opt for one of the four types of business registrations in India. Once you have selected the most favourable business structure to register a company in India, you are required to submit the required documents along with a company registration form.
Besides, there are a few steps that you need to follow for online company registration in India. Also, you must know about the regulatory requirements and authorities that govern company registrations in India.
In this blog, we will mainly focus on the registration of private limited companies in India. But before we move on to the steps of the company incorporation, let us first understand the four types of business structures in India.
The question arises - why do we even have to choose a specific business structure? Why can’t we just go with any of them?
It is important to choose the right business structure for your company because it affects several factors from your liability towards your business, company name, to how to file your taxes and statutory dues.
The operational and financial success of your business depends on the business structure you have chosen. Hence, selecting the right business type for your company is quite essential.
Below we have enlisted and described the types of company registrations in India:
Private limited company registration is one of the cited and popular legal business structure options in India. Usually, start-ups and developing companies prefer to have online company registration as a private limited company.
It is so because the PLC allows outside funding to be raised easily and without much complications. The liabilities of the shareholders are limited and it also let them offer ESOP (Employee Stock Options) to attract top talents.
A private limited company is regarded as a separate legal entity from its shareholders, in the eyes of laws. It has directors also known as company officers and shareholders who are also known as stakeholders. Besides, every entity in the company is regarded as an employee of the company.
Read our blog on different career opportunities in the stock market and decide whether you would like to start your own brokerage firm or any other institute and register it as a private limited company.
As per the Companies Act 2013, a public limited company is referred to as a company that has limited liability and volunteers shares to the general public. Public limited companies are listed on the stock exchange and their stocks can be acquired by anyone, either through trades on the stock market or privately through IPO (initial public offering).
The regulations for public limited companies are stringent and these companies are supposed to publish their true financial health to their shareholders. Just like the private limited company, this also has a separate legal existence. The liabilities of the members of the private limited company are limited to shares they hold.
LLP is a special form of business structure that features a traditional partnership. The benefits of limited liability are enjoyed by the partners of an LLP firm.
Limited Liability Partnership is mainly opted by individuals over other business entities because the amount of flexibility offered by this form of structure outweighs the other form of entities.
Moreover, the liabilities of partners in an LLP are only limited to their agreed contribution. Such a company is registered under the Limited Liability Partnership Act, 2008.
One Person Company was introduced in the year 2013 and is the best form of structure to choose if there’s only one owner or promoter of the company. It allows a sole-proprietor to carry on his work and still be part of the corporate structure.
The provisions for an OPC are present under the Companies Act 2013. An individual with one person company registration can enjoy multiple benefits such as limited compliances, limited liability, separate independent entity, and separate legal entity.
Besides the four above-mentioned business entities, other forms of business structures include HUF (Hindu Divided Family), Partnership Firms, and Sole Proprietorship.
You can opt for any business structure that suits your business needs best and register your business accordingly.
The Ministry of Corporate Affairs (MCA) is the principal regulatory authority for all company registration processes in India.
When an individual is willing to establish a company in India, then he/she is required to submit all the essential documents and information to the MCA for processing of the application.
Once the company is incorporated, the required individual has to fill in specific documents with the Registrar of Companies.
To register a company in India successfully, you must submit the following documents to the Ministry of Corporate Affairs:
As we made clear at the beginning of the blog, we are mainly going to describe the firm registration process of a private limited company here. However, other business registrations also follow a somewhat quite similar process.
The first thing that you need to do while filing an application for commercial registration in India is to apply for a DSC (Digital Signature Certificate). A digital signature certificate is a legal document used for verifying information. Usually, the DSC is an electronic signature used to sign electronic documents. Hence, while incorporating a company, you must first apply for a DSC with the MCA (Ministry of Corporate Affairs).
After applying for DSC, the next step is to apply for the DIN (Director Identification Number). The DIN indicates that all compliances have been fulfilled by the company while recruiting a director.
The company’s name is one of the essential elements in the company registration process as it adds value to the business you do. Therefore, you must check for the availability of the company name. Plus, this process is mandatory.
When you check for the company’s name on the MCA portal, the portal will inform you if the company name is already taken or registered. In case the company’s name is already taken by somebody else, then you would be given another chance to choose a unique name for your business. You need to file the RUN (Reserve Unique Name) form on the MCA portal.
While choosing the name for your company, you must remember that the name doesn’t hurt the sentiment of any religion, caste, or community. Plus, it should not be offensive and must add value to your business.
Next, you need to do is to file SPICe (Simplified Proforma for Incorporating a Company Electronically) form or INC-32 with the Ministry of Corporate Affairs (MCA). Filing SPICe application serves the following purposes with the convenience of a single form.
Before May 2015, the company registration required the filing of various documents such as INC-1 for obscuring a company’s name, DIR-3 for acquiring the DIN, INC-7 for the registration of the company with the MOA and AOA, DIR-12 for the directors, and INC-22 for the registered office. However, with SPICe, now one can file all these things with just one form as all of them have been combined to form INC-32.
You or any applicant for the company registration must proceed on to filing documents such as MoA (Memorandum of Association) and AoA (Articles of Association) online. Filing these documents will provide you or the applicant with a legal certainty of the company formation. This process would be carried out through the Ministry of Corporate Affairs (MCA) portal.
After you have filed MoA and AoA, you need to consider applying for getting a PAN and a TAN number for your company.
Once you are done with all the above process including the documentation, the MCA and Registrar of Companies (ROC) will monitor your application. If they don’t find any issues in the application, they will grant you a certificate of incorporation (COI). A COI is a legal document that offers legal status to the company registered.
Once you have acquired the certificate of incorporation, you need to open a company’s bank account, also known as the current account. A company’s bank account is essential for carrying out business transactions.
One thing I would like to suggest here while you open a bank account is that do check how much returns you are going to earn. Explore our blog on how much returns do bank account give and choose the best one for your business.
Any applicant willing to register a company in India must first choose the right business structure as per his/her requirements. Then, you must make sure that you have the required documents. Follow the steps mentioned above. Make sure that you choose a unique company name or your application will be rejected.
If the MCA and ROC are satisfied with your application and don’t find any issues, they will grant you the Certificate of Incorporation. Once your company has been incorporated, make sure to open a company’s bank account.
In case you have any queries related to the same, please feel free to ask us. Leave a comment below.
Until then, happy learning & happy investing!