Are you looking for information on “how to register a company in India?”
Well, you have arrived at the right place! In this article, we will provide you with minute details about the entire Company registration process.
It is very important to register a business under the right structure of company registration in India. Whether you are starting any business-related activity, from engineering to design to marketing to sales to support, the right business structure and company registration will allow you to operate your business efficiently and lawfully.
Before we move to the company registration procedure, we just want to make sure that you have a fair knowledge of business structure. For those who aren’t aware, let’s dig out the basics first.
What is a company?
A company is any entity that engages in business. It can be structured in different ways. For example, your company can be a sole proprietorship, a partnership, or a corporation. Depending on what type of company you’re dealing with, it may be owned by one person or a group of people.
According to the Section 3 of the Companies act, a company means a legal entity formed and registered under Companies Act 1956. This act maintains two types of companies called Private and Public Companies.
What are the differences between Private and Public Companies?
- The Minimum number of Board members required for a private company is two, while a public company should have seven.
- A Private Company can have a maximum of only 50 members, whereas a Public Company can have any number of members.
- A Private Company can start its business as soon as it is incorporated, but a Public Company has to wait until it receives a business commencement certificate.
- A Private Company shouldn’t sell its shares to anyone or shouldn’t make any invitation to people regarding the company’s shares, but a Public Company can invite people to buy its shares by issuing a prospectus.
- A Private Company may have two directors, but a Public Company must have at least three directors.
Under the Ministry of Corporate Affairs, every company is to be registered by the Registrar of Companies (ROC) for the state. There are mainly 5 types of companies (listed below) in India, which are different from one another. Below are the popular business structures and their legal compliances that we have explained for your better understanding.
|Company type||Ideal for||Tax advantages||Legal compliances|
|Sole Proprietorship||Small merchants and traders||– Benefit on depreciation||– Individual tax returns to be filed
– An audit, if required
|General Partnership||Small businesses where two or more people are involved||– Benefit on depreciation||– Business tax returns to be filed
– Audit if applicable
|Limited Liability Partnership||Service-oriented businesses or businesses that have low investment needs||– Benefit on depreciation||– Business tax returns to be filed
– ROC returns to be filed
|One Person Company||Sole owners looking to limit their liability||– Tax holiday for first 3 years under Startup India
– Higher benefits on depreciation
– No tax on dividend distribution
|– Business returns to be filed
– Limited ROC compliance
|Private Limited Company||Businesses that have a high turnover||– Tax holiday for first 3 years under Startup India
– Higher benefits on depreciation
|– Business tax returns to be filed
– ROC returns to be filed
– Mandatory audit
With the above information, you must have understood the business structure. So, depending upon the nature of your business, you can get your company registered under a business structure which is best suitable for you.
Documents Required to Register a Company in India
You need to provide the following documents for your company’s registration in India.
- Passport-sized photograph
- Copy of PAN Card
- Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
- Voter’s ID/Passport
- Notarized Rental Agreement in English
- No-objection Certificate from the property owner
- Utility Bill of the registered address.
Now, let’s move towards the Company Registration Process
In India, the companies are governed by MCA (Ministry of Corporate Affairs). And, if you want to register a new business then you need to follow some of the official procedures. Though, you don’t need to visit the corporate office, instead, you can do online registration from anywhere. However, the registration process includes some must-follow rules and some registrations like Digital Signature Certificate (DSC), Director Identity Number (DIN) and the filing of an e-form.
Four Steps of Company Registration in India: –
- Acquiring Digital Signature Certificate(DSC)
- Acquiring Director Identification Number (DIN)
- Filing an eForm or New user registration
- Incorporate the company
Step 1: Acquire Director Identification Number (DIN)
The first step of company registration is to obtain the identification number for each director of the company. As per the Amendment Act 2006, it is compulsory for both an Indian and a Foreigner to register and get a unique identification number. Even if a person serves as the Director of many companies, only one DIN is allotted to a particular individual.
To get DIN, you need to file an eForm called DIN-1 which is available on the Ministry of Corporate Affairs Website (here is the link of the DIN-1 Form).
- Create an account on MCA Website first and then fill the E- Form to generate your DIN.
- Download the E-form DIN-1 and fill it with the necessary details
- Now upload the filled form and pay the applicable fees
- One the upload gets done, it will generate the DIN for the Director. Now, one should intimate their company about DIN by using DIN 2 form
- The next process is that the company should intimate regarding the director’s DIN to the Registrar Of Corporates (ROC) through a DIN 3 form
- If you want to update your personal details or change of address or any change in DIN, then director should intimate the change by submitting the eForm DIN-4 Form.
Step 2: Acquire Digital Signature Certificate (DSC):
The digital signature is an electronic signature that is used by the sender of certain documents to show that the documents originated from them. It will be used while sending an electronically signed document to your business partners, investors, and other shareholders. In order to ensure the security or authenticity of documents filed electronically, the Information Act 2000 demands a valid digital signature on the documents submitted electronically.
The digital signature certificate should be acquired by only those agencies which are appointed by the Controller of Certification Agencies (CCA). One should not use DSC given by any other agency, which is not approved or authorized and it’s illegal to use others’ DSC as yours/use a fake one.
If you already have a digital signature then you can use the same, no need to apply for another one. But do check for your digital signature’s validity since agencies issue DSC’s with one or two-year validity, so after the expiry you will have to renew it.
One can acquire his/her Digital Signature certificates from the agencies that have been appointed by the Controller Of Certificates (CCA). The digital signature validity is within one or two years. Once when it expires, you should renew it. The time taken to complete this process is a minimum of 1 to 6 days. The registration fee may vary from Rs. 400 to Rs. 2650. To check out the pricing details of Govt approved agencies, follow this link.
Step 3: Create an account on MCA Portal – New user registration
This is about having a registered user account on MCA Portal for filing an eForm, for online fee payment, for different transactions as a registered and business user. Creating an account is totally free of cost. To register a company in India on the MCA portal, click on the “Register” link.
Step 4: Reserve the Company Name
This is the final step of a company’s registration in India. To complete this step, you have to come with a unique business name (suggest five unique, different names to the ROC staff) to register and get approval from the ROC in India. You also need to submit necessary documents such the address proof of the company, name and signature of one of the directors, and information regarding the payout of their qualification shares.
If the business name that you have suggested is not approved, then you will be given a chance for resubmission of the new panel of names against the fee paid. It may take 2 to 3 days to complete the process and the registration fee is Rs 500.
- Form-1A: Application form for availability or change of a company name. Once you apply for a new company name, the MCA will suggest four different forms for your company name; you have to choose one from them. To do the same, you have to fill Form-1A and submit it.
- Form-1: This is for application or declaration for incorporation of a company. In this form you have to fill the same name which you chose during application of form-1A.
- This form is for notice of the location of a new company office or change of location of previous registered office.
- For a new company, you have to fill the form with genuine office address and submit it.
- For a new company, this form is for notice of appointment of new Directors, Managers and Secretary.
- For an existing company, this form is for a change of directors, Manager, Secretary or company head.
- Form-29: Consent to act as a director etc. Dates on the Consent Form and the undertaking letters should be the same as is mentioned in the Memorandum of Association signed by the Director himself. A private company and a wholly-owned Government company are not required to file Form No. 29.
- No objection letter from the persons whose name has been given in the application for availability of name in Form No. 1-A as promoters/directors, but are not interested at a later stage, should be filed with the Registrar at the time of submitting documents for registration
- The agreements, if any, which the company proposes to enter with any individual for appointment as managing or whole-time director or manager are also to be filed.
After submitting these forms, the application needs to be approved by MCA. Once it is done, you will receive a confirmation email regarding the application for incorporation of a new company, and the status of the form will get changed to Approved.
There are a few other things that need to be dome such as opening a current account with a bank, getting a Permanent Account Number (PAN) Tax Account Number and Trademark or logo registration. To complete these tasks, you can either do them on your own or you need to outsource them to professional auditors. This usually takes about 3-4 weeks.
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