How to Register a Company in India

How to Register a Company in India

Company formation & registration

GlobalLinker Staff

GlobalLinker Staff

25 Aug 2014, 11:37 — 5 min read

Starting a business entails planning and various formalities. In India, a company can be registered based upon its business structure.The five categories of business structure are:

 

Sole Proprietorship: A one-person company, where the business and the owner is treated as the same. The owner bears all the risks and liabilities

Partnership: An arrangement between two or more individuals on the level of risks they share, liability sharing and the pool of resources they contribute

 

Private Limited: A voluntary association of two or more people (limited to fifty), who have limited liabilities; the transfer of shares is limited to its members and is not allowed to invite General Public to subscribe to the company shares

Public Limited: An associate of seven or more individuals, who can raise capital by selling shares to the general public and also enjoy limited liabilities

One Person Company: OPC, like the sole proprietorship structure allows a single individual to run the business, but their liability is limited. An OPC gives a business all the benefits of a Private Limited Company in the name of a separate legal entity

 

Sole Proprietorship Business Registration

Sole proprietorship businesses do not require any specific registration under the law.  However, there arecertain business licenses the proprietor will need to obtain while setting up the business. Some of the common licenses/ documents include

 

  • Service Tax Registration

  • PAN Card

  • TAN (Tax Collection & Deduction Account Number)

  • VAT/ CST Registration

  • Shops & Establishment License

  • Central Excise License

  • Importer Exporter CodeProfessional Tax

  • Employee Provident Fund Registration

  • ESI (Employee State Insurance) Registration


Business Partnership Registration

The Indian Partnership Act of 1932 regulates the legalities of registering a partnership firm. A business can register itself as a partnership at anytime and not necessarily at the time of its formation. An application is filed with the Registrar of Firms (ROF) in the area where the business will be operating. For more information on the registration process for a partnership firm click here

 

Registering a Private Limited Company

The Ministry of Corporate Affairs (MCA) regulates the terms and conditions to register a Private Limited Company.  Registrar of Companies (ROC) within the MCA is vested with the duty to register a company in a certain state.

 

A Private Limited company must have a paid-up capital of INR 1,00,000. The company should have a minimum of two directors and two shareholders.

 

Step 1: Obtain a Director Identification Numberand a Digital Signature Certificate

 

Step 2: File a name for the business


The MCA maintains a directory of names on their website. A business owner can file for a unique name by submitting the Form INC-1 and paying a fee of INR500 fees online. The approvedname holds valid for 60 days within which the company should be incorporated.

 

Step 3: Certificate of Incorporation


Once the name is approved, the business owner can initiate the incorporation process. The Memorandum of Association (objectives and scope of company) & Articles of Association (rules and regulations of the company) with other documents are filed with the MCA.

 

Other forms required can be downloaded from the MCA website. If the registrar is satisfied with all the forms filed and the information submitted, it would register the company and issue a Certificate of Incorporation.A private company can commence the business right from the date of its incorporation. 

 

Registering a One Person Company (OPC)

Steps to register a one-person company are similar to registering a Private Limited Company. The business owner is required to get the name approved, post which they file an INC-2 Form for incorporation of the company.


A DIR-12 Form is to be filed by OPC in case the promoter is not the sole director or there are more than one directors in an OPC. These forms can be downloaded from the MCA website.

 

This article is based on research and readers are recommended to seek professional advice when they plan to register a company.

 

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