A step-by-step guide to help you understand how to register a company in India
Registering a company in India can take anything from 15 days to as many as 35 days, though instances of getting the certificate of incorporation in a day to a week are also there.
Before you start the process, you have to decide on what kind of company you plan to set up—a private limited company, a public limited company, a producer company or a branch of a foreign company in India.
If you are planning to start a business and looking forward to registering your company, here is a step-by-step guide to help you in your pursuit.
Rules for a private limited company
- There can be maximum of 50 shareholders.
- Minimum paid-up capital required is Rs 100,000.
- A minimum of two directors and two shareholders are required.
- No limit on maximum number of directors. Articles of Association of a particular company can fix a maximum number for itself.
- There can be no invitation to the public for subscription of shares or debentures.
- There can be no acceptance of deposits from public. However, deposits can be accepted from members, directors and their relatives.
- Transfer of shares is restricted as per the Articles of Association.
- Compliance requirements are lower in number.
|Private Company vs. Public Company|
|Shareholders||Minimum 2, maximum 50||Minimum 7, no limit on maximum|
|Director||Minimum 2||Minimum 3|
|Paid-up capital||Minimum Rs 100,000||Minimum Rs 500,000|
|Public deposits||Restriction on public deposits||No restriction|
|Transfer of shares||Restricted as per Articles of Association||No restriction|
|Compliance requirements||Lesser in number||More in number|
|Commencement of business||Possible on obtaining certificate of incorporation||Possible only after getting commencement of business certificate within six months of getting certificate of incorporation|
Rules for a public limited company
- Minimum number of shareholders is seven. No restriction on maximum number of shareholders.
- Minimum paid up capital requirement is Rs 500,000.
- Minimum number of directors is three. Company with paid-up capital and reserves of Rs 5 crore or more or turnover of Rs 50 crore or more should have a minimum of seven directors.
- No limit on the maximum number of directors, the limit of which can be fixed by the Articles of Association of the company, though in order to have more than 12 directors permission of the central government is required.
- No restriction on transfer of shares.
- No restriction on acceptance of public deposits.
- Invitation to the public for subscription of shares or debentures is allowed.
- Compliance requirements are far higher.
Registering a private limited company
Registration of all sorts of companies in India is overseen by the Registrars of Companies (ROC), appointed under Section 609 of the Companies Act 1956. Every state has a regional office of the ROC to oversee the registration process. The ROC is vested with the power to register companies in India and also ensure they comply with all statutory requirements under the Act.
|Procedure||Time to complete||Cost to complete (Rs.)|
|1 Obtain director identification number (DIN) online||1 day||100|
|2 Obtain digital signature certificate online||1-6 days||400-2,650|
|3 Reserve the company name with the Registrar of Companies (ROC) online||2-3 days||500|
|4 Memorandum and Articles of Association vetted and printed||Has to be done within six months of name approval||Nil|
|5 Stamp the company documents either at the superintendent’s or an authorized bank||1 day||Charges vary from state to state|
|6 Get the Memorandum and Articles signed by at least two subscribers||1 day||Nil|
|7 Get the certificate of incorporation||3-7 days||4,000 for a company with authorized capital of Rs 1 lakh (Fee keep on reducing successively in slabs after this)|
|8 Make a seal||1 day||350|
|9 Obtain a Permanent Account Number (PAN) from UTI or NSDL||15 days||66 for fee and 5 for application form (if not downloaded)|
|10 Obtain a tax account number (TAN) for income taxes deducted at source from the Assessing Office||15 days, simultaneously with procedure 9||55|
|11 Register for VAT with the sales tax officer||12 days simultaneously with procedure 10||5,000 (registration) + 100 (stamp duty)|
|12 Register with Employees’ Provident Fund Organization||2 days, simultaneous with procedure 11||Nil|
|13 Register with ESIC (medical insurance)||1 day, simultaneously with procedure 11||Nil|
|14 Filing for government approval before RBI/FIPB for foreigners and NRIs||15 days||Nil|
The very first step in the process of registration begins with the prospective directors of the company obtaining a directors’ identification number (DIN) and digital signature certificates. Both these can be obtained online. The next step involves approval of the name of the company by the ROC. One has to submit a list of six names (cannot be less than four) in order of preference to the concerned ROC in Form 1A (of the General Rules and Forms) along with a fee of Rs 500. The names should not resemble the name of any other company already registered and also should not violate the provisions of Emblems and Names (Prevention of Improper Use) Act 1950. The ROC is supposed to respond to the application within six days, but it normally takes anywhere between two to three days. Nowadays this procedure is done online. The approved name is reflected on the Website of the Ministry of Company Affairs (MCA).
written by Wicked Sunny, November 23, 2009
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