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How To Register A Company In India

how to register a company in india

In India, to own a company, you need to register under certain legal compliance’s. But, before jumping into the process of registering a company, it is crucial we need to understand the various types of business modules in India. Once you can decide on the module, it will be easier for you to understand the process of registration also.

Types of Companies

The different types of companies in India.

business registration in india
  1. One Person Company: Introduced in 2013, One Person Company is somewhat similar like sole-proprietorship and suited for single owners who want to perform within the periphery of company law. Unlike a sole proprietorship, the company is treated as a separate legal entity from the owner with limited liabilities.
  • Limited Liability Partnership: It is suited where more than one partners are there. However, the liabilities of individual partner is restricted to the amount agreed upon by them.
  • Unlimited Liability: While this form is the company is also for business where more than one person is involved, but the liabilities of these members are not restricted to business assets. But, it can extend to the personal assets of each of the partners, if required.
  • Private Limited Company: The Company and the founders are treated as two separate entities and starting from 2 it can have up to 50 members. The rights of stakeholders are limited and common public cannot invest in it.
  • Public Limited Company: To start a public limited company at least seven partners are required, and as it open to the public, it has no restriction on the maximum limit. The company and the shareholders are treated as a separate entity, and their liabilities are limited to the percentage of share held by them in the company.

Steps to Register a Company

Let us now discuss the various steps to register a company.

company registration

There are four steps to register a company:

  1. Obtain a Digital Signature Certificate (DSC). DSC is a digital signature that is made compulsory for each director under the information act 2000. It takes approximately two days to obtain the e-signatures, and the directors can proceed with the rest of the steps once it is acquired.

Since a lot of applications, forms can be submitted online, and a lot of other activities can be carried out online, it is essential to have a verified e-signature. However, it is necessary to obtain a DSC from Government approved agencies only and it must be checked before being used anywhere.

Also note, in case a director already has a DIN, he will not have to apply for once again. But, he needs to get the existing one verified to ensure its validity.

new company registration

New applicants can apply using the simple steps on the MCA portal:

  • On MCA homepage, under MCA service, click on “Acquirer DSC.”
  • Select on “Director” and key in your DIN precisely.
  • Only once the system verifies the number, it will allow you to proceed.
  • You will have to finish the remaining of the form with the utmost concentration. The information should be the same as DIR-3 or DIR-6, whichever the director has.
  • Click “Next.”  In case the system finds some mismatch in the information, it will throw an error. The information submitted while applying for DIN and the information here should be the same. Without which the director cannot proceed.
  • Once you fill in all the details correctly, and carefully, you can select DSC.
  • Click “Select Certificate” and ensure to select the correct DSC while browsing through the list of it.
  • If the DSC is already tagged to the DIN, there will be a message on the same. In case there is any separate DSC tagged to a DIN, then that will also be intimated to take confirmation if any change is desired.
  • Key in the system generated code and get yourself verified as human.
  • Agree to the terms and conditions by tapping on “I Agree.”
  • Submit the form and acknowledge the information that appears on the screen.
  • Take a print out of the acknowledgment slip for future reference.

The process is same for managers, CEOs, CFO, or Practicing Professionals; they only need to select their respective field instead of “Director’ post clicking on “Register DSC.” Rest of the process is the same as explained above.  Also not, instead of DIN, PAN number is the critical validating factor for the rest except Director.

  •  Obtain Director Identification Number (DIN) from MCA. Each director must have a DIN by submitting all the information about the self. It is a simple procedure:

a. Create an account on the MCA website and upload the DIR-3 form after completing it carefully. (In case of any change in address or other details in a later period, the same need to be updated using DIR-6). A fee is applicable to acquiring DIN.

Affix the director’s photograph and scan the copies of required documents. List of documents required are:

  • ID proof of identity.
  • Address proof.
  • Verification application containing information on the applicant’s name, his/her father’s name, DOB, the address of residence, declaration that the applicant is making the request, and signature of the applicant.

b. The form needs to be validated with a digital signature before being submitted.

c. Once the director receives his DIN, he needs to intimate the company about the same.

d. Once all the directors have acquired their DIN, the company should further intimate the Registrar of Corporates about the compiled list of DIN through an eForm and application.

  • Register under new users and create an account on the MCA webpage.

It is necessary to have a registered account in the MCA portal as it plays a very crucial role in making online transaction with the Government, like submitting an online form, payment of fees with convenience (and without paying any extra charge), and various other transactions which can be done online without going to the office physically.

You need not have to pay any fees for registering yourself and creating a new account on the MCA portal. You merely need to go to the MCA portal, click on Register and submit the required information along with a unique user id and password.

Remember this user id and password as these will be required for all the future online transactions on this portal. Post registration, for every time you log in you, need to click on “Login” and type in your registered User Id and Password.

  • Acquire the Certificate of Incorporation.

This is the last step for registering your company. It is for recording the details pertaining to the company like the address, the details of the directors, managers, and secretaries, and their shares.

Checklist of documents to be submitted for acquiring a certificate of incorporation.

  • Director Identification Number of each of the directors.
  • A Digital Signature Certificate
  • Original copy of the letter from ROC confirming that the selected name is available and can be opted as a new company name.
  • Form-1: as proof of incorporation.
  • Form-18: confirming the address of the company that is to be started.
  • Form-32: containing all the information of the to-be-appointed directors, managers, and secretaries.

Besides the above, you will need to submit the following documents

  • Passport-sized photograph(s) of the founder(s).
  • PAN Card’s copy.
  • Proof of address of the founder(s).
  • Copy of Voter card or passport.
  • Rubber stamped rent agreement, in no other language than English.
  • Clearance certificate from the landowner (known as No-Objection certificate).
  • Address proof of the proposed company.

You will have to submit all these forms and documents to Minister of Corporate Affairs for verification. These can be submitted online, and no physical copies are required. However, you can take printouts of the same for reference. Post verification, MC will send you an authorization email confirming the acceptance of the application for incorporation. The status of the application will change to “Approved.”

Selecting the Name for New Company

Why is it important to choose the right business structure

While applying for the name of your company, you must ensure that the name is unique and has not been used by any registered company earlier. Form-1A is used for this purpose. This form needs to be submitted with a processing charge of INR 500 to the Registrar of Companies. You will have to suggest four options as the proposed name of your upcoming company.

It should also contain the details like name and address of the directors. The minimum number of directors details required are:

  • For the private limited company – 2
  • For the public limited company – 7.

The primary business objective and the services or products your company will offer should be clearly stated along with the amount of capital authorized for the same.

It takes about ten days for the Registrar of Companies to confirm you. If the name is not unique, then you the Registrar of Companies’ office will suggest you with a few names, and you can choose one from them. Once your name is finally approved, you will receive a letter of confirmation.

What are the types of business structures in India

Once a company is registered with Registrar of Companies, the Certificate of Incorporation (COI) is issued by the MCA. It is proof enough to ensure that you can start operating your business using the name registered.