Any Individual aged 18 years or above or a Legal entity can incorporate a private limited company in India. In India, private limited companies are most popular form of business structure and therefore most obvious choice of most of the business organisations. In a private limited company, there can two shareholders and two directors and same persons be Director and Shareholder both.
Private limited company incorporation process is fast and hassle free and can be completed online. That means the Directors and Shareholders doesn’t have to necessarily move from their office or home to incorporate a private limited company in India. The step by step incorporation process is discussed below:
Obtaining Digital Signature Certificate
Since all incorporation papers are submitted to the Central Registration Centre, Ministry of Corporate Affairs (registering authority to register all types of Companies in India) online, so all the Individual promoters are required to have a class II type of digital signature certificate issued by any private agency such as SIFY and/or E-Mudhra. These agencies holds a license from the Certifying Authority (Under the provisions of Indian Information Technology Act, 2004) to issue digital signature certificates to individual and organisations.
To obtain digital signature certificate, the applicant has to fill, affix his/her passport size recent colour photograph and sign an application form of issuing organisation (SIFY and/or E-Mudhra). This application form is submitted to the issuing authority along with a self-attested copy of PAN (Mandatory for Indian nationals), any proof of identity and proof of address of the applicant.
Digital signature certificates are generally valid for one or two years and can be used after incorporation as electronic signature of the individual promoter for submitting any document with the MCA or the Income Tax Department.
In case the proof of identity and address is not in English or Hindi language, then a certified translated copy of the same shall be submitted along with the filled in and signed application form. To obtain digital signature certificate the applicant is also required to provide his/her mobile number and e-mail ID, and the same E-mail ID and Mobile Numbers will be verified by the applicant through a One Time Password.
Filing of name application & obtaining name approval from the Central Registration Centre, Ministry of Corporate Affairs, Manesar, Gurugram
After the introduction of SPICe (A single form for submitting incorporation application), name of proposed company can be submitted in SPICe. However, it is general practice to file name application in RUN (Reserve Unique Name) and obtain name approval certificate from the Central Registration Centre, Ministry of Corporate Affairs before preparing the Memorandum and Articles of Association and SPICe. RUN is filed online after logging in on www.mca.gov.in. Two options for the proposed name, in order of preferences, can be submitted. In case the promoters has any registered trademark in India, or elsewhere, and the same is being used in the name of proposed Indian company, a no objection of the Proprietor of the trademark along with trademark registration certificate shall also be necessary to get name approved.
The Central Registration Centre shall provide two opportunity to the applicant, in case the name applied is not available for registration, thereafter a fresh name application in Form RUN shall be filed. MCA fee for filing Form RUN is INR. 1,000/- which is non-refundable.
Once approved, the name shall be available for registration for 20 days and after expiry of 20 days, the approved name shall automatically be withdrawn and a fresh name application shall be filed to get the same name again. In short – incorporation papers must be submitted within 20 days of name approval. Before making name application, one should make sure that the proposed name is not:
- Similar/identical to existing company in India;
- Already reserved;
- similar/identical to any registered or applied trademark in India;
- general name e.g. Corporate Consultants Private Limited, Food trading company private limited etc.
Memorandum of Association (MOA) & Articles of Association (AOA)
The main constitutional documents of an Indian company is its Memorandum of Association and Articles of Association. The Memorandum of Association contains the objectives of the company and details of Company’s promoters and their ownership in the company and also their liability in case of liquidation. The Articles of Association is also very crucial piece of document and it contains the rights, duties, obligations of promoters and directors. It defines working relationship of company with its promoters and directors. The company’s Memorandum of Association and Articles of Association has be very carefully drafted as a company cannot go beyond the provisions of its Memorandum and Articles of Association.
In case of Indian promoters, the company’s Memorandum and Articles of Association shall be prepared in Form INC – 33 and Form INC – 34. Form INC – 33 and Form INC – 34 contains subscriber page, which needs to filled in and digitally signed by the promoters of the proposed company. In case promoter is a body corporate, the subscriber page of the Memorandum and Articles of Association shall be signed by the person authorised by the parent company through a Board resolution. Form INC – 33 and INC – 34 shall also be digitally signed by a practicing professional viz. practicing Company Secretary, practicing Chartered Accountant or a practicing Cost and Management Accountant. The practicing professional shall fill-in his/her full name, residential address, occupation, Membership No. or Certificate of Practice Number and sign both the forms digitally.
Preparation and submission of SPICe (Incorporation Papers)
Once company’s Memorandum and Articles of Association is finalised and executed, an incorporation application shall be prepared in SPICe and submitted online with the Central Registration Centre, Ministry of Corporate Affairs. In order to prepare SPICe, the following information and papers shall be necessary:
- Service Request Number of RUN (Name application Form), in case name is reserved earlier. In case the applicant has not reserved the name earlier, name application can be filed in SPICe as well. However, it is advisable to get the name reserved through RUN to be double sure about name and avoid procedural hurdles in case the proposed name faces rejection from the Central Registration Centre;
- Main business activity code of the proposed company;
- Particulars of registered office address: In India, every company must have a Indian address to be used as registered office of the company within fifteen days of incorporation. Particulars of registered office address can be submitted in SPICe at the time of incorporation. In case registered office address is not finalised, then particulars of a local communication address has to be provided in SPICe and company can submit the particulars of its registered office in Form INC – 22 within 15 days of incorporation;
- Particulars of Authorised and Paid-up share capital of the company: There is no requirement to have minimum paid-up share capital and therefore, paid-up share capital can be as low as INR. 1/-. The authorised share capital or nominal capital is maximum limit of share capital, a company can issue shares. Presently there is no incorporation fee for keeping the authorised share capital upto INR. 1 Million and only stamp duty has to be paid on authorised share capital. It is advisable to keep the authorised capital INR. 1 Million at the beginning. The company’s authorised capital may be increased at later stage after incorporation as per the requirements of capital;
- Particulars of Directors/Shareholders:After introduction of SPICe, the application for allotment of DIN (Director Identification Number) is submitted at the time of incorporation itself through SPICe. DIN is a eight digit unique number allotted to all the Directors by the Central Government and is valid for lifetime. To obtain, the Directors/Promoters has to their passport and any document establishing proof of address. The copy of PAN, Proof of Identityand proof of address must be self-attested. In case these documents are not in English or Hindi language, then a certified translated copy shall also be necessary. In SPICe, the names, father’s name, residential address, nationality, residential status, occupation, education qualifications, the number of shares to be held by them in the company and amount paid-up etc. shall be mentioned. Particulars for allotment of PAN and TAN shall also be filled in the SPICe. After filling the necessary details in the SPICe, necessary attachments such as affidavits, consent letters, Memorandum of Association, Articles of Association, Proof of Identity and address of promoters etc. shall be attached. The SPICe has tobe digitally signed by the applicant and the same shall be duly certified by a practicing professional such as a practicing Company Secretary, Chartered Accountant or a practicing Cost Accountant.
SPICe shall be submitted on the MCA Portal along with Memorandum of Association and Articles of Association in Form INC – 33 and INC – 34 respectively.
Clarifications | Additional information requested by the MCA officials
After submitting SPICe online, all the papers are reviewed and scrutinised by the officials at the Central Registration Centre and they may require some additional information and/or clarifications by sending back the form for its re-submission. These clarifications are requested through e-mail though re-submission request. Upon receipt of re-submission request, the applicant has to again prepare SPICe and address the queries raised by Central Registration Centre and re-file the application.
Certificate of Incorporation & Allotment of PAN & TAN
Once all clarifications are provided and officials of Central Registration Centre are satisfied, they approve SPICe and send the same to the Income Tax Department for the allotment of PAN and TAN to the proposed company. PAN and TAN are generally allotted within few hours and after allotment of PAN and TAN by the Income tax department, an electronic Certificate of Incorporation is generated. The electronic Certificate of Incorporation contains company name, an unique CIN, date of incorporation, Company’s registered office address, Company’s PAN and TAN. After incorporation, first Board meeting of the company is to be necessarily held within one month of incorporation, wherein a Board resolution to appoint the first auditors of the company and opening of corporate bank account shall be passed.
After issuance of Certificate of Incorporation, the promoters can initiate the process of bank account opening and remittance of share application money in Company’s bank account. To open a corporate bank account in India, the Directors of the Company will have to be physically present to sign the bank account opening documents as this is general practice adopted by banks in India.
Since the Narendra Modi government came into power in 2014, many initiatives to promote the business climate of the country has been taken by the Government. India’s incorporation process is effectively fast and simple and a company can be incorporated in 2-3 business days only.
We at Pratham Legal can help you with company registration in India. In case of any question(s) or clarification(s) required, you can get it touch with me at email@example.com at +91 9821008011. To know more about us, our practice, please take a look at https://prathamlegal.com