Company Registration in India: Easy Step-by-Step Guide

Introduction:

Understanding Company Registration

Company registration is a way to formally establish a business entity. In the past, people often started businesses as sole proprietors or in partnerships. However, in modern times, especially after India gained independence, the government introduced a modern business mechanism known as the Companies Act of 1956.

The economic scenario prompted significant changes in 2013, leading to major amendments to the Companies Act, now commonly known as the Companies Act of 2013.

Types of Business Entities Under the Companies Act of 2013

Well, there are various types of business entities described in the Companies Act of 2013. In this discussion, we’ll explore each of these entities. Although there are numerous business entities, the Private Limited Company stands out as a widely recognized and popular business entity. Interestingly, this entity draws inspiration from the US LLC (Limited Liability Company) model.

1. Private Limited Company

Definition: A Private Limited Company is a legal business entity that limits the liability of its shareholders to the amount they have invested in the company. It requires a minimum of two shareholders and can have a maximum of 200 shareholders.

Benefits:

Limited Liability: Shareholders’ personal assets are protected.
Separate Legal Entity: The company has its own identity distinct from its owners.
Access to Funding: Easier to attract investments and loans.
Tax Advantages: Eligible for certain tax benefits.

Best for: Small to medium-sized businesses looking for limited liability protection and ease of raising capital.

2. Public Limited Company

Definition: A Public Limited Company is a type of business entity that offers shares to the public and is listed on a stock exchange. It requires a minimum of seven shareholders and has no maximum limit on the number of shareholders.

Benefits:

Capital Raising: Can raise substantial capital by issuing shares to the public.
Transferability of Shares: Shares can be freely traded on the stock exchange.
Prestige and Credibility: Enhances the company’s reputation and credibility.

Best for: Large-scale businesses with plans for substantial growth and access to public funding.

3. One Person Company (OPC)

Definition: An OPC is a type of Private Limited Company that allows a single individual to own and manage a company. It provides limited liability to the sole shareholder.

Benefits:

Limited Liability: Sole owner’s personal assets are protected.
Easy Management: Simplified compliance and governance requirements.
Continuity: Continues to exist even in the absence of the sole shareholder.

Best for: Entrepreneurs and sole proprietors looking for limited liability and control over their business.

4. Limited Liability Partnership (LLP)

Definition: An LLP is a hybrid business structure that combines features of a partnership and a corporation. It provides limited liability to its partners.

Benefits:

Limited Liability: Partners’ personal assets are protected.
Flexibility: Allows partners to manage the business without extensive formalities.
Tax Benefits: Taxed as a partnership, enjoying certain tax advantages.

Best for: Professional services firms, small businesses, and startups looking for liability protection and flexibility in management.

5. Section 8 Company (Non-profit Organization)

Definition: A Section 8 Company is a non-profit organization established for promoting charitable or social welfare objectives. It must apply its profits solely towards its objectives.

Benefits:

Charitable Objectives: Exists for charitable or social welfare purposes.
Limited Liability: Members’ personal assets are protected.
Tax Exemptions: Eligible for tax exemptions on income generated for charitable purposes.

Best for: Organizations and individuals focused on social welfare, charitable activities, and non-profit initiatives.

6. Producer Company

Definition: A Producer Company is formed by farmers, artisans, or producers to engage in agricultural or related activities.

Benefits:

Collective Ownership: Owned and managed by its producer members.
Limited Liability: Members’ personal assets are protected.
Market Access: Facilitates better market access and fair prices for producers’ goods.

Best for: Farmers, artisans, and producers involved in agriculture or related activities seeking collective ownership and market access.

How to register a company in India?

Got a great business idea for starting a business India? Ready to make it official? Company formation is the first step to legalise business in india. Registering your company (Formation) is key, but it can feel overwhelming. No stress – this guide makes it easy!

Follow these step to register a company in India

Choosing Your Company Type:

Private Limited Company (Pvt Ltd): This is a popular choice for new businesses. It protects the owners (shareholders) from being personally responsible for company debts. You’ll need at least two directors (people in charge) and two shareholders to get started.

Limited Liability Partnership (LLP): This is a mix of a company and a partnership. LLP owners have more flexibility in how they share profits and can find it easier to manage than Pvt Ltd.

Company Formation in India:

Company Formation in India is a streamlined process that, with proper guidance, anyone can navigate seamlessly.

Pick a Great Company Name: Brainstorm a unique and catchy name that reflects your business. Check if it’s available on the Ministry of Corporate Affairs (MCA) website: [MCA website ON MCA gov.in].
Get Your Digital Signature (DSC) and Director ID (DIN):
- DSC: Imagine it as a digital fingerprint for signing documents online.
- DIN: A special ID number for each company director. You can apply for these online.
Prepare Key Documents: These are like your company’s rulebook:
- Memorandum (MoA)
- Articles (AoA)
File Online: Submit your documents electronically through the MCA website.
Get Your Certificate: Once everything is approved, you’ll get a Certificate of Incorporation, officially making your company official!
Get Tax Numbers: Apply for a PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) to handle taxes.
Open a Business Bank Account: Set up a current account in your company’s name to manage finances.

Bonus Tips:

Registered Office: You’ll need a local address for official mail.
Startup India: Consider registering for benefits like tax breaks and faster approvals (if applicable): [Startup India ON startupindia.gov.in]

Documents Needed for Company Registration in India

Registering your company (Formation) in India involves submitting some require documents. Here’s a breakdown of what you’ll need:

List of Documents Required for Register a Company in India.

For All Applicants:

Proof of Identity (Any One):
- PAN Card (Permanent Account Number) – Most important for Indian Directors
- Passport (For Foreign Directors or Shareholders)
- Voter ID Card
- Driving License
- Aadhaar Card (Unique Identification Card issued by UIDAI)
Proof of Address (Any One – Not older than 2 months):
- Latest Electricity Bill
- Latest Telephone Bill (Landline or Mobile)
- Latest Bank Statement
- Rental Agreement (if applicable)

For Foreign Directors and Shareholders:

Passport: Mandatory document for identification.
Address Proof:

Company Documents:

Registered Office Address Proof:
- Rental Agreement or Ownership Deed (Sale Deed)
- No Objection Certificate (NOC) from the landlord (if renting)
Memorandum of Association (MoA): Outlines the company’s objectives and powers.
Articles of Association (AoA): Defines the internal regulations for governance.
Declaration by Directors and Subscribers: Forms with self-declarations about directorship and shareholding.
Digital Signature Certificate (DSC): Needed for digital signing by authorised directors.
Director Identification Number (DIN): Unique ID number for each director. (Apply online)

Additional Documents (Optional):

Board Resolution (for Foreign Investment)

Note:

This is a general list, and specific requirements might vary depending on your company structure (Pvt Ltd or LLP) and other factors.
Always refer to the Ministry of Corporate Affairs (MCA) website ([MCA website ON MCA gov.in]) for the latest and most accurate information.

Tip: Consider consulting a Company Secretary (CS) or Chartered Accountant (CA) for guidance on document preparation and the registration process. They can ensure you have everything in order and avoid any delays.

Taking the exciting step of launching your business in India? Look no further than LegalMate, your one-stop solution for a smooth and hassle-free company registration process.

How Much MCA Charge For Register a Company in India?

Updated Pricing for MCA Services

Here’s an overview of the updated pricing for Ministry of Corporate Affairs (MCA) services:

Service	Fee
Company Name Approval	Rs. 1000
Company Registration	Rs. 2000
Digital Signature Certificate (DSC) each	Rs. 950
Director Identification Number (DIN) each	Rs. 500
PAN + TAN	Rs. 170
Documents Notarization Cost	Rs. 1000
MOA + AOA	Rs. 150
Stamp Duty	Rs. 1510

In some states of India, such as Punjab, there is a significant stamp duty fee for registering a company. For example, Punjab charges Rs. 10,000 as the stamp fee. It’s important to be aware of these regional variations in stamp duty costs when planning for company registration in specific states.

Why Choose LegalMate?

Seamless Experience: LegalMate boasts over 7 years of experience and has successfully registered over 1,000 companies in India. Their team of qualified company lawyers and chartered accountants will guide you through every step of the process, ensuring a stress-free journey.
Comprehensive Services: LegalMate offers a complete suite of legal services, both online and offline, to cater to all your company registration needs. They’ll handle the legalities, documentation, and compliance requirements, allowing you to focus on building your business.
Expertise You Can Trust: Their team comprises qualified professionals with in-depth knowledge of Indian corporate law. They’ll ensure your registration adheres to all regulations, minimizing the risk of delays or errors.