Chanakya Consultancy Services Pvt. Ltd.

  Company Registration

Company registration in India is regulated by the Companies Act, 1956 and is administered by the Ministry of Corporate Affairs (MCA - www.mca.gov.in) through the Offices of Registrar of Companies (ROC) in each State.

Types of companies that can be registered in India are Private Companies and Public Companies.

Company Registration process starts by filing of name application with the ROC. Once, name is allotted, company registration documents have to be prepared and filed with respective ROC for registration. Up on scrutiny of documents, in a day or two the ROC registers the Company and issue the Certificate of Incorporation.

What is a Private Limited Company?

A Private Limited Company is a Company limited by shares in which there can be maximum 50 shareholders, no invitation can be made to the public for subscription of shares or debentures, cannot make or accept deposits from Public and there are restriction on the transfer of shares. The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. However, the liability of a Director / Manager of such a Company can at times be unlimited. The minimum number of shareholders is 2.

What is a Public Limited Company?

A Public Limited Company is a Company limited by shares in which there is no restriction on the maximum number of shareholders, transfer of shares and acceptance of public deposits. The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. However, the liability of a Director / Manager of such a Company can at times be unlimited. The minimum number of shareholders is 7.

What are the advantages of a Limited Company?

• Members' (the directors and shareholders) financial liability is limited to the amount of money they have paid for shares.
• The management structure is clearly defined, which makes it easy to appoint, retire or remove directors.
• If extra capital is needed, it can be raised by selling more shares privately.
• It is simple to admit more members.
• The death, bankruptcy or withdrawal of capital by one member does not affect the company's ability to trade.
• The disposal of the whole or part of the business is easily arranged.
• High status.

What are the disadvantages of a Limited Company?

• Requirement to register the company with the registrar of companies and provide annual returns and audited statement of accounts. All details of the company are available for public inspection so there can be no secrecy. There are penalties for failing to make returns.
• Can be more expensive to set up.
• May need professional help to form.
• As a director, you are treated as an employee and must pay tax.
• The advantages of limited liability status are increasingly being undermined by banks, finance house, landlords and suppliers who require personal guarantees from the directors before they will do business.

• The following documents are required to be executed (signed) before they are submitted to the ROC:
• MOA and AOA - These are required to be executed by the promoters in their own hand in the presence of a witness in quadruplicate stating their full name, father's name, residential address, occupation, number of shares subscribed for, etc.
• Form No. 1 - This is a declaration to be executed on a non-judicial stamp paper of INR 20 by one of the directors of the proposed company or other specified persons such as Attorneys or Advocates, etc. stating that all the requirements of the incorporation have been complied with.
• Form No. 18 - This is a form to be filed by one of the directors of the company informing the ROC the registered office of the proposed company.
• Form No. 29 - This is a consent obtained from all the proposed directors of the proposed company to act as directors of the proposed company. (Not required in case of private company).
• Form No. 32 - This is a form stating the fact of appointment of the proposed directors on the board of directors from the date of incorporation of the proposed company and is signed by one of the proposed directors.
Name approval letter in original.
• Power of Attorney signed by all the subscribers of MOA authorizing one of the subscribers or any other person to act on their behalf for the purpose of incorporation and accepting the certificate of incorporation.
• Power of Attorney in case of a subscriber who has appointed another person to sign the MOA on his behalf.9. Filing fees as may be applicable.

• Obtaining Permanent Account Number (PAN) from Income Tax Department
• Obeying Shop and Establishments Act
• Registration for Import Export code from Director General of Foreign Trade
• Software Technologies Parks of India registration (STPI) if required
• RBI approval for foreign companies investing in India and FIPB approval, if required.
• The directors of an Indian company, both Indian and foreigner directors, are required to obtain Director Identification Number - DIN and Digital Signature Certificate - DSC