An Overview of Company Registration

One of the many essential aspects of running a business is deciding on the legal status of the business entity and acquiring appropriate registration. Incorporating a business as a company has nimiety of benefits attached to it. Companies incorporated under the Companies Act 2013 have a separate legal entity, perpetual existence, higher credibility and directors and shareholders have limited liability. To register a company under the Companies Act 2013, it needs to be registered with the Registrar of Companies as per the guidelines and norms laid down by the Ministry of Corporate Affairs. Depending on the business model, companies receive many benefits and exemptions from the government. One can obtain a company registration online through the Ministry of Corporate Affairs website.

Different Types of Business Structures in India

Following are the different types of Business Structures in India:

1. One Person Company: In India, One Person Company is the best way to commence a company if there are only one person or owner. OPC enables a sole proprietor to carry their work and still be part of the corporate background.
2. Private Limited Company: A Private Limited Company is considered as a separate legal entity from its founders. It has shareholders and directors. Each individuals is considered as an employee of the Company.
3. Public Limited Companies: Public Limited Companies are corporate entities that are incorporated under the Indian Companies Act. They have a separate legal identity & are considered to be different from their owners. The owners of a Public Limited Company are termed as Stakeholders or Shareholders of the Company.
4. Limited Liability Partnership: It’s a separate legal entity where the partners’ liability are only limited to their agreed contribution. A Limited Liability Partnership is established under the Limited Liability Act, 2008 with the ROCs.

Note: These business structures are one of the best structures to start a company in India. You can choose any of the above business structures as per your business needs. There are some other forms of business structures like HUF (Hindu Undivided Family), Partnership Firms, and Sole Proprietorship. But these structures do not come under the Company Law.

Benefits of Company Registration in India

As mentioned above, there are many benefits of Company Registration over other business models. Some of the many advantages of Company Registration with the Registrar of Companies are as follows:

• Separate Legal Entity

A company duly registered is considered an artificial person and has a separate legal entity, which is distinct and wholly different from its members. A company can own assets in its name, incur liability, sue, and be sued in its own name. 

• Limited Liability of Members

The liability of the company's members is limited and extends only to the face value of shares of the company owned by them. This means that if the company is in debt, the responsibility of members to repay that debt extends only to the value of shares held by them and shall not extend to their personal assets.

• Perpetual Existence

Since a company has a distinct legal identity which is separate from its members, it can exist in perpetuity even after the members leave the company. Once incorporated, a company shall continue to survive until it is wound up, irrespective of whether the death or insanity or insolvency or retirement of the founding members or directors or shareholders of the company.

• No Minimum Capital Requirement

There is no minimum paid-up capital required to incorporate a private limited company. A company's capital structure is flexible and can be altered at any time to receive more funds when needed. It can raise funds either through debentures or through venture capitalists or angel investors.

• Exemptions for Certain Companies

Based on the business model of the company, the Central Government grants certain exemptions to companies which are operating for charitable purposes. NGOs and other not-for-profit organizations registering as Section 8 companies receive many tax benefits and exemptions.

• Higher Market Credibility

A company duly incorporated as per the MCA norms has higher credibility in the marketplace as this ensures that the entity has followed and shall be required to follow specific compliances, making it more trustworthy than other entities. Moreover, suppliers, vendors or investors or other businesses can quickly obtain basic information about the company from the MCA website. This builds confidence in the brand name and enhances the goodwill of the company among entities looking to conduct business with it.

How to Choose an Idea Company Structure before applying for Company Registration in India?

Following are some important points every entrepreneur must know before applying for Company Registration in India:

• If an individual who owns the entire initial investment required for the Company, an OPC would be good for you. On the other side, if your business has 2 or more owners and is actively looking for investment from other parties an LLP or Private Limited Company would suit you best.
• Business Structures such as HUF, Partnership Firm & Sole Proprietor have unlimited liability, that means, in case of any default in loans, the entire money will be recovered from the partners or members in profit sharing ratio.
• If you want to spend less initially, it would be better to go for HUF, Sole Proprietor, and Partnership Firm. But, if you are sure that you will be able to recover the setup & compliance costs, you can simply opt for a Private Limited Company, One Person Company (OPC) or LLP (Limited Liability Partnership).
• The Income Tax rates application to HUF and Sole Proprietorship are the normal slab rates. In case of a Sole Proprietorship, the business income is clubbed with the individual’s other income. But in the vase of entities like Partnership Firms & Companies a tax rate of 30% is applicable.
• It is very difficult to get investments when your business structure is unregistered. Entities such as LLP & Private Limited Company are trusted when it comes to investment. Ensure you choose the correct Structure seek the help of an expert so that you register under proper guidance.

Comparative List of Different Company Structures in India

Have a look at the following table that explicitly differentiates various business structures based on different parameters:

Requirements for Incorporating a Company in India

There are specific requirements which entities need to meet before they can be incorporated as a company, and they are as follows:

• Directors

To be incorporated as a company, it should have a minimum of two directors for a private limited company and a minimum of three directors when it is a public company. It is also required that at least one of the directors has been residing in India for at least a period of 182 days. There must be a minimum of 2 shareholders, while the maximum number of shareholders of a private company can extend up to 200, while there is no upper limit on the number of shareholders in a public company.

• Digital Signature Certificate or DSC Requirement

Shareholders, proposed directors, and other authorized signatories of a company are required to acquire a Digital Signature Certificate or DSC from a certification agency which has been approved by the Controller of Certification Agencies. DSCs are necessary to attest forms and duly submit them on the MCA website during the registration process. It is also imperative to have a valid DSC to apply for a Director Identification Number.

• Director Identification Number or DIN Requirement

Every proposed director of a company is required to have a Director Identification Number or DIN. The DIN can be applied for by filling out Form DIR-3 on the MCA website along with the SPICe+ Form. The Form is to be submitted with valid identity proof, and address proof of the director and the Form must be signed by a chartered accountant.

• Name of the Company

It is imperative to decide on a unique and distinct name for one’s company when applying for registration of the company on the MCA website.

Documents Required for Company Registration in India

Along with many regulatory and legal compliances involved, one needs to submit specific documents while applying for registration with the Registrar of Companies on the MCA website. The registrar scrutinizes the application along with the documents submitted and grants the certificate of incorporation once she is satisfied with the sufficiency of the submissions made. Some of the crucial documents to be submitted are as follows:

• Documents related to the proposed directors of the company

1. PAN card and Aadhar card of the proposed directors.
2. Address proof of the proposed directors like Aadhar cards, utility bills, Voter-ID cards, ration cards, driver's licenses, passports,
3. Identity proof of directors like driver's license, voter ID, and Aadhar card.
4. Contact details of the proposed directors along with their Email IDs.
5. Passport-sized photographs of the proposed directors.

• Documents related to the company

1. Proof of ownership of the office space, if any
2. If the office space is on rented premises, then the lease deed.
3. If the office space is on rented premises, then a No Objection Certificate from the landlord is needed.
4. Address proof of the office space, like utility bills.
5. Email ID of the company
6. Draft Articles of Association or AOA and Draft Memorandum of Association or MOA of the company.
7. Document showing the expected income of the company and the expenditure for the next three years with the source of income and the purpose of the spending.

Essential Forms to be filed for Incorporating a Company in India

The MCA website facilitates the online registration of companies by filing applications and uploading requisite documents on the website itself. Mentioned below are some of the critical forms which are necessary to be filed for the incorporation process:

• SPICe+ Form

This Form is segregated into two parts. SPICe+ Form Part-A is filed to reserve a unique name for the company. The applicants must provide alternative names in the Form for the registrar to choose the most appropriate name from. The applicants can also use the RUN or Reserve Unique Name feature available on the MCA website to check for the existence of similar or identical names in order to avoid using them.

SPICe+ Form Part-B is used to apply for incorporation of the company, Details pertaining to the capital structure of the company, and director details. Add details of subscribers, address of the office space, and information as to the jurisdiction for obtaining the TAN and PAN for the company. Mentioned below are certain documents which are to be attached to this Form:

1. Identity proof and address proof of the proposed directors of the company and subscribers who have signed the memorandum of association.
2. Passport-size photographs of the proposed directors of the company.
3. The articles of association and the memorandum of association signed by the subscribers as provided under the Companies (Incorporation) Rules, 2014.
4. Proof of ownership of the office space.
5. If the office space is on rented premises, then the lease deed and a no objection certificate from the landlord.
6. Utility bills for the office space.
7. Details of the registered office space, if any or the office space being used till then.
8. Declaration under Form INC-9 stating that the shareholders and the directors have committed no offence or malfeasance.
9. Document showing the expected income of the company and the expenditure for the next three years with the source of income and the purpose of the spending.

• AGILE PRO Form

The AGILE PRO Form is filed for registration of Goods and Service Tax Identification Number, bank account opening, professional tax registration, and registration with the Employees’ State Insurance Corporation and the Employees’ Provident Fund Organization. Mentioned below are certain documents which are required to be attached along with this Form:

1. Proof of the principal place of business.
2. Identity proof of the authorized signatory for bank account opening.
3. Address proof of the authorized signatory for bank account opening.
4. For EPFO purposes, the signature of the authorized signatory.
5. Copy of the resolution or a letter of authorization passed by the board of directors.
6. Proof of appointment of the authorized signatory for Goods and Service Tax Identification Number.

• Form DIR 2

This Form is filed to intimate the consent of the proposed directors of the company to be appointed as the directors of the company.

• Form DIR 3

This Form is filed to obtain the unique director identification number for the proposed directors of the company.

• Form INC 22

the applicant shall file this Form to provide information pertaining to the registered office space of the company. This Form is required to be filed after the applicant receives the certificate of incorporation from the registrar within 30 days of such receipt.

Procedure for Company Registration in India

Following is the step-by-step procedure for Company Registration in India:

Step 1: Apply for a digital signature certificate

The proposed directors, shareholders and authorized signatories are required to apply for valid digital signature certificates from a certification agency approved by the Controller of Certification Agencies. Digital signature certificates are imperative 2A test forms on the MCA website during the Company registration process.

Step 2: Apply for a director identification number

Once the proposed directors have obtained their respective digital signature certificates, they are required to fill out Form DIR 3 and apply for the unique director identification number. The application has been approved by the registrar of companies, and she shall grant the distinctive DIN to the proposed directors.

Step 3: Company Name Search and Approval: We can file SPICe+ Form for Company Name Approval and PAN & TAN of the Company in two different part as mentioned below:

• Select a unique company name and reserve it (Part A)

The next step is to fill out the SPICe+ Form Part A and reserve the company name.

The applicant has to click on the SPICe+ Form under the MCA services tab. One must select the company type, class of company, company category and sub-category of the company. The next step is to give details as to the 'main division of industrial activity of the company' The applicant is required to provide two alternative names from which the registrar of companies shall choose the most appropriate name. The forms shall be submitted along with documents as mentioned above and the prescribed fee.

• Duly Fill out SPICe+ Form Part B

Once the company name has been reserved, the next step is to file a new application under the SPICe+ Form Part B along with the requisite documents as mentioned above. The applicant is required to provide details pertaining to the proposed directors and shareholders of the company, information about the company's registered office and resources of the company. One can also apply for PAN and TAN registrations at this stage. The applicant is required to conduct a pre-scrutiny check to review the correctness of the information filed under Part B. After the scrutiny check, and the Form can be submitted.

The next step is to download the Part B of the Form to affix the DSCs of the directors or the authorized signatories. There are certain forms which are to be filed along with the SPICe+ Part B form. The forms which are linked to the SPICe+ Form Part are AGILE PRO, SPICe+ MOA, SPICe+ AOA, URC-1 and INC-9. The applicant must ensure that SPICe+ AOA and SPICe+ MOA forms are filled as per the instructions provided under Schedule 1.

The next step is to upload all the forms on the MCA portal.

Step 4: Assessment by the Registrar

All the submissions made shall be scrutinized add assessed by the registrar of companies. If there a star finds any lacuna or error in the application or the documents, it shall give the applicant an opportunity to rectify the error and resubmit the forms again, as stated above.

Step 5: Issuance of Certificate of incorporation

After the registrar has reviewed the application along with the details and the documents submitted by the applicant and the registrar is satisfied with the accuracy and completeness of the application, she shall grant the certificate of incorporation to the company. A unique Corporate Identification Number or CIN shall be generated along with the certificate, and this shall be valid proof of the registration of the company.

Post Incorporation Compliance for Private Limited Company

Once a company is incorporated in India, it should maintain a number of compliances to avoid any penalties and legal actions. After Company Registration, a Company would need to comply with the following requirements:

• DIN KYC: Every year, DIN KYC is required who holds a Director Identification Number, which is given at the time of Company Registration Process and verifies the email address & phone number on file with the MCA.
• Commencement of Business: The Company’s Shareholders must deposit the subscription amount cited in the MOA within 180 days of Company Registration, and the company must create a bank current account. Therefore, in order to receive a Company Registration Certificate, the Company’s Shareholders that is to be established with a paid-up capital of Rs. 1 lakh must deposit Rs. 1 lakh into the bank account of the company and file a copy of bank statement with the MCA.
• Filing of Income Tax: Each Financial year, all businesses are required to submit an ITR using Form ITR-6. ITR filing must be completed for each financial year before the deadline. A DSC of a Director must be used to digitally sign the Company’s Income Tax Return.
• Appointment of the Auditor: Within 30 day of Company Incorporation, every in Company in India must appoint a practising, registered & certified CA.
• Annual Filings: Every Financial Year, the Ministry of Corporate Affairs must get a copy of the Financial Statements from each Company that is incorporated in India. A Company that registered between Jan & Mar may elect to include the 1sdt MCA Annual Return in the Annual Filing for the following Financial Year. Form AOC-4 and Form MGT-7 are the components of the MCA annually return. The Directors and a working professionals must digitally sign both of these documents.

Note: For more information regarding MCA Compliances to be followed by the Company, read on MCA Compliance.

How Perfect Advice will help you in Company Registration Process?

The process of Company Registration involves adhering to many requirements, preparing documents, and complying with pre-incorporation and post-incorporation compliances. Moreover, complying with specific MCA mandates is imperative to avoid incurring hefty penalties and late fees. This process can seem daunting and confusing without professional assistance. Perfect Advice provides expert service in the online Company registration process on the MCA website. Our team of experts will assist you every step of the way in your journey to get your company registered.

With Perfect Advice, you can establish your Company in minimal time. Our Company Company Registration package includes:

• Company Name Search and Name Approval for Your Company
• Obtaining DIN or Director Identification Number for 2 Directors
• Filing SPICe+ Form
• Issuance of Incorporation Certificate along with PAN  & TAN, Opening of Current Account for your Company.