Company registration is the most critical step in a business journey. If you are an investor and have chosen India as your primary business hub, brace yourself to confront a host of legalities. This article sheds some light on the legalities around company registration in India.
Understanding the Business Structures For Company Registration in India
The company registration process typically begins with structure selection, followed by the name reservation and application filing. The number and type of paperwork and application process vary as per the company structure you choose. Typical business models in India include LLP, partnership firm, private limited company, public limited company, One Person Company, etc. Let’s shed some light on them and understand their legalities.
LLP
LLP stands for Limited Liability Partnership. It is an ideal business model for those who prefer partnership-based models or have a moderate market footprint. It offers comprehensive legal protection to the partner’s assets from any company-related loss. These entities are regulated by the LLP Act 2008.
Partnership firm
Partnership companies are governed by the Partnership Act of 1932, and they offer good corporate stability by imparting transparency among the partners. There is a need for a partnership deed boasting the partner’s duties and obligations to incorporate such firms.
Private limited companies
These are hands down the best business structures for any foreign entrepreneur seeking to start a venture in India. The Companies Act 2013 governs these entities in their entirety. The legislation entails norms cornering registration, annual filing, board meetings, document drafting, etc.
Nonetheless, typical requirements to form such an entity include the presence of at least two directors and shareholders (at least one being an Indian national), one lakh rupees paid-up capital, a non-trademarked name, etc.
Public limited companies
Public limited companies are best-fit entities with a prominent market footprint or extensive management. The formers of such entities can involved with public share trading, ensuring fundraising for expansion or other purposes.
Unlike the preceding option, these entities must arrange a minimum paid-up capital of five lakh rupees before incorporation. Other requirements include at least three directors and seven shareholders, drafting of MoA and AoA, Digital Signature certificate, etc.
Documents for Company Registration in India
Documents for registering a company in India are as follows.
- PAN card concerning proposed directors or partners
- ID proof concerning proposed directors or partners, such as DL and Voter ID.
- Bank account details relating to proposed directors
- Proposed directors’ or partners’ address proof
- Proposed directors’ or partners’ photos
- Proposed directors’ or partners’ specimen signature
- Partnership Deed (for partnership firms only)
- Identity and address proof of the shareholders
- Address proof of the registered office of the company
- MOA and Articles of Association (for entities falling under the Companies Act 2013)
- DSC Registration (Digital Signature Certificate)
Process of Company Registration in India
Let’s get into the process of registering a company in India. Since it involves various critical steps, it is advisable to follow it diligently.
Step 1: Document Arrangement
Arrange the aforesaid documents without fail and make sure they have no scope for factual error. Since the application filing process will be online, you will only be required to submit a scanned copy of these documents. Pay close attention while drafting charter documents like MoA and AoA because any error therein can serve as a backfire.
Note: Partnership firm must draft and duly notarize the partnership deed from the notary.
Step 2: Secure DSC
A Digital Signature Certificate is a digitized version of the individual’s signature, helping to authenticate delicate paperwork. DSC is a modern way to sign paperwork. The DSC is issued by agencies acknowledged by the Ministry of Corporate Affairs. The Directors and authorized signaries would require this.
Step 3: File an online application
The next step will be to file an electronic application called Spice+ on the MCA portal. This form has two parts: Part A and Part B. Part A will help you with name reservation, and Part B will provide you with a host of services such as grant of GSTIN, DIN, company incorporation, bank account opening, etc. The portal shall prompt you to upload the documents in the standardized format as soon as the filing ends.
Step 4: Document inspection
The Ministry of Corporate Affairs shall vet the application and attest the paperwork for accuracy. The cancelation may come into effect if any error comes to light. During the inspection, the authority would typically look for factual errors in the paperwork.
Step 5: Grant of incorporation certificate
You have finally arrived at the final stage of company registration in India. The authority shall grant the incorporation certificate to the applicant after a successful inspection.
Important note: Foreign entrepreneurs may need FEMA clearance for profit repatriation after securing the incorporation certificate. This clearance serves as a legal document for conducting cross-border transactions. For more details, connect with Adviso’s professionals.
Compliances for the Registered entities in India
- The Partnership deed should clearly state the partner’s obligations, duties, and profit margin. This is important to ensure transparency.
- Under the Companies Act 2013[1], entities must hold board meetings within the stipulated timeframe.
- The director’s appointment or removal cannot be done without the BOD’s consent.
- The share trading is possible for the members of the public limited companies.
- Any change in the management or partnership deed requires the authority’s approval.
Conclusion
Company registration in India for Foreign Entrepreneurs is a long and tedious process involving hefty paperwork. Thus, it is advisable to proceed under the supervision of a trusted partner like Adviso. The company has a proven track record of helping foreign entreprenuers make their mark in India.
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