Company Registration in India

In India, company registration can be completed online through zero corporates. Private limited company is the most common type of legal entity that is preferred by millions of Indian Entrepreneurs and popular startups like Flipkart, PhonePe and Swiggy. A private limited company can be registered online in less than 10 days at a very affordable price of just ₹5,999.

What is a Private Limited Company?

A Private Limited Company (PLC) is one of the most common types of legal entityin India. Private Limited Companies are governed by the Companies Act, 2013 and require a minimum of 2 Directors and 2 Shareholders with one of the Directors being an Indian Resident and Indian Citizen.

Documents Required for Company Registration

The proposed directors of a private limited company must present the following documents as proof of identification in order to register a company:

Indian Nationals: PAN card mandatory

Foreign Nationals: Passport is mandatory

In addition to the above document, the Directors must submit one of the following documents that contain the address of the Director.

Indian Nationals: Passport / Driver’s License / Election ID / Ration Card / Aadhar ID

Foreign Nationals: Drivers License / Bank Statement / Residence Card

Finally, as proof of residency, the prospective Directors must produce one of the following documents. This document must have been generated within the last two months:

Indian Nationals: Bank Statement / Electricity Bill / Phone Bill

Foreign Nationals: Bank Statement / Electricity Bill / Phone Bill

If one of the company's shareholders is a company based in India or abroad, the following documents must be submitted:

Board resolution authorizing investment in the company

Incorporation Certificate of the Company

Address proof of the company

Capital Required to Start a Company

A company can be started in India with a very minimum amount of capital. There is no fixed amount and the shareholders of the company being incorporated can determine the capital they wish to contribute. While setting up the capital structure of the company, the following are some of the concepts to be kept in mind:

Face Value of Share: The face value of a share is the price per share with which the company is incorporated. Normally, the face value of share is Rs. 1 or Rs. 10 or Rs. 100 or Rs. 1000 or Rs. 10,000.

Authorised Capital: Authorised capital is the total value of shares a company can issue to shareholders. Normally, all companies are incorporated with an authorized capital of Rs. 1 lakh or Rs. 10 lakhs. If a higher authorized capital is required, the company would be required to pay additional fees to the Ministry of Corporate Affairs. The authorised capital of a company can be increased at any time after incorporation.

Paid-up Capital: Paid-up capital of a company is the number of shares issued to shareholders for which they have paid or deposited money to the company. Paid-up capital of a company cannot be more than the authorized share capital of the company.

Company Registration Process

The following are the steps involved in registering a company in India:

Step 1: RUN Name Approval

An application for company name approval is first submitted to the Ministry of Corporate Affairs to reserve the company name. In the name approval application, 1 or 2 names with business objectives can be submitted. If a name approval is rejected, 1 or 2 more names can be resubmitted. Normally, the MCA approves all name approval applications in less than 5 working days.

Step 2: Digital Signature for Directors

In India, the Ministry of Corporate Affairs does not allow wet signatures. All signatures for filings with the MCA must be completed with a digital signature that is issued by a Certification Authority in India. Hence, digital signatures are mandatorily required for the Directors before incorporation.

Digital signature for the Directors will be obtained through an Authorized Certifying Authority by zerocorporates. To obtain Digital Signature, the Directors will have to submit a copy of their identity proof and complete a video KYC process. If the Director is a foreign national, the passport and other documents submitted must be apostilled by a local embassy.

Step 3: Incorporation Application Submission

Once the digital signatures are obtained, the incorporation application can be filed in SPICe Form to the MCA with all relevant attachments. Along with the incorporation application, the Memorandum of Association (MOA) and Articles of Association (AOA) of the company are filed. If the MCA finds the incorporation application to be complete and acceptable, the Incorporation Certificate is granted along with PAN of the company. The MCA normally accepts all incorporation applications in less than 5 working days.

Private Limited Company Compliances

Once a company is registered in India, various compliances must be maintained from time to time to avoid penalties and prosecution. The following are some of the compliances a company would be required to complete after company registration:

Auditor Appointment: All companies registered in India must appoint a practicing and licensed Chartered Accountant registered with the ICAI within 30 days of incorporation.

Director DIN KYC: All persons who hold a Director Identification Number (DIN) – which is allocated during the incorporation process must complete DIN KYC each year to validate the phone and email address on record with the Ministry of Corporate Affairs.

Commencement of Business: Within 180 days of incorporation, the company must open a Bank Current Account and the shareholders must deposit the subscription amount mentioned in the MOA of the company. Hence, if the company was to be incorporated with a paid-up capital of Rs. 1 lakh, then the shareholders must deposit Rs. 1 lakh in the Company’s bank account and file the bank statement with the MCA to obtain a commencement of business certificate.

MCA Annual Filings: All companies registered in India must file a copy of the financial statements with the Ministry of Corporate Affairs each financial year. If a company is incorporated between January – March, the company can choose to file the first MCA annual return as a part of the next financial year’s annual filing. MCA annual return consists of Form MGT-7 and Form AOC-4. Both these forms must be digitally signed by the Directors and a practising professional.

Income Tax Filing: All companies must file an income tax return using Form ITR-6 each financial year. Income tax filing must be done for each financial year before the due date – irrespective of the incorporation date. The income tax return of a company must be digitally signed using one of the Director’s digital signature.

Registered Office of Company

All companies registered in India are required to maintain a registered office in India. The registered office must have a board with the name of the company and should be a place where notice or communication if any can be served. Hence, the registered office of a company cannot be vacant land or under construction premises.

After incorporation, the registered office of a company can be changed if required. In case the registered office is changed within the same city or same Registrar of Company, the process can be completed easily. In case the registered office of a company is changed from one state to another, the process would be longer and more cumbersome.

GST Registration after Company Registration

During the company registration process, the Directors can opt to obtain GST registration along with the incorporation. However, it is not mandatory for a company to be registered under the GST unless certain turnover limits are crossed. You can know more about the turnover limit and process for obtaining GST registration in our detailed guide on GST registration in India.

Bank Account for Private Limited Company

After company registration, a bank current account must be opened in the name of the company within 180 days and the subscription amount must be deposited. If the above steps are not completed, the commencement of business certificate would not be issued and a penalty would be applicable.

The following are documents required to open bank account for a private limited company:

Incorporation Certificate of Company

Directors KYC Documents

Board Resolution Authorizing the Directors to open Bank Account

Address Proof of the Company

At zerocorporates, we work with various banks to help our clients open a current accounts for their companies in a seamless fashion.

Benefits of Incorporating a Company in India

As mentioned above, there are many benefits to registering your business as a company over other business models. Some of the many advantages of registering a company 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.

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.