Procedure involved to Start a Company (Private Limited) in India

Posted by kumaran on September 6, 2006 This information will be useful for those who are looking in a nutshell the steps involved to start a Private Limited company in India 1. First and foremost identify the Directors of the Company. Minimum of two directors need to present and Maximum of 8 is allowed. 2. All Directors should have DIN (Directors Identification Number). If you do not have one you can apply DIN online at www.mca.gov.in. FAQ on DIN http://www.mca.gov.in/MinistryWebsite/dca/faq/faq1.html Documents required for DIN A. Identity Proof (Any one of the following) PAN Card Driving License Passport Voter ID Card Others (to be specified) B. Residence Proof (Any one of the following) Driving License Passport Voter ID Card Telephone Bill Ration Card Electricity Bill Bank Statement Others (to be specified) 3. Once you have got your DIN then you need to apply for Company name. You need to go with 5-6 names in the order which you prefer.If the name is not available then they go to the next one in the order you have provided. 4. You need to apply online for the name availability . You need to Fill in Form 1A. Forms are avilable at this location.http://www2.mca.gov.in/MinistryWebsite/dca/downloadeforms/eformTemplates/103 0-Form1A_help.zip 5. Once you have got your name approved you have to apply for the Incorporation of Company. For this you will have to prepare Memorandum of Association which will detail what the company;s operations the first list of directors who are going the be in the board need to be defined in this document. This should be applied along with Form 1 http://www2.mca.gov.in/MinistryWebsite/dca/downloadeforms/eformTemplates/1022Form1_help.zip. Ocne this has been approved make atleast 10-15 copies of your Certificate of Incorporation and Memorandum of Association and have it in a booklet form.

com/tan/form49B. 4 1 .html 8.25.com/pan/form49A. 7. Good Luck and If you need more information or any guidance drop in a mail.000. Besides incorporation there are many other formalities in establ ishing a business in India.tin.6. Get the Memorandum and Articles of Association vetted by the ROC and printed Make an application to the Superintendent of Stamps or an authorized bank requesting for stamping of the Memorandu m of Association and Articles of Association. You will get office spaces at lower rates at STPI units.tin.nsdl. If your services are in Software related area you can apply for STPI license which will give you certain benefits like Company need not pay tax for 5 years. Typical Procedure to Establish Business in India In India establishing a business takes some time. Thenyou need to apply for TAN and PAN for the Company https://tin. You will need to submit a copy of Certificate of Incorporation and Memorandum of Association along with Borad resolution to open the bank account.html https://tin. We did it through Auditor and it took almost three weeks (Upto Step 7 excluding STPI) and all charges(excluding sTPI) would approximately cost you Rs.nsdl. there will be no import or expurty duty levied on software/hardware. These are few of the benefits of becoming an STPI member. All this you can do on your own or you can outsource these to professional auditor. I read in one of the blogs that in Delhi the whole process was completed in 30 minutes after the e-Governance was launched. I am not sure how much it would cost if you do it on your own. Once your company has been incorporated you can open a Current account in any of the leading banks for carrying out your operations. The following chart contains typical formalities including incorporating a private limited company in India: Nature of Procedure in India Procedure Number 1 2 3 Duration (days) 3* 3* 7 Obtain DIN for proposed Directors of the new Company Obtain DSC for proposed Directors of the Company Filing the proposed name of company for approval to the Registrar of Companies (ROC).

The actual time and procedure may vary with city and state and the nature of business. Instances of this are marked with an asterisk (*). The above procedures and timings are indicative for a typical big city in India where all the required documents are ready with the promoters. SPECIAL NOTE . to obtain a Permanent Account Number (PAN) Obtain a Tax Account Number (TAN) for income taxes deducted at source from the Assessing Office in the Income Tax Department Register under Shops and Establishment Act Register for value added tax (VAT) before the Sales Tax Officer of the ward in which the company is located Register for Profession tax Register with Employees' Provident Fund Organization Register with ESIC (medical insurance) Filing for Government Approval before RBI/FIPB for Foreigners and NRI's Totals: 5 9 6 7 3 15* 8 15* 9 10 2* 12* 11 12 13 14 2* 2* 1* 15* 14 40 Note: Procedures sometimes take place simultaneously.Present the required documents along with the registration fee to the Registrar of Companies to get the certificate of incorporation Obtain a company seal Apply for UTI Investors Services Limited/National Securities Depository Ltd. All the procedures must be followed.

It is called Director Identification Number.DIN. Shareholders: There must be a minimum of two shareholders (also described as `members' or `subscribers'). `Institute'. The company name must be displayed in a conspicuous place at every office. This is the address. The Companies Registration Office exercises some control over the choice of name. There are various classes of DSC.DSC . Click here to Contact us for Obtaining DIN and DSC in India Requirements for a Private Limited Company 1. or other premises where the company carries out business. Digital Signatur e Certificate (DSC) is required for all Directors or authorized representatives of any company and professional who will require to sign ROC forms or documents. it cannot be identical (or very similar to) the name of an existing company. A DSC.under the new requirements. both Indian and foreigners. DSC . It won't be considered if it is offensive or illegal and the use of certain words in a company (for example.Director Identification Number Directors for an Indian company. like hand written signature. A private company can have up to fifty shareholders. A DSC is not only a digital equivalent of a hand written signature it adds extra data electronically to any message or a document where it is used to make it more authentic and more secured. 3. must register and get and identification number under the new requirements. Quite frequently the address used for the registered office is that of the firm's solicitor or accountant. where all official correspondence will go. establishes the identity of the sender filing the documents through internet which sender can not revoke or deny.NEW DIRECTOR REGISTRATION REQUIREMENTS IN INDIA DIN . through. A Registered Office: This need not necessarily be the same address as the business is conducted from. A Registered Business Name: This must be followed by the word µLimited' or µLtd'.Digital Signature Certificate for Directors Directors for an Indian company. 2. are also required to get Digital Signature Certificate . both Indian and foreigners. `National') can only be used in certain circumstances. .

Within ten months of the end of an accounting reference period. nominal share capital divided into shares of fixed amounts. Share Capital: The company must be formed with a stated. Small companies are frequently formed with a nominal share capital of Rs. most importantly. 8. a register . In theory. the company can only operate in the areas mentioned in the objects clause but in practice the clause is drawn to cover as wide an area as possible.: In addition to the accounts books. which the registrar of companies issues to you once he has approved your choice of name and your memorandum. 6. Nevertheless. an audited set of accounts must be laid before the shareholders at a general meeting and a set delivered to the registrar of companies. Auditors: Every company must appoint a qualified auditor.100. Every company must maintain a set of records. 10. The auditor's duty is to report to the treasurer whether or not the books of the company have been properly kept. the fact that liability is limited and. etc. 9. 7. Many companies don't bother to draw up their own articles but adopt (sometimes with some modifications) articles set out in the Companies Act. The memorandum must be signed by at least three shareholders. The accounts comprise a profit and loss account and balance sheet with the auditors' and directors' reports appended. and anyway a 75 per cent majority of the members of the company can change the objects whenever they like. 5. When you receive this document your company legally exists and is ready to trade. and they hold office from the conclusion of the meeting until the next general meeting. Articles of Association: The document contains the internal regulations of the company. the relationship of the company to its shareholders and the relationship between the individual shareholders. a register of directors and secretaries. the situation of its registered office. Certificate of Incorporation: This is the document. Accounts: The Companies Act lays down strict rules on accounting. Memorandum of Association: The memorandum is the company's charter. the object for which the company has been formed. which show the financial position at any one time with reasonable accuracy. and that the balance sheet and profit and loss account presents (or doesn't present) a true and fair view of the company's affairs and complies with the Companies Act. it is worth bearing in mind that directors of the company will incur personal liability if the company engages in a type of business which is not authorized by the objects clause. Registers. A new company's accounting reference period begins on its incorporation and runs until the following 31st March unless the company notifies the registrar of companies otherwise. Auditors are appointed or re-appointed at general meetings at which annual accounts are presented.4. It states the company's name. its share capital. companies are required to have: a register of members and share ledger.

this is included in the ready-made company package. or secretary of the company. Company Seal: All companies must have an engraved seal. 4. . if it becomes necessary. authorizing him/her to make corrections in the documents submitted to the registrar of the companies. a declaration signed by a person named in the articles of the proposed company as a director. information about directors. Again. Articles of Association.of share transfers. 5. 3. a list of persons who have consented to act as directors of the company. information about the registered office in a prescribed form. manager. Memorandum of Association. This will be provided automatically if you buy a running concern. or by an attorney entitled to appear before the High Court. power of attorney in favor of one of the promoters or any other person. 7. a register of debenture holders. if the proposed company is a public company. 11. or by a chartered accountant practicing in India stating that all the requirements of the Companies Act 1956 and the applicable rules with respect to the registration and other matters have been complied with. Corporate Documents & Registration of a Company For incorporating a company in India. applicable registration fee payable to the registrar of the companies. a book can be purchased to hold all of the above. or by an advocate of the Supreme Court or High Court. 2. 6. consent of very person prepared to act as a director must be submitted in a prescribed form. and 9. managing directors and managers and secretary must be submitted in a prescribed form. a register of charges. 8. This must be impressed on share certificates and must be used whenever the company has to execute a deed. an application for registration should be submitted to the registrar of companies with the following documents: 1.

See also Doing Business with India Free Guide | FDI in India Sector wise Guide | Formation of Subsidiary in India | Starting a Business in India | Opening Branch in India | Incorporating company in India | Procedure for Formation of Company in India | Government Approvals for Investing in India | Entry Strategies in India for Foreign Investors | FIPB Approval for Foreign Investment in India | RBI Approvals for FDI in India | FDI in Small Scale Sector in India Further Liberalized | Tax Rates in India | Withholding Tax Rates For Foreign Companies Doing Business In India Under The Tax Treaties | Annual Corporate Filings in India | Joint Ventures in India | Outsourcing to India | Legal Outsourcing Where to Incorporate in India? A company incorporated in any state of India can do business in all the states of India. read with Companies (Central Governments') General Rules and Forms.Advantages of Incorporating in India y y y y y y Many tax exemptions available to the company set up in Special Economic Zone. NEW DELHI Registrar of Companies Karnataka BANGALORE Registrar of Companies Maharashtra MUMBAI ( Bombay ) Karnataka Maharashtra. The following are the locations of ROC's in India: States & U. it is most sought after destination for business process outsourcing. Skilled and intelligent employees available at nominal rate.1956. Knowledge processing etc. India has got double taxation treaties with many countries. Many tax incentives available to IT companies. and other laws & regulations.T.000 (US $ 2250 approximately) is required to form a private company in India. With its large base of English speaking skilled human resource. Dadra & Nagar Haveli . Applicable Laws for Forming a Company in India The laws applicable for incorporating a company in India include the Indian Companies Act of 1956.'s of India Delhi & Haryana ROC Locations Registrar of Companies Delhi & Haryana. the Indian Income Tax Act. Minimum authorized capital of only INR 100. The Foreign Exchange Management Act of 1999 is applicable for foreign investments and transactions.

JALANDHAR Registrar of Companies Rajasthan . Daman & Diu Jammu & Kashmir Kerala. Himachal Pradesh & Chandigarh. KANPUR Registrar of Companies West Bengal CALCUTTA (Kolkata) The Registrar of Companies Andaman PORT BLAIR Goa. Sindhudurga. Periyar Salem. Manipur. Meghalaya. Ratnagiri. Tripura. CHENNAI ( Madras ) Tamil Nadu Coimbatore. Kolhapur. Nagaland. Arunachal Pradesh. PUNE Registrar of Companies Tamil Nadu. Nagaland. Tripura. HYDERABAD Gujarat Andhra Pradesh Assam. Amindivi. Mizoram & Shillong SHILLONG Bihar & Jharkhand Registrar of Companies PATNA Registrar of Companies Goa.Pune. Minicoy & Lakshadweep Islands Madhya Pradesh & Chhattisgarh Orissa Pondicherry Punjab. Nilgiris. Sholapur & Ahmednagar districts in Maharashtra Registrar of Companies Pune. Quaid Registrar of Companies Coimbatore -eMilleth districts in Tamil Nadu COIMBATORE Registrar of Companies Gujarat. Daman & Diu. GWALIOR Registrar of Companies Orissa CUTTACK Registrar of Companies PONDICHERRY Registrar of Companies Punjab. AHMEDABAD Registrar of Companies Andhra Pradesh. Mizoram & Shillong Arunachal Pradesh. Registrar of Companies Assam. Meghalaya. JAIPUR Registrar of Companies Uttar Pradesh. Dharmapuri & Dindigul. GOA Registrar of Companies Jammu & Kashmir JAMMU & SRINAGAR Registrar of Companies Kerala COCHIN Registrar of Companies Madhya Pradesh. Himachal Pradesh & Chandigarh Rajasthan Uttar Pradesh & Uttaranchal West Bengal Andaman Sweat Equity in a company in India . Sangli. Satara. Manipur.

not less than one year has. . if any. if an Indian company can issue sweat equity. other regulatory provisions are applicable for issuing sweat equity shares for a private company in India. The sweat equity shares of a company whose equity shares are listed on a recognized stock exchange are issued in accordance with the Securities and Exchange Board of India (Issue of Sweat Equity) Regulations. Please feel free to Contact us for further information about sweat equity in an Indian company. The sweat equity shares of a company whose equity shares are listed on a recognized stock exchange are issued in accordance with the regulations made by the Securities and Exchange Board of India in this behalf. you can't issue Sweat Equity at the time of incorporation of your Company as one year has not elapsed since the date on which the company was entitled to commence business. and the class or classes of directors or employees to whom such equity shares are to be issued. The resolution specifies the number of shares. consideration. current market price. Please feel free to Contact us for further information about sweat equity in an Indian company. There are separate rules for sweat equity in a private company in India and a public company in India. In view of the above provisions. at the issue elapsed since the date on which the company was entitled to commence business. In addition to the above provision.The question is asked a lot. Sweat Equity in a private company in India The provisions for issue of Sweat Equity are covered under Section 79A of the Companies Act. 2002. Sweat Equity in a public company in India The aforesaid provisions regarding issuing of Sweat Equity under Section 79A of the Companies Act are applicable to a public company in India. It provides that a company may issue sweat equity shares of a class of shares already issued if the following conditions are fulfilled: y y y y y the issue of sweat equity shares in authorized by a special resolution passed by the company in the general meeting.

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