Registering a startup or a new business in India first and foremost one has to go by, there are some official procedures a startup or a company has to follow in order to register them in Indian official records, MCA (ministry of Corporate Affairs) has to made registration process online few years back, please find below on how to go about these process when you want to register your company.
One don’t need to visit corporate office, you can apply for registration just sitting at home. We will help you to get a legal license for your business. The registration includes some must follow rules and some registration like Digital Signature Certificate (DSC), Director Identity Number (DIN) and filing for an eform.
These are four major steps:
* Acquiring Digital Signature Certificate(DSC)
* Acquiring Director Identification Number(DIN)
* Filing an eForm or New user registration
* Incorporate the company
It’s necessary to get registered yourself to run your business without any legal problem. India is a land of opportunity, no matter in which field your business is operating the chances of getting success is very high, so it just needs a start. Starting an entrepreneurship in India would fetch you great success.
What is mean by company, the private company and public company?
In India, there are about 7 lacks registered companies and every month thousands of firms apply for registration. Company is a legal entity; According to Section 3 of Companies Act Company means a legal entity formed and registered under Companies Act 1956. Under the ministry of corporate affairs, every company is to be registered by the registrar of companies for the state. This act maintains two types of companies called private and public companies. The ‘Limited’ is the most commonly used corporate form at the end of the company name. First you need to know what these public and private companies are and decide how you want your company to get registered.
When it comes to company registration, Every firm will have following two options:
1. Private company:
2. Public company:
The main differences between Private and Public companies are:
1. Minimum number of Board members required for a private company is two and for a public company is seven.
2. Private company can have maximum of only 50 members, but a public company can have any number of members.
3. A private company can start its business as soon as it is incorporated but the public company shouldn’t start its business until it receives business commencement certificate.
4. Private company shouldn’t sell it is shares to anyone or shouldn’t make any invitation to people regarding a company shares, but a public company can invite people to buy it is shares by issuing a prospectus.
5. Private company may have two directors, but a public company must have at least three directors.
Business Vehicles legally available to any entrepreneur at the initial stages of starting up, and the decision as to which vehicle to choose, solely depends on the ‘where to’, ‘how far’, ‘with whom’, and ‘how much you can spend’ criteria. These are further explained as follows:
* Where to: Assuming that your business would heavily scale up and would break even in a reasonably expected time, it is important for you to know, the vision, mission, and objectives of your business, before you decide on how you would incorporate it. That is, if you are starting up for a project lasting for a very short time, and you wish to wind up as soon as you finish the project, going for the Company form of business would be a drag on your resources. On the other hand, if you are clear in your mind that you want to be the most successful listed company in your chosen sector, it’s pointless if you go for a Trust or Society.
* How far: There is a very popular saying among the company law academia: “Men may come but men may go, but a Company goes on forever”. This adage only highlights the fact that, an organization incorporated as a Company, has its separate legal existence, and even if all the directors and shareholders die, the Company still remains. Its assets still remain. Whereas, this is not the case with Partnership firms. A firm has no separate existence without its Partners. Thus, when you start up, it is important for you to know, how far do you want to go in this vehicle, and this is very much related to what answer you give for the Where To?
* With whom: If it is a partnership firm that you want to start, there has to be high levels of trust between you and your partner(s). But, the same high level of trust isn’t required in case you want to start a Company, because there are stringent legal regulations governing Companies, more than Partnership firms. Also, it is said that, partnership firms are the easiest way to structure your business, because of the low compliance requirements. Thus, you got to decide who would matter to you the most in your organization 10 years down the lane: your shareholders, or your co-partners, and also what is the amount of control you would want to exercise in all matters relating to your organization. The answer to this question also depends on the overall goals and objectives of your organization: Is it social entrepreneurship? People’s Company? Money-making venture? What? You want to walk with people’s aspirations, hand-in-hand with their dreams and needs, or with your own vision for yourself and your shareholders and your company’s economic prosperity?
* How much can you spend: This is in fact the most significant criterion that determines the decision of choosing a business vehicle. Because, you need to quintessentially know whether you would be bootstrapping or would be using venture capital to fund your dream project. Because, you cannot possibly bootstrap if you want to set up a Public Limited Company unless you are a millionaire already, and you cannot possible attract venture capitalists and angel investors if you are planning to set up a partnership firm. Also, there are various legal restrictions put on foreign investments, and external commercial borrowings. Hence, your funding options would be limited and/or defined by the choice of your business vehicle. Thus, it is very important to choose your vehicle wisely.
Registration procedure:
Step 1: Acquire Director Identification Number(DIN)
This is the first process in registration that each director of the company should obtain their identification number. As per the amendment act 2006, acquiring a DIN is compulsory for every director i.e. as such every existing and intending director have to obtain their DIN. To get DIN one need to file a eform DIN-1. The DIN-1 form is available on Official site of the ministry of corporate affairs the link is DIN-1 Form.
1. Register yourself on MCA Website first and have a login id. After filling DIN-1 Form, one should upload the filled form by clicking to eForm upload button on MCA website and should pay applicable fees.
2. After getting generated DIN one should intimate their company about DIN. The director can intimate their company about DIN by using DIN-2 Form.
3. The company should intimate the Registrar of Corporate (ROC) about all director’s DIN through DIN-3 Form.
4. If there is any change in DIN or need for any updating like change of address, personal details etc, then director should intimate this change by submitting the eForm DIN-4 Form.
Step 2: Acquire Digital Signature Certificate(DSC):
In order to ensure the security or authenticity of documents filed electronically the information act 200o demands a valid digital signature on the documents submitted electronically. This is the only and safest way that one can submit their documents electronically. The digital signature certificate should be acquired by only those agencies which are appointed by the controller of certification agencies (CCA). One should not use DSC given by any other agency which is not approved and it’s illegal to use others DSC as yours or the false one.
If you already have a digital signature then you can use the same, no need to apply for another. But do check for your digital signature validity, agencies issue DSC’s with one or two year validity after expiry you have to renew it.
One can acquire his/her Digital Signature certificates from these government listed agencies like TCS, IDBRT, MTNL, SAFESCRYPT, NIC, nCODE Solutions etc. to check out their price details of these Govt approved agencies, Go to this link.
Step 3: Create a account on MCA Portal – New user registration
This is about having a registered user account on MCA Portal for filing a eform, for online fee payment, for different transactions as registered and business user. Creating an account is totally free of cost.
Step 4: Apply for the company to be registered.
This is the final major step in a registration of your company which includes incorporating company name, Registering the office address or notice of situation of office and notice for appointment of company directors, manager and secretary. And also regarding the take and pay for their qualification shares.
* Form-1:
* Form-1A: Application form for availability or change of a company name. Once you apply for new company name, the MCA will suggest four different form of your company name; you have to choose one among them. To do the same you have you have to fill Form-1A and submit.
* Form-1: This is for application or declaration for incorporation of a company, in this form you have to fill the same name which you have chosen during application of form-1A.
* Form-18:
* This form is for notice of the situation of a new company office or change of situation of previously registered office.
* For a new company you have to fill the form with genuine office address and submit.
* Form-32:
* For a new company, this form is for notice for appointment of new Directors, Managers and Secretary.
* For an existing company, this form is for a change of directors, Manger, Secretary or company head.
After submitting these forms, once the application has been approved by MCA, you will receive a confirmation email regarding the application for incorporation of a new company, and the status of the form will get changed to Approved.
Detailed procedure for approval of the proposed company name:
For obtaining name for your new company, An application in Form-1A needs to be filed with the Registrar of Companies (ROC) of the state in which the Registered Office of the proposed Company is to be situated to ascertain the availability of a name along with an official service fee of Rs.500/-.
You have to provide four alternative names for the proposed company. Your company name shall not resemble the name of any other company already registered or violate the provisions according to Act, 1950.
In this form you have to fill name and addresses of directors (minimum 2 for a private company and 7 for a public company). You have to mention main objects of the company and authorized capital.
In about 10 days, the ROC will inform you about approval or objections. If there are any objections then ROC will suggest you with some available names and let you choose among them. If your company name is approved then you will receive a formal letter regarding the confirmation of the same. Keep the same which will be required during registration process of the proposed company.
If you find any difficulty or encounter any problem while obtaining the company name then do contact us, We will help you to sort out your problem.
Check these documents before submission of a company:
1. DIN of all those directors of a proposed company.
2. DSC – Digital Signature Certificate
3. Original copy of the formal letter issued by ROC regarding availability of Company name.
4. Form-1 for incorporation of a company.
5. Form-18 for situation or address of the proposed company.
6. Form-32 for particulars of proposed directors, managers and secretary.
Formalities to be followed while incorporation of a company:
1. Obtain a TAN card
2. Obtain a Permanent account number (PAN) from income tax dept. India
3. If required: Documents obeying shop and establishment acts.
4. If required: For foreign trade, Registration documents of import export code from Director General of foreign trade.
5. If required: Registration documents of Software technologies Parks of India (STPI).
6. If required: RBI approval for foreign companies investing in India and FIPB approval.
7. Both Indian and foreign directors need to have valid Digital Signature Certificates from authorized agencies.
A business is covered under the definition if it aims to develop and commercialize:
1. A new product or service or process; or
2. A significantly improved existing product or service or process that will create or add value for customers or workflow.
3. The mere act of developing products or services or processes which do not have potential for commercialization; or undifferentiated products or services or processes; or products or services or processes with no or limited incremental value for customers or workflow would not be covered under this definition.
In order for a “Startup” to be considered eligible, the Startup should
* be supported by a recommendation (with regard to innovative nature of business), in a format specified by DIPP, from an Incubator established in a post-graduate college in India; or
* be supported by an incubator which is funded (in relation to the project) from Government of India as part of any specified scheme to promote innovation; or
* be supported by a recommendation (with regard to innovative nature of business), in a format specified by DIPP, from an Incubator recognized by Government of India; or
* be funded by an Incubation Fund/Angel Fund/ Private Equity Fund/ Accelerator/Angel Network duly registered with SEBI* that endorses innovative nature of the business; or
* be funded by Government of India as part of any specified scheme to promote innovation; or
* have a patent granted by the Indian Patent and Trademark Office in areas affiliated with the nature of business being promoted.
Author Name
DEEPAK DAYAL (MBA, LLB) | Managing Partner,
Dayal Legal Associates .India.
Advocate, Supreme Court Of India.
Skype: deepak@dayallegal.in
http://www.dayallegal.in
M : +919560732244
O: +919069113331