As part of the Government’s agenda to improve the ease of doing business in India, the aspect of company incorporation/registering a company is extremely crucial – be it for domestic or foreign businesses looking to enter the market. The relation between faster company incorporation and ease of doing business is directly proportional, and a number of steps have been taken to streamline this process, reduce the hassle for company owners, reduce the paperwork, etc. and to be fair, we’ve come a long way.
Before we talk about all that is needed, it’s important that this article covers the registration process and pre-requisites of a specific type of company – which is a private limited company. Setting up or registering an LLP (Limited Liability Partnership) differs in certain ways, so does the process for a One-Person Company (OPC) or a Public Limited Company (PLC). Once a business is registered as a private limited company, it can then be registered as a startup under certain specific criteria as well, which we will elaborate in the latter half of this article.
Starting the general process when it comes to registering a private limited company in India, we’ll further dive deep into the nuances and documentation needed for the same – following which we’ll move to startup registration, its benefits and more. The end result of registering a private limited company is to obtain a Certificate Of Incorporation (COI), which acts as a crucial document – be it for registering your company as a startup or an MSME.
Steps For Registering A Private Limited Company In India
The Government of India has made it relatively easier for new companies to get incorporated by introducing the form SPICe Plus, where it allows for 10 services to be covered in a single form.
While the application form is one, its prerequisites and general steps remain the same and are highlighted as follows:
The first step deals with obtaining a DSC (Digital Signature Certificate) – which shall be obtained by the director(s) of the company and subscribers mentioned in the MOAs (Memorandums of Association) and AOA (Articles Of Association), as well as for all other digitally signed forms. Usually, a Government-verified agency helps in allotting a DSC.
The 2nd step deals with applying for a unique name with the Registrar of Companies (ROC). This can be done via the SPICe Plus form Part A which has been made available for company incorporation purposes.
Step 3 essentially deals with preparation and execution of all necessary documents, i.e. consents, declarations, etc. in the prescribed format. Also, it involves the drafting of e-MOA and e-AOA. However, In case of Foreign Shareholders/Subscribers, physical copies of MOA and AOA shall be drafted and subscription page shall be manually signed by the shareholders.
The next step is to file SPICe Plus Part B, with all the executed documents and e-MOA and e-AOA (and their submission via Form INC-33 and INC-34 respectively). In addition to making your application for Director Identification Number (DIN), it is compulsorily required to file an application for PAN and TAN in the same form.
Also, the GST application for a company needs to be filed within the same form (if required) along with the Registration of the Company with EPFO and ESIC (which is compulsory for every company). Even the opening of bank account is compulsory under this process. All these filings will be done by using the digital signatures.
Once the Spice Plus Part B is successfully uploaded by paying the requisite fee, the ROC will scrutinize the documents and If everything is in order, a Certificate Of Incorporation is issued by the ROC.
Once the primary procedures are completed, capital must be infused by the shareholders in the said company within 60 days of incorporation in the bank account of the company.
Request for issuance of Foreign Inward Remittance Certificate (FIRC) must be submitted to the bank, in case the subscribers/directors are foreign/non-residents and they are investing money from outside India. Also, the company must allot shares to the subscribers and issue the required share certificates within 60 days of incorporation.
Another aspect which must be ensured in this step is that the stamp duty on the share certificates must be paid within 30 days from the execution of the certificates. The stamp duty documents, which are signed by the director, are to be submitted to the sub-divisional magistrate which varies from state to state in India.
Once the share allotment is done and the FIRC is obtained (in case foreign direct investment), Single Master Form (“SMF”) must be submitted to the Reserve Bank of India (“RBI”) through the Authorized Dealer (“AD”) Bank within 30 days of allotment.
In order to commence business, a declaration in the prescribed form must be filed with the Registrar Of Companies, duly stating that every subscriber to the memorandum has paid the value of shares agreed to be taken by the said shareholder within 180 days of the incorporation of the company.
Registering A Company As A Startup In India
Once the company incorporation is complete, there is certain criteria which must be adhered to in case a company is to be registered as a startup in India.
The first step is company incorporation, the entire process of which has been highlighted above. Here, the company can either be incorporated as a private limited company or an LLP as well. A few other important points must be taken care of while registering a company as a startup, such as:
- The turnover of the company must not exceed INR 100 crore in any of the financial years since the date of incorporation of the company
- A company made by splitting of an existing entity is not considered a startup
- The business must be working towards innovation or should be a scalable business model
Following this, the company must be registered on the Startup India portal, where certain documents need to be digitally attached (in PDF format). These include:
- The certificate of incorporation of the company
- A brief about the business and its nature, citing how it’s working for innovation and improvement of either processes, products or services or adding value via employment generation and wealth creation
Once these documents are submitted, a startup can actually decide on how it must go about in terms of tax benefits, since startups are exempted from taxes for 3 years if they are certified by an inter-ministerial board.
These steps, executed with proper documents, often lead to quick and streamlined registrations as a company and then, a startup. While there is no set timeline for the process, it is advised for the directors/founders to ensure their documents are in order and all other checks are complied to with diligence. Also, sometimes it is equally pivotal to furnish additional documents at the time of need – so some buffer time shall be accounted for in that case as well.
Amrita currently leads Coinmen’s Corporate Secretarial Services as an Assistant Manager.