When you want to start a new business in India, it is an exciting journey. However, this journey is filled with crucial steps leading to the process of registering your company. Company registration is a legal requirement, and it allows legitimate status to your business. Moreover, it also provides various benefits. These advantages include capital raising, the ability to enter into contracts and liability protection. In this blog, let’s explore the process of new company registration in India.
Types of Companies in India
Before we dive into the registration process, it is important to understand the options of various types of companies that you can form in India. Learning the options will help you make a better decision based on your business needs.
Sole Proprietorship
A sole proprietorship firm is not exactly a formal company. It is more of an informal structure of business. As the name suggests, it is owned and managed by a single individual with unlimited liability. The unlimited liability is one of its drawbacks.
Partnership
A business entity owned by two or more individuals is known as a partnership firm. It is also an unregistered business which helps the partners in sharing profits and unlimited liability amongst themselves.
Limited Liability Partnership (LLP)
An LLP is a hybrid model business. Which means, it combines the various benefits of a partnership firm and a company. This helps in offering limited liability to the partners of an LLP.
Private Limited Company
A private limited company is one of the most popular types of companies. It is a separate legal entity with limited liability and easy modes of raising funds. The only prerequisites are you need to have a minimum of two directors and two shareholders.
Public Limited Company
A company that is allowed to raise capital from the public at large is known as a public limited company. In a public company, you need a minimum of three directors and seven shareholders.
The Process of Company Registration in India:
The process of company registration in India takes place online on the MCA portal. Below is the step-by-step process of registration as a private company in India:
Obtain Digital Signature Certificates (DSC)
The first step in registering a private company in India is to get the DSCs of all the proposed directors and subscribers. Digital signatures are vital for submitting the e-forms and relevant documents to the Ministry of Corporate Affairs (MCA).
Apply for a Director Identification Number (DIN)
All proposed directors of a company must also apply for a DIN. A DIN is a unique identification number that the Ministry of Corporate Affairs issues. This authority issues the DIN through Form DIR 3. Hence, as a director or a designated partner in India, you need to have a DIN or DPIN.
Reserve a Company Name
A unique company name is mandatory for all companies registered in India. Hence, choosing a unique name for your company and checking its availability. Besides, you can apply for the reservation of your company name through the MCA RUN Portal. (Reserve Unique Name). Once the name is approved, you can submit the form for company incorporation.
File Incorporation Documents
After you obtain the company name approval, you need to prepare all incorporation documents. These documents include the charter documents, ie, Memorandum of Association and Articles of Association (AOA), ID proof and Address Proof, etc. Once you have all the documents ready, it is easier to fill in the details on the incorporation form. Moreover, you will also need to upload these documents in the format as prescribed by the MCA.
Pay Registration Fees
The fees for company registration are prescribed by the ROC as per the Companies (Registration Offices and Fees) Rules, 2014. Check the fees applicable to you based on your authorized capital.
Obtain the Certificate of Incorporation
After the Registrar of Companies verifies your documents and approves the application, you receive the COI. This COI marks the official company registration. It includes basic information such as the name of the company, date of incorporation, and registered office address.
Company Registration Fees in India
The fees for company registration in India may vary depending on different factors. These factors include:
- Authorized share capital;
- State of registered office address; and
- Type of company.
The key factors that you need to consider while deciding the fees are:
Stamp Duty
Stamp duty is to be paid on the authorized share capital of a company. Moreover, the rates of stamp duty vary from state to state.
Registrar of Companies (RoC) Fees
The RoC also charges fees for the process of submitting incorporation documents and issuing the COI. The fees also may vary based on share capital.
Digital Signature Certificate (DSC) Charges
When you don’t have the DSC of all proposed Directors, you will also need to pay the charges for obtaining DSCs.
Director Identification Number (DIN) Charges
A certain amount of fees is levied on each Director for DIN application.
Name Reservation Fees
There’s a nominal fee for reserving the company name using the RUN service.
Professional Fees
Many entrepreneurs choose to hire professional services, such as company secretaries or chartered accountants, to assist with the registration process. These professionals charge fees for their services.
It’s important to check the latest fee structure with the MCA and the RoC because it can change over time. To get an accurate estimate of the registration fees, consult with a professional or refer to the official MCA website.
Conclusion
Registering a new company in India is a systematic process that involves several steps and associated company registration fees. The choice of the company structure, the state of registration, and the authorized share capital will all impact the registration fees. While the registration process may seem complex, it is essential for establish
