Ease of Doing Business Starts Here

Incorporating a company in India is now easy. In 2018, through a string of reforms, India leapfrogged into the 100th rank in the World Bank's Ease of Doing Business rankings, jumping 30 notches. Through the various initiatives, the Government has reduced the bottlenecks, combined forms, and simplified procedures.

However, due to the ever so dynamic set of changes and developments, one needs professional guidance and assistance to zero-in on the right steps, procedures, and processes to make the most of the features and facilities extended by the Government.

Incorporating a Company in India

Overview - Governing Law, Authority, and Act

The Ministry of Corporate Affairs (MCA) regulates all Companies and corporate affairs in India through the Companies Act, other allied Acts, Rules, and Bills.

In line with the Government's 'Ease of Doing Business in India' initiative and simplified business procedures, various modifications have been made in the company incorporation process. With effect from 1st April 2014, the Companies Act, 1956 has been replaced by the new Companies Act, 2013

Regulations and Framework

The MCA regulates all matters through a framework of rules and regulations and filing requirements like:

  • Following Accounting Standards
  • Undertaking Audit of Accounts
  • Holding of AGM
  • Rules for Borrowing and Lending
  • Regulating Share Capital And
  • Undertaking Steps for Investor Protection and so on…

It provides for and casts an obligation on companies to file various forms, returns and documents under various provisions with the Registrar of Companies (ROC)/ Regional Director/ Central Government in an electronic mode within the prescribed time, along with the prescribed fees.

The MCA has introduced the MCA21 Mission Mode Project (MCA21), which is the e-governance initiative from the Ministry of Corporate Affairs, Government of India. It is one of the 27 Mission Mode Projects of the National e-Governance Plan and is designed to fully automate all processes related to proactive enforcement and compliance of legal requirements under the Act. This means that all types of filing, incorporation, etc., is to be undertaken via the online mode only.

E-filing under the Companies Act can be categorized as

Annual Filing

Annual filing is to be undertaken within 30 days from holding of AGM and it involves filing of Annual accounts, Directors Report, Audit Report, Cash flow statements, etc., in an electronic form.

Event-Based Filing

These include 'Approval services' and 'Change Services' – covering all other aspects like company incorporation, change directors, and other particulars of existing companies, etc.

Types of Companies

Private Limited Company

It is the most common form of a company incorporated in India. It is also known as a Closely Held Company as there are restrictions on transfer of shares and invitation to public to subscribe for securities of the company.

The features are

  • Minimum 2 and maximum 15 directors
  • Minimum 1 lakh paid up capital (no maximum limit prescribed)
  • Maximum 200 shareholders
Public Limited Company

A company which is not a Private Limited Company and has

  • Minimum 3 and maximum 15 directors
  • Minimum 5 lakhs paid up capital (no maximum limit prescribed)
  • No upper limit on shareholders
  • Invitation can be made to the public to subscribe to shares and securities
Other Forms of Companies

  • One Person Company
  • Government Company
  • Section 8 Company
  • Producer Company
  • Foreign Company

Incorporation of Private Limited Company

Broadly speaking, incorporating a company in India is a six-step process as shown.

Step-by-step Procedure for incorporating a Private Limited Company in India

  • Obtaining Digital Signature Certificate (DSC) of all the proposed Directors
  • Obtaining Director Identification Number (DIN) of all Proposed Directors
  • Register DSC on MCA portal against the DIN
  • Apply for Availability of company name (Form INC 1)
  • On name approval, prepare and submit documents for incorporation application within 60 days
  • Incorporation Application in SPICe Form

Incorporation through Spice Forms (Salient Features)

  • Easy incorporation using SPICe Form INC 32
  • Linked Forms INC 33 and INC 34 for e-MoA and e-AoA
  • Application for DIN and Name reservation along with Incorporation application
  • One-step online application for PAN and TAN once Incorporation Form filed
  • Maximum time for incorporation of 2 days
  • CIN, PAN and TAN allotted simultaneously

ROC Fees Structure

Sample fee structure for ROC Mumbai, for different capital size

Summary of incorporation expenses under Form INC 32 For Incorporation in ROC Mumbai
Particulars Authorized Capital
1 Lakh 5 Lakhs 10 Lakhs 50 Lakhs
Form INC 32 - Normal Fees 500 500 500 500
MoA - Fees 5,000 21,000 36,000 156,000
AoA - Fees 300 400 400 500
Stamp Duty 100 100 100 100
Stamp Duty - MoA 1,000 1,000 2,000 10,000
Stamp Duty - AoA 200 200 200 200
Total 7,100 7,100 39,200 167,300

Planning to incorporate a company in India? Need expert guidance for using the SPICe form for registering your start-up in India? V. Purohit & Associates can help. We offer end-to-end consulting and execution services for company incorporation in India.

Talk to us and Share your requirements.

We are a new-age financial accounting company, that upholds age-old values and principles of Chartered Accountancy. We offer a fairly-differentiated set of services, tailored to specific business goals and challenges.