How to apply for Incorporation of a Company in India – Indian National & Resident Investors

For starting up any kind of business in India, it is important to give that business a legal recognition.

In India, there are various different types of legal structures like sole proprietorship, Partnership firm, Limited Liability Partnership, Company, etc available to choose from and selection of the form of business entity is one of the important decisions before starting a business.

Let us assume that after considering pros and cons of each of the legal structure available, you are intending to set up your business in form of a Company, the next big question that will arise is as to how to form a company?

With this article let us understand the flow and process of forming and incorporating a company.

Know the Authority

Knowing whom to approach and where to apply is very important and crucial step. Just like when you want to apply for a Driver’s Licence you immediately approach the respective RTO, similarly, when you intend to apply for the formation of a company, an application is made to the Registrar of Companies.

The Companies Act, 2013 is the act that is applicable to companies incorporated and the Ministry of Corporate Affairs (MCA) is the regulatory body that regulates the affairs of the company through the Registrar of Companies (ROC).

All Application for incorporation of a company is made online to the ROC of the Particular state which is routed through Central Registration Centre (CRC) department of the MCA.

No Company can come into existence without a Certificate of Incorporation issued by the Registrar of Companies.

Know more about MCA here http://www.mca.gov.in/MinistryV2/homepage.html

Understand the basic structure of a company

A Company as a form of legal business structure can further be divided into 4 different types as follows:
1) Private Limited
2) Public Limited
3) OPC
4) Section 8 (NGO)

As an applicant, understanding the structure of these above types of a company becomes a very important factor not only from the point of view of choosing the right type that will work for you but also with respect to the actual process of incorporation of your company.

Private Limited

Public Limited OPC
Minimum Shareholders Required  

2

 

 

7

 

Only 1
Maximum Shareholders Required 50 Unlimited Cannot have more than 1
Directors Required Min 2 Min 3 Min 1
Capital Required No Minimum requirement No Minimum requirement

No minimum requirement

Pre-requisites before making an application

It is essential for an applicant to have a Digital Signature certificate in place for all the subscribers i.e shareholders that will be willing to invest in the company. The subscribers will require a class 2 DSC and it is easily procured by making an application to any MCA recognized Certifying authorities.

The Actual Process

So now that you have decided upon the type of company you want to incorporate and managed to gather the shareholders and person willing to be the directors and accordingly procured the DSC, the company formation process will flow as per the following steps:

1) Create MCA Account: The First step will be to register yourself with the MCA Portal since all the applications will be required to be made online. Creating an account is very simple and involves zero cost.

You can register and create your account here http://www.mca.gov.in/mcafoportal/login.do

2) Apply for a name and reserve it: The second step will be to apply for the name to the Registrar of the Company. This can be done in 2 ways:
a) Through RUN Portal of MCA
b) Directly Through the Incorporation form

While applying for the name, you can propose 2 different names. However, an apparent check must be done for the similarity of the name with other company and trademark as these are the common reasons for the ROC to refuse to approve your name application.

You can check for the name availability here http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do

The name approved shall be valid for 20 days.

3) Filing of Incorporation forms: The last but not the least step is submitting the incorporation forms online with the MCA along with paying statutory fees.

Forms to be filed:

a) SPICe Form or INC 32 wherein Basic details regarding the Shareholders, Directors, and Place of the registered office and Capital are to be mentioned in this form.

b) SPICe MOA or INC 33 is e-Memorandum of Association of the Company wherein the State in which the company will be registered along with capital of the company and the main activity of the company is mentioned.

c) SPICe AOA or INC 34 is e-Articles of Association of the Company. The Form contains standard format applicable to the company however, you can alter the clauses as per your requirements.

Documents required:

The documents required to be attached in the SPICe form are as follows:

1) Declaration in form of INC-9 from all the Subscribers

2) Consent from Directors in form of DIR-2

3) Proof of Registered office like Electricity Bill/Telephone Bil/Water Bill/Gas Bill along with a No Object letter from the owner to use the premises as the registered office of the company.

4) Identity Proof of Subscribers and directors (PAN Card and Either Passport/Voter’s ID/Driving Licence)

5) Address Proof of Subscribers and Directors (Latest Electricity Bill/Mobile Bill/Bank Statement)

6) A Declaration of the Practising Professional which forms part of the above Three forms.

7) Other Documents required by ROC specifically.

Fees to be paid:

The Fees required to be paid will depend upon the capital of your company and also the state in which the company is being incorporated.

Find the forms here http://www.mca.gov.in/MinistryV2/companyformsdownload.html

4) Scrutiny of ROC and getting the Certificate of Incorporation: After forms are filed with the MCA and the applicable fees are paid, the ROC will check your forms and if the ROC feels that the application are complete with all respects, he will issue the Certificate of incorporation and voila your Company is incorporated.

pexels-photo-618158

DIR-3 KYC- New Annual KYC for Directors

The Ministry of Corporate Affairs (MCA) has notified on 5th of July, 2018 an Annual filing of “DIR-3 KYC” – A form for Application for KYC of Directors as a part of updating its registry and conducting KYC of the Directors on a regular basis.

One can follow the below-given guidelines for filing the form and completing the KYC with MCA –

Applicability

Filing of the form DIR-3 KYC is applicable to all the Directors holding a DIN which is approved by the MCA on or before March 31, 2018 irrespective of whether one is currently a director of any company or not or has been disqualified u/s 162 (2) of the Companies Act, 2013 or not.

Due Date of Filing of the form

The form shall be filed with MCA on or before August 31, 2018, failure of which would lead to deactivation of the Director’s DIN by MCA.

Fees

If the Form is filed on or before August 31, 2018, no fees is payable on submission of the form. If the Form is filed after August 31, 2018 an amount of INR 5,000 is payable when submitting the form.

Finalising the KYC forms for your DSC

Documents required

The Documents required to be attached under the form will vary according to Nationality of the Director as follows:

A. If the Director is an Indian National:

(1) Self-attested copy of PAN Card

(2) Self-attested copy of Aadhar Card

(3) Self-attested copy of Passport (if the Director is a valid holder of one)

(4) Self-attested copy of Latest Residential proof (any one of Electricity bill/Mobile Bill/Driving License/Bank Statement)

B. If the Director is an Indian National but Foreign Resident:

(1) Self-attested copy of PAN Card

(2) Self-attested copy of Aadhar Card

(3) Self-attested copy of Passport

(4) Self-attested copy of Indian Residential proof (any one of Electricity bill/Mobile Bill/Driving License/Bank Statement)

(5) Self-attested copy of Foreign Residential proof (any one of Electricity bill/Mobile bill/Driving License/Bank Statement or any other Government issued document of the country which the Director is presently resident of and such proof shall be attested by the Consulate of Indian Embassy or Foreign Public Notary)

C. If the Director is a Foreign National:

(1) Self-attested copy of Passport (Duly notarized and apostilled in the country of the Director)

(2) Self-attested copy of Latest Residential proof (any one of Electricity bill/Mobile Bill/Driving License/Bank Statement duly notarised and apostilled in the country of the Director)

Important points to be noted

One must keep in mind the following important points –

(1) Download the form from the website of the MCA and enter DIN and pre-fill the form. Once the form is pre-filled, enter all the requisite details according to the PAN or in case of Foreign National not having PAN, according to the DSC (Digital Signature).

(2) The Form is required to be digitally signed by the Director only. Hence, each Director must have a valid DSC duly registered with the MCA.

(3) The Director is required to mention their personal email id and mobile number in the form which shall be duly verified by an OTP sent on both email id and mobile number of the director. Hence each DIN will require a unique email id and mobile number of the Director to be submitted.

(4) Such OTP shall be sent only for a maximum of 10 times in one day and twice in a span of 30 minutes.

(5) The Form DIR-3 KYC will be mandatorily required to be certified by a Practicing Company Secretary/Chartered Accountant/Cost Accountant.

(6) The Form will be processed by the MCA in STP mode which means an approval email will be sent to the director immediately upon the filing of the form.

(7) Non-filing of Form DIR-3 KYC will result in deactivation of the DIN.

(8) If the DIN is deactivated due to non-filing of the form DIR-3 KYC, such DIN will be activated only by payment of INR 5,000 as penalty along with the filing of the DIR-3 KYC.

For any queries feel free to reach out to me at [email protected].

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