India: Procedure Of Company Formation In India

Last Updated: 13 October 2016
Article by AJSH & Co

These days, most people want to start business in India. From foreign nationals to NRIs to Indian residents, many people are looking at investing their money in India. There are two reasons behind this trend. One is because the Indian economy is growing at a fast pace and in the near future it has potential to grow more. The other reason is because India is a diversified country and hence it is the most favoured location for doing business. Being a diversified country, India offers different routes of investment to its people.

The most suitable for of entity for carrying out business in India would be to form a private limited company. The formation of a private limited company takes approximately 12-15 working days after receipt of the necessary documents.

In this article, we will discuss the procedure of forming a private limited company in India.

The minimum requirement to start a private limited company:

  • Identify the directors of the company (minimum of 2 directors should be present and maximum of 8 is allowed).
  • Minimum 2 shareholders
  • Minimum capital of the company should be INR 1,00,000/-
  • DIN (Directors Identification Number) for both directors. If you do not have one, you can apply for it online
  • Digital signature of all directors
  • Reservation of the name of the company (You can submit 5-6 names in the order of which you prefer. Based on availability, you get your company name)
  • Apply for incorporation of company
  • Consent from subscriber to director
  • Preparation of documents such as Memorandum of Association.
  • Filling documents with authorities
  • Liaison with the authorities and correction
  • Proof of registered address
  • NOC from the owner of the premises
  • Getting final certificate of incorporation

The procedure:

  • The most important step in forming a private limited company is applying for DIN. Only directors that do not have this need to apply. They need to submit the form to the central government with a fee of rupees1500 per director.
  • Obtaining digital signatures is the next step. The director has to apply for the digital signature certificate. This is necessary to file company registration documents.
  • Submit 5-6 preferred names for your company in order of the most preferred. Check for name availability.
  • Apply for name availability to the concerned ROC.
  • Once the name has been approved, you need to apply for incorporation of the company. For this, you will have to prepare a Memorandum of Association that details company operation and list of directors.
  • Once it is approved, make at least 10 copies of Certificate of Incorporation and Memorandum of Association and have it in a booklet form.
  • You will then have to fill various forms in the ROC.
  • You will have to submit proof of registered address (pan card, voters id)
  • Filling fees for final documents
  • Other government expenses
  • If the registrar is satisfied with all the requirements that have been compiled by the company, they will issue certificate of incorporation. The date mentioned on the certificate is the date of incorporation of the company.
  • Lastly, you can open a current bank account in any leading bank to carry out your operations.

Therefore, formation of a private limited company is not that difficult as it seems. If you lack the expertise to do it on your own, you can always take the advice and assistance of professionals. Roughly, formation cost of a company should be INR 25,000.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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