- What is a private limited company?
There are several different types of entities in India such as private limited company, public limited company, limited liability partnership, sole proprietorship etc.A private limited company refers to an entity which limits the liability of the owner to their respective shareholdings and restricts shareholders from publicly trading shares.
- How many directors are required to incorporate a private limited company in India?
A private limited company must have a minimum of 2 directors and can have a maximum of 15 directors. One of the Directors of a private limited company is mandatorily required to be an Indian citizen and an Indian resident. The other director(s) can be a foreign national.
- How many shareholders are required to incorporate a private limited company in India?
To incorporate a private limited company, a minimum of 2 shareholders are required. These shareholders could be natural persons or companies, including foreign companies. The maximum number of shareholders is 200.
- Can an individual person incorporate a company in India?
Yes, like several other countries such as China, Singapore, UK, Australia, and the USA, the Companies Act, 2013 has also introduced the concept of a One Person Company.
- What is a One Person Company ("OPC")?
The Companies Act, 2013 defines a One Person Company as a company that has only one person as its member, i.e. a company that has only one shareholder.The sole member of the OPC is required to while registering the OPC, select a nominee who in the event of the subscriber's death or his incapacity to contract becomes the member of the company.Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.
- How many directors does an OPC require?
OPCs need to have a minimum of one person (the member) as a director. They can have a maximum of 15 directors.
- What is the typical process to be followed to register a private limited company in India?
- Step 1: Reserve a name for the company;
- Step 2: Apply for digital signature (DSC) for each of the director;
- Step 3: Acquire an identification number (DIN) number for each director; and
- Step 4: File the SPICe Form.
- How does one reserve a name or how do I apply for a company name? Are there any considerations to be kept in mind while providing a name to the company?
An applicant can pick up any suitable name for the company, provided that (i) the company cannot be registered with a name which is undesirable as per the Central Government; (ii) the name of the company has to end with 'Private Limited'; (iii) the name which is chosen for the company should not resemble or be identical to the name of another registered company.
One can reserve the name of its company via Reserve Unique Name form ("RUN").
- What is the procedure of availing services of RUN?
One is required to create an account for oneself at the Ministry of Corporate Affairs ("MCA") portal.After creating an account, the applicant can avail the RUN services. The applicant can propose two names under this service. It is important to note that the name applied for will either be approved or rejected and that no resubmissions are allowed. A fee of Rupees One thousand will be levied for the submission of each form.
- How long is the approved name valid for?
An approved name is valid for a period of 20 days from the date of approval of such name.
Is it mandatory to reserve a name in advance?
No, it is not compulsory to reserve a name through the RUN service. The approval of a name can also be sought while filing the SPICe (INC-32) form.
One can apply for the proposed name through SPICe (INC-32) form on the MCA portal. Only one name can be applied for under this form. However, in case of rejection due to non-approval of the name, the applicant in this case get a second chance of refilling the same SPICe (INC-32) form without any further charges.
- What is DSC? Is it required to file the SPICe (INC-32) and RUN?
DSC refers to a Digital Signature Certificate. It must be obtained from a certifying agency which has been recognized by the government. Since the registration process is now online, all the forms require a valid DSC. The cost of obtaining DSC varies from each certifying agency.
DSC is required to file the SPICe (INC-32) form whereas the same is not required for filing RUN.
- What is DIN?
DIN is a unique Identification Number allotted to an individual who is appointed as a director of a company. Any new company is required to make an application for allotment of DIN through SPICe form at the time of its incorporation.
- What is SPICe form?
SPICe refers to a Simplified Proforma for Incorporating Company Electronically. SPICe helps incorporate a company with a single application for:
- reservation of name;
- application for allotment of DIN;
- incorporation of a new company; and
- allotment of PAN and Allotment of TAN.
This Form helps incorporating a company quickly in India by integrating many of the steps into a single process. It has been introduced to do away with filing of various forms.
- Are there are any other forms that are required to be filed along with the SPICe (INC-32) form?
Along with SPICe (INC-32) form, the following forms are also required for the incorporation of a company:
- e- Memorandum of Association ("E-MoA") in Form No. INC-33; and
- e-Articles of Association ("E-AoA") in Form No. INC-34.
- What is Memorandum of Association and Memorandum of Articles? Is it mandatory to use e-MoA and e-AoA?
Memorandum of Association represents the charter of the company while Articles of Association refers to the internal rules and regulations of the company. These are required for the incorporation of a company and need to be filed with the MCA.
It is mandatory to use e-MoA and e-AoA only in the case of following:
- individual subscribers are Indian nationals;
- individual subscribers who are foreign nationals (in case they have valid DIN and DSC and have a proof of a valid business visa); and
- non-individual subscribers based in India.
- Is it mandatory to apply for PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) along with SPICe (INC-32) form?
Yes, it is mandatory. The applicable fee for applying for both PAN and Tan is Rupees Sixty-Five each.
- What general documents are required to register a private limited company?
- Affidavit and declaration by first subscriber(s) and director(s);
- Proof of office address;
- Copies of utility bills that are not older than two months;
- Copy of approval in case the proposed name contains any word(s) or expression(s) which requires approval from central government;
- If the proposed name is based on a registered trademark or is subject matter of an application pending for registration under the Trade Marks Act, then it is mandatory to attach the trademark registration certificate or trademark application copy;
- NOC from the sole proprietor/ partners/other associates/ existing company;
- Proof of identity and residential address of the subscribers (in the absence of DIN); and
- Proof of identity and residential address of directors (in the absence of DIN).
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.