An entrepreneur’s enthusiasm can answer questions of finance, resources, target audience, publicity, growth forecast and so on.  But the enthusiasm falls short to answer questions cost and time of starting a business, liability – personal or corporate when things do not go as planned. When the business is faced by an unforeseen circumstance or a sudden change in policy, or internal mismanagement. How do we address these questions? 

The answer lies in going to and not going back to basics i.e business registration. It is fundamental to consider these questions especially that of liability at the time of starting the business. The current corporate legal fabric of India allows entrepreneurs to consider several types of entities for business registration. 

Initiation of a business with a company registration is the most common form of business entity chosen by entrepreneurs. A private limited company is registered under the Companies Act, 2013 and has the following key features:

1. 1. A minimum of 2 directors and a maximum of 7 directors are required for the company registration.
   2. There is no minimum amount of capital requirement. 
   3. The private limited company cannot invite members of the general public to subscribe to its shares like in the case of a public company. A private limited company can offer shares only by way of a private placement. 
   4. The shares are not freely transferable and can be transferred only as per the provisions of the articles of association. 
   5. Except in the instances of fraud, directors of a private limited company do not attract any personal liability.

The process for the registration of a private limited company is as under:

Step No. 1 – Name reservation: The first step towards the incorporation of a company is choosing a name. While choosing a name it is important to ensure that no existing companies are operating under the same name. This name availability process can be undertaken on the website of the Ministry of Corporate Affairs (“MCA”). In addition to undertaking the process of checking for availability of names on the website of the Ministry of Corporate Affairs, it is wise (though not compulsory) to undertake this process on http://www.ipindia.nic.in/ to ensure that the name of the company can also be registered as a trademark eventually. The applicant must create an account on the website of the MCA and click of the icon “RUN”. In this eForm, the applicant must provide the proposed name along with any other comments like objects, trademarks etc. The name check facility in the eForm is an auto check facility. An applicant can attach the required files (example: NOC for use of the same name as the of an existing company) as an attachment to the eForm. After completion of these steps, the applicant must submit the form and pay fees of INR 1000. On payment of fees, a challan will be generated which must be saved for its SRN. On the successful completion of this process, the name is reserved for 20 days within which the incorporation of a company must be completed. It is not mandatory to file form RUN. The same process can be undertaken while filing eForm SPICe.

Step No. 2 – Procure Digital Signature Certificate: The company registration process requires electronic filing and submission of the requisite forms. A digital signature certificate (“DSC”) is used for the purpose digitally signing all eForms. The DSC is issued be a Certifying Authority on submission of original supporting documents and self-attested copies. A DSC is valid for two years. 

Step No. 3 – Preparation of documents required for incorporation: 

The following documents are required to be submitted at the time of filing the company registration form and must be kept readily available at the time of filing:

• Procuring Director Identification Number: A Director Identification Number (“DIN”) is an 8-digit unique identification number required to procured by all persons who intend to be a director in any company. The application for a DIN is required to be filed in eForm DIR – 3 along with a passport size photograph, self-attested address proof document i.e. Aadhar, passport etc and a copy of the PAN card. However, it is not mandatory to procure the DIN before the submission of the eForm SPICE for incorporation (provided below) and can be procured in eForm SPICE itself. If a director or a subscriber (in case of an MoA or an AoA) does not have a DIN at the time of filing eForm SPICE, then a proof of identity and address of all such director/subscriber must be attached.
• Draft of Charter Documents: As per the Companies Act, 2013, a private limited company is required to mandatorily have Memorandum of Association (“MoA”) and an Articles of Association (“AoA.”) A MoA is a document that exhaustively defines the objectives for which the company is being incorporated i.e the permitted business activities of a company. An AoA is rules and regulations pertaining to the management of a company. The Companies Act, 2013 provides for certain standard drafts that can be adopted by a company as is or with minor tweaks. The MoA and AoA are required to be filed in SPICe MOA (INC-33) and form SPICe AOA (INC-34).
• Statement of first directors in eForm DIR -2.
• Declaration of first directors along with a copy of identity proof in INC – 9.
• Proof of registered office address and copies of utility bills that are not older than two months.
• If the proposed name is based on a registered trademark or is the subject matter of an application pending for registration under the Trade Marks Act, then it is mandatory to attach approval of the owner/applicant of the trademark.
• If proposed name requires approval from any sectoral regulator, then it is mandatory to attach (if already received) an in-principle approval from the concerned regulator.
• If any subscriber to the proposed company is a company incorporated outside India, then it is mandatory to attach a copy of the certificate of incorporation of the foreign body corporate and the resolution passed for the intended incorporation.
• If any subscriber to the proposed company is a company itself, then it is mandatory to attach a copy of the resolution passed by the promoter company.
• In case the name is similar to any existing company, then it is mandatory to attach a certified true copy of a no-objection certificate by way of board resolution. 
• In case any of the directors have any interest in the proposed company, then it is mandatory to attach a declaration of interest of the first director(s) in other entities.

Step No. 5 – File eForm SPICe for incorporation of a company: eForm SPICe is a single-window form for the registration of a company and/or allotment of DIN and/or application for PAN and TAN. The above-listed documents are required to be attached with the eForm. Stamp duty and registration fees are payable depending on the share capital of the company.

Step No. 6 – File eForm AGILE for GST, ESIC and EPFO registration: After eForm SPICe is filed for the registration of a company, the applicant is also required to file eForm AGILE. eForm AGILE is a single-window form for registration of Goods and Services Tax Act, 2017, Employee State Insurance Corporation Act, 1948 (“ESIC Act”) and the Employee Provident Funds Act, 1952 (“EPF Act.”) The eForm must be submitted along with a proof of principal place of business (property tax receipt, municipal khata copy, electricity bill, rent/lease agreement, consent letter, rent receipt with NOC), proof of authorisation of authorized signatory and specimen of the authorized signature.

Once the above steps are completed and eForms SPICe and AGILE are approved, a company is registered and a Company Identification Number (“CIN”), GSTIN, PAN, TAN, foundation code under the EPF Act and employer code under the ESIC Act will be provided. It is important to note that while eForm AGILE registers a company for ESIC and EPFO, the compliance under the ESIC Act and the EPF Act will only be required to be undertaken once the required thresholds under these legislations are met.

After the allotment of CIN, a Company is required to undertake post incorporation compliances like intimation of registered office address, preparing the letterhead of the company as per the requirements of Companies Act, 2013, appointment of an auditor, first AGM etc.