Entrepreneurs often have the drive and passion to tackle various aspects of starting a business, such as finances, target audience and growth prospects. However, they might overlook crucial questions about the costs, time and potential liabilities involved in the process. What happens when unexpected situations arise (Such as change in policy, internal mismanagement, etc) or if plans don’t go as expected? How can these concerns be addressed?

The key lies in the fundamentals, specifically, the company registration process. It is essential to address these questions, especially concerning liability, right from the start of a business journey. In India, the corporate legal framework offers various options for company registrations. Among them, starting a business as a Private Limited Company is the most common choice for entrepreneurs.

A private limited company is registered under the Companies Act, 2013 and has the following key features:

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, in other words, investors putting in money in exchange for a percentage of shares in the company. 
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 Procedure for Company Registration Online

Step No. 1 – Reserve a Company Name

The first step towards incorporating a company is choosing a name that is unique and which no other company is using. You can check for available company names on the Ministry of Corporate Affairs (MCA) website.
If you plan to Trademark your brand, then you must check if your proposed name already exists on https://www.ipindia.nic.in/ as well.

The applicant must first create an account on the MCA website and click the “RUN” icon to open up the eForm. Here, they must provide the proposed company name along with any other comments like objects, trademarks etc. The name check facility in the eForm is an auto check facility. The applicant can also attach any required files (example: NOC for use of the same name as that of an existing company) to the eForm.
After the eForm is submitted and a fee of INR 1000 is paid, a challan will be generated which must be saved for its SRN. The name is now reserved for 20 days, within which the incorporation of the company must be completed. It is not mandatory to file form RUN (Reserve Unique Name). The same process can be undertaken while filing eForm SPICe ( Simplified Proforma for Incorporation Company Electronically).

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 of digitally signing all eForms. The DSC is issued by 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 Pvt Ltd company 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. 4 – File eForm SPICe for Incorporation of a Private Limited Company:

eForm SPICe is a single-window form for the registration of a Private Limited 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. 5 – File eForm AGILE for ESIC and EPFO Registration:

After eForm SPICe is filed for the registration of a company, the applicant is also required to file eForm AGILE. It 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 authorised signatory and specimen of the authorised signature.

Once the above steps are completed and eForms SPICe and AGILE are approved, a Pvt Ltd 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 Private Limited 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.