Procedure of Company Formation (Private Limited Company), in India.

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Step by step guide to Formation / Registration / Incorporation of a Private Limited Company, in India.

What’s New/changed ?

*** Updated as on 3rd February, 2019***

E-SPICe: AN EASY WAY OF INCORPORATING COMPANY IN INDIA

As you must be aware that for incorporating a private limited company with minimum two members and two director or One person company having one director and one member, it was required to submit lots of documents and information and required to file E-form INC-7,DIR-12 and INC-22. With all these formalities it used to take around one month to register the company.

But from 1st February 2017 onwards, the Central Government has made major changes in incorporation process which would save time of incorporation. It has introduced easy process of incorporation which is termed as “Incorporation through SPICe form”.

SPICe means “Simplified Proforma for Incorporating Company electronically”.

Again, on 26th January, 2018 the Ministry of Corporate Affairs amended e-form SPICe which was available for incorporation during 2017. Due to this new amendment in form, one can apply for name reservation without applying for Director Identification Number.

Here is my take to explain you all provisions applicable and incorporation process under SPICe.

INFORMATION ABOUT SPICe

  1. It is termed as E-Form SPICe.
  2. It deals with the single application for reservation of name, incorporation of a new company and/or application for allotment of DIN (Director Identification Number).
  3. Form can be filed without having DIN of director.
  4. Maximum three Directors can fill up their respective details for filing application of allotment of DIN while incorporating a company.
  5. Once the e-Form is processed and found complete, company would be registered and CIN would be allocated and PAN and TAN will be allotted on Certificate of incorporation. Also DINs gets issued to the proposed Directors.

Minimum requirements for the Private Limited Company

  • Minimum 2 Directors
  • Minimum 2 Shareholders
  • The directors and shareholders can be the same person
  • Minimum Authorised Share Capital shall be Rs. 100,000 (INR One Lac)

Steps Involved

With these Amendments, there are following  steps  available which one can opt for registration process.

Step 1- Name reservation  of proposed company by filing RUN (Reserve Unique Name) form on MCA portal and after approval of name, apply for registration of company through e-form SPICe, e-form SPICe MOA , e-form SPICe AOA.

Or

Step 2- Directly apply for registration of company through e-form SPICe, e-form SPICe MOA , e-form SPICe AOA. (Note: This does not require for Name reservation through RUN).

Step 1 PROCEDURE OF NAME RESERVATION THROUGH (RUN)

  1. An applicant can directly apply for proposed name of company through “RUN” (Reserve Unique Name) on MCA portal without having Director Identification Number and Digital Signature Certificate. This RUN form is used for a new company or for change of name for any existing company. You can apply for two proposed names as per preference. All you need is a login User ID and password on MCA Portal (Ministry of Corporate Affairs) and some basic knowledge of internet after making a well informed search about the proposed name on the below mentioned link:

Notes :

For name search on the MCA portal

http://mca.gov.in/mcafoportal/showCheckCompanyName.do

Refer the “undesirable names” rules extracts from the Companies (Incorporation) Rules, 2014.

Also refer MCA General Circular on Use of word ‘National’, ‘Bank’, ‘Exchange’, ‘Stock Exchange’ in the names of Companies or Limited Liability Partnerships (LLPs). Refer General Circular No. 2/2014

For Trademark search on ipindiaonline.gov.in

http://ipindiaonline.gov.in/tmrpublicsearch/frmmain.aspx

After proper check has been made an applicant can apply for name Reservation through RUN form. While preparation of RUN, an applicant shall need to attach NOC in case name requires the approval of a concerned Regulator or Central Government. It is at the sole discretion of the Central Registration Centre (CRC) either to approve or request an applicant to resubmit the form. There is only one re-submission allowed.

 After name reservation of company, an applicant shall be required to apply for registration of company within 20 days. (

Refer Section 4(5)(i) of Companies Act, 2013, ” the Registrar may on the basis of information and documents furnished along with an application, reserve the name for  20 days from the date of approval (in case name is being reserved for a new company”.

Although you feel it is an easy process of name application, there are some pros and cons of the RUN (Reserve Unique Name) as experienced by me:

Pros:

  • Auto check about name- Easy to know about name availability. Previously after completion and pre-scrutiny of e-form INC -1 the applicant was getting message about uncertainty of name which was time consuming.
  • Lesser time to prepare form.
  • It does not require approved DIN (Directors Identification Number) and DSC (Digital Signature Certificate) of an applicant.

Cons:

  • New user is required to create login account first before using RUN service.
  • Two Proposed names can be applied at a time (earlier 6 names can be applied in INC-1).
  • Only One Re-submission is allowed, in case of query. Re-submission is allowed within 15 days from date of raising the query.
  • Rs. 1000/- fees for each Fresh Submission
  • Need of immediate preparation and submission of RUN once login is made, otherwise the session gets expired.
  • Only one attachment is allowed with maximum upto 6 mb limit.
  • An applicant shall be required to file SPICe form for Incorporation within 20 days after name approval.
  • Lesser time period allotted for Foreign Subscribers/ NRI to get documents apostile, notarised or attestation from Indian Embassy from respective countries after name approval.
  • Same user ID to be used for submitting and uploading SPICe (Incorporation form), INC-12 (Incorporation form for Section 8 company) and INC-24 (Application for change of name) forms which have been used for name application through RUN(Reserve Unique Name).
  • An applicant has another option for incorporation of company instead of reserving name through RUN and avoiding chances of repeated rejection of names. An application can opt to file SPICe form directly and in the same form he can apply for DIN, Name reservation.

Post amendment Benefit:

  • The Government has substituted Rule 10 of Companies( Registration Offices and fees) Rules, 2014 as per Notification dated 20.01.2018. Refer Notification dated 20.01.2018…….
  • “NO” registration fees if the amount of authorised capital ( in case of OPC and small company) is less than or equal to Rs. 10,00,000/-.
  • Five facilities in one e-form SPICe i.e DIN, Name application, registration, PAN and TAN application.
  • Incorporation forms can be submitted with the help of PAN number even when none of the Proposed Directors have DIN (Director Identification number)
  • Time Saving process if the name is unique and required documents are proper.
  • Incorporation possible in few days.
  • Only PAN / TAN and Stamp Duty to be paid while incorporation.
  • Resubmission is allowed on incorporation e-form SPICe, SPICe MOA, SPICe AOA.

Depending upon the choice and considering the risk factors applicant can opt for any aforementioned option either by applying for name application in RUN at first and then incorporation with the help of SPICe or apply for registation of company through  SPICe directly without filing name application.

Step 2: FILING OF SPICe form WITH REGISTRAR OF COMPANIES (ROC) within whose jurisdiction the registered office of the company is proposed to be situated, along with SPICe MOA and SPICe AOA.

INFORMATION ABOUT SPICE

  1. It is termed as E-Form SPICe.
  2. It deals with the single application for reservation of name, incorporation of a new company and/or application for allotment of DIN (Director Identification Number).
  3. Form can be filed without having DIN of director.
  4. Directors not having DIN cannot be more than three in number in the form. Maximum three Directors can fill up their respective details for filing application of allotment of DIN while incorporating a company.
  5. Once the eForm is processed and found complete, company would be registered and CIN would be allocated and PAN will be allotted on Certificate of incorporation. Also DINs gets issued to the proposed Directors who do not have a valid DIN.

STEPS OF FILLING UP THE FORM

Applicant shall fill up details in SPICe form as follows,

  1. To select one of the types of companies – (New Company or Section 8 company or Producer company or Part I company).
  2. To select one of the classes of companies- (Private or Public or One Person Company).
  3. To select Category as – (Company Limited by shares or Company limited by Guarantee or Unlimited company).
  4. To specify the Main division code for the industrial activity of the proposed company
  5. To specify authorised and subscriber equity and preference capital of company
  6. Registered address of company including PIN code.
  7. Name of Office of the Registrar of Companies in which the proposed company is to be registered
  8. Particulars of Proposed name of company , if already applied write down SRN ( Service Request number) of RUN ( Name application form) and pre-fill it, the system will automatically reflect the approved name or directly type the proposed name in SPICe form (if name is not reserved through RUN).
  9. Number of first subscribers to MOA and directors of company – a) Having Valid DIN b) not having valid DIN – Accordingly the system will pre fill the details.
  10. Specify number of shares in number.
  11. Specify the stamp duty to be paid electronically
  • Fill up information for applying PAN (Permanent Account Number) and Tax Deduction Account Number (TAN) which is mandatory. [From 1st February 2017 new SPICe form has been introduced under which an applicant can specify PAN / TAN details. It is made compulsory to fill up PAN / TAN details in SPICe form and upload the form along with SPICe MOA and SPICe AOA].
  • Fill up the details of first subscribers, name address, occupation, DIN numbers ( if they are directors) and attach Digital Signature Certificate of each subscribers.
  • The Witness of each subscriber has to attach his/ her Digital Signature certificate.

ATTACHMENTS

Following documents are required to be attached mandatory to SPICe form

  1. Registered address proof of company ( Copy of conveyance deed or sale deed)
  2. Utility Bill (not older than two months)
  3. DIR-2 ( Consent by first directors) along with Identity proof and address proofs
  • Declaration from the directors
  • Identity proof and address proof and PAN of proposed directors not having DIN.

ATTACHMENTS REMOVED FROM SPICe FORM :

Following documents are no longer required to be attached

  1. ID and address proof of subscribers if directors are subscribers as well.
  2. Nature of Relation and NOC from owner of place is not required.
  3. Memorandum and Articles of Association (if all directors are Indian Resident).
  4. Declaration by professional i.e. INC-8.
  5. INC-10 ( Declaration).
  6. Proof of Relation

Step 3: MEMORANDUM OF ASSOCIATION

SPICE form is required to be filed along with e-form SPICe MOA ( i.e. Memorandum of Association) and e-form SPICe AOA ( i.e. Articles of Association). Let us get more information about this form SPICe MOA and SPICe AOA.

What is SPICe MOA ?

  1. It is e-form of incorporation for specifying format of Memorandum of Association
  2. Pre fill the SRN of RUN and system will auto generate the approved name of company or directly type proposed name (if name is not reserved through RUN)
  3. An applicant shall select one Table from Table A to E.
  4. The object of the company on its incorporation and further objects shall be specified.
  5. Amount of authorised capital in numbers shall be specified
  6. Fill up the details of first subscribers, name address, occupation, allotted DIN numbers or PAN of directors, number of shares and attach Digital Signature Certificate of each subscriber.
  7. Digital signature certificate of number of subscribers and witness is necessary.

Step 4: ARTICLES OF ASSOCIATION

Along with SPICe and SPICe MOA, e-form SPICe AOA is required to be filed.

 What is SPICe AOA ?

  1. It is e-form of incorporation for specifying format of Articles of Association
  2. Pre fill the SRN of RUN and system will auto generate the approved name of company or directly type proposed name (if name is not reserved through RUN)
  3. An applicant shall select one Table from Table F to J.
  4. Applicant can modify the clauses of the Table.
  5. Fill up the details of first subscribers, name address, occupation, allotted DIN numbers or PAN of directors and attach Digital Signature Certificate of each subscriber.
  6. The Witness of each subscriber has to attach his/ her Digital Signature certificate.

Step 5: FILING OF E-FORMS WITH REGISTRAR OF COMPANIES (ROC)

UPLOADING PROCESS

  1. Visit to www.mca.gov.in
  2. Log in with password and upload form SPICe along with SPICe MOA and SPICe AOA.
  3. Certificate of Incorporation will be generated with PAN after receipt of approval from the Government and TAN shall be sent to address of company separately by email.

Step 6: PAYMENT OF ROC FEES AND STAMP DUTY

After filing of documents online, we need to make payment of Government fees and Stamp Duty electronically which is based upon the Authorised Capital of the Company.

Step 7: VERIFICATION OF DOCUMENTS AND FORMS BY ROC OFFICE

After payment of all stamp duties and government fees, Central Registration Centre (CRC) would verify all the documents and forms.  They may suggest some changes to be made in the attachments or form itself. We need to make necessary changes accordingly. Only Two re-submissions are allowed for SPICe form.

Step 8: CERTIFICATE OF INCORPORATION

After verification by CRC and satisfied by them, it shall send soft copy of Certificate of Incorporation via email along with PAN and TAN.

As part of the Green Initiative by the MCA (Ministry of Corporate Affairs), few Certificates including “Certificate of Incorporation” are now issued only in the electronic format i.e. soft-copy (having digital signature of RoC Registrar).  Once the Incorporation Certificate is received, Company can start it’s operations.

How to validate a Digital Signature on the Incorporation Certificate? 

The Certificate of Incorporation (CoI) received in the .pdf (which opens in “Adobe Reader”) format, may display “Validity Unknown” for the Digital Signature. Please follow the steps mentioned  here to validate the same.



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The information / articles & any replies to the comments on this blog are provided purely for informational and educational purposes only & are purely based on my understanding / knowledge. They do not constitute legal advice or legal opinions. The information / articles & any replies to the comments are intended but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as a legal advice or an indication of future results. Therefore, I can not take any responsibility for the results or consequences of any attempt to use or adopt any of the information presented on this blog. You are advised not to act or rely on any information/article contained without first seeking the advice of a Practicing Professional.

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1,163 thoughts on “Procedure of Company Formation (Private Limited Company), in India.

  1. Good article. Most helpful for someone like me who is not an accounting professional but interested to know about registering private limited company. Thanks

  2. Hello,

    I need to know whether obtaining FSSAI license is mandatory for a food manufacturer before opening a company or it can be obtained after opening the said company?

  3. Hii Madam,

    Already we have incorporated Private Limited Company(Badavath Export & Import Pvt Limited). Please guide me on the following:

    Increase of authorised Capital : For this SH-7 everything was ready. Let me know the procedure to file SH-7 I.E, Do we need to give Notice of the same to ROC in 30days advance?

    At present Two directors were there and now a foreigner want to invest and he want 49% share for this do we need to make changes in MOA. If not what to do?

    ThankYou Madam.

    • File SH-7 for increase of nominal capital with ROC within 30 days of holding of general meeting. If foreign subscriber wants to invest more money then after increase of nominal capital, and remittance of application money from foreign subscriber, allot shares to him and report to RBI within 30 days about advance remittance and file FCGPR after issue of share certificate to foreign subscriber. No need to amend MOA page.

  4. I am a type of person who used to explore knowledge, I found it’s article full of knowledge and useful to the people, who are looking for New company registration in India

  5. Great information regarding registration and find your blog much valuable and useful to my work.

    Thank you for sharing

  6. we are 4 partners and want to start five business 1) Call Center 2) Attendance services 3 on line home decor Business 4) Building Material Trading 5)Bar and Cafe with name “360 SMARTECH”
    PLS SUGGEST HOW TO REGISTER OUR BUSIBESS.

  7. I wish to register a pvt. ltd. company. As per your article steps Can I register myself or do I need any service provider to do it for me and how much the approximate cost for 2Dir, 2 shareholder, 1lac capital , bangalore location.

  8. The article is helpful and the steps are beneficial for us.Thankyou for sharing with us.

  9. hello madem,

    how to prepare MOA & AOA. do you have any format format.for preparing MOA&AOA with little changes to that format.
    i am CA article student
    please help me in this regard

  10. Dear

    I already open pravate limited company.

    Now I want add other buiness same company is it possible

  11. Hello madem,
    I want to start my own business. I have to register new company, please guide me for the same( Registration charges, fees, etc)

  12. Mam, its really a great job.
    very informative

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