01.01.13
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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.

***** Updated as on 28th April 2013.

Minimum requirements for the Private Limited Company

  • Minimum 2 Directors
  • Minimum  2 Shareholders
  • The directors and shareholders can be the same person
  • Minimum Share Capital shall be Rs. 100,000 (INR One Lac)
  • DIN (Director Identification Number) for all the Directors
  • DSC (Digital Signature Certificate) for one of the Directors

FAQ’s

Legal aspects to consider

Activities after Formation

Steps Involved

Step 1. Get the DIN (Director Identification Number) & DSC (Digital Signature Certificate)

What is a Director Identification Number (DIN)?

Director Identification Number (DIN) is a unique identification number issued by the Ministry of Corporate Affairs (MCA), for an existing director or a person intending to become a director of a company.

Documents required for DIN Application in case of Indian Applicant 

a) Address Proof: Copy of passport / driving license having pin code / electricity bill / telephone bill / Election card / Bank statement certified by Bank Manager (should not be older than 30 days), also PIN code must be mentioned on the address proof.

b) Identity Proof: Copy of PAN Card  (Income Tax Permanent Account Name is mandatory in case of Indian National and in such cases applicant details should be as per Income tax PAN)

c) One Passport Size color photograph

d) Email Address of the Applicant *

e) Mobile/Cell Number *

f) Current Occupation *

g) Educational qualification *

h) Affidavit to be signed by an applicant * (It shall be notarized on Rs. 10 stamp paper) vide Ministry of Company Affairs Notification dated 25.12.2012.

Notes:

1. All the documents require “Self attestation”.

2. In case of Foreign national or NRI, passport copy is must and identity proof and address proof should be notarized by an Indian Consulate of home country. The Address proof  should not be older than 1 year from the date of filing of form.

3. While making DIN Application following details are mandatory :

First Name, Middle Name, Last Name, Details of father of an applicant (even in case of a married woman)

4. In case of a Married woman, copy of the Marriage Certificate is required (If DIN needs to be in the “Changed Name”)

5. Refer “Common Causes of DIN Rejection” (http://www.abhyankarcs.com/docs/DIN_CommonCausesRejection.pdf)

6. * items are mandatory field of DIN 1 application 

What is a Digital Signature Certificate (DSC)?

Digital Signature Certificate (DSC) is the digital equivalent (i.e. electronic format) of physical or paper certificates. Examples of physical certificates are drivers’ license, passport. Certificates serve as proof of identity of an individual for a certain purpose; for example, a driver’s license identifies someone who can legally drive in a particular country. Likewise, a digital certificate can be presented electronically to prove your identity, to access information or services on the Internet or to sign certain documents digitally. Since MCA accepts electronic submission of Forms on its website the DSC is mandatory for all the users.

Documents required for obtaining DSC

a) Digital Signature Certificate application Form (duly signed by an applicant). An applicant is required to sign across the photo.

Download the DSC Application Form

b) All other documents are same as required for the DIN Application

Note : All the documents require “Self attestation”

Step 2. Search for the Company Name availability

The Promoters have to provide at least 6 names in the order of their preference/priority. The Promoters can themselves search for the available names by visiting the MCA Website: Check Name Availability 

Promoters may also search for the Trademark using http://ipindia.nic.in/ Website Check Trademark  (If they are going to apply for the Trademark, in future)

Step 3. Application for the Name availability

After drafting of Main Object of the proposed company, need to file e-Form 1A with Registrar of Companies for name availability. The Applicant needs to give 6 proposed names in preference/priority along with their meaning and significance of each word.

Note: The name availability guidelines issued by MCA should be followed.

Step 4. Drafting of Memorandum of Association (MOA) & Articles of Association (AOA)

What is a Memorandum of Association?

Memorandum of Association covers fundamental provisions of the company’s constitution. It covers main object and other objects of the company.

What is Articles of Association?

Articles of Association contain rules and regulations governing the internal management of the company. It is a binding contract between company and its members and members among themselves defining their rights and duties.

After name approval from ROC, the next step is to draft MOA & AOA. The subscribers need to specify Name, Address, and Occupation in their own handwriting & sign the subscription pages of MOA & AOA.

If one of the subscribers is a Foreign National or NRI, the subscription page where he/she is supposed to sign on the Memorandum and Articles of Association, should be notarized by an Indian Consulate of Home Country.

Step 5. Filing of e-forms with ROC (Registrar Of Companies)

Following Forms to be filed/uploaded on the MCA Website

a) Form1 (Incorporation document), along with MOA & AOA

b) Form 18 (For Notice of situation of the Registered office)

Attachments to e-form 18:- (Refer Notification dated 25.12.2012)

1. Proof of Registered address shall be attached to e-form 18.

2. No Objection certificate from the director if the registered office is owned by the director (not taken on lease by the company)

3. A proof that the company is permitted to use the address as the registered office of the company if the same is owned by any other entity /Person (not taken on lease by the company)

For Form 18, a certification from CA/CS/CWA (in Whole Time Practice) shall be required that he/she has personally visited the new address and verified it and given opinion that the premises are indeed at the disposal of the applicant company.

c) Form 32 (Notice of Directors with their personal details)

Step 6. Payment of ROC Fees & Stamp Duty

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

Please refer to the “Fee Calculator” link on the MCA Website for the ROC Fees.

To know more about each Form, you may checkout the options “Company Forms Download” on the Left Panel on MCA website or just checkout following URL. This URL also display the links to Instructions Kit (describing how to fill up the specific forms).

http://www.mca.gov.in/DCAPortalWeb/dca/jsp/mydca/home/StaticFramePage.jsp?para1=/MCA21/dca_html/downloadeforms/Download_eForm_choose.html

In order to know the Total statutory fees, note down the fee for the following forms from the dropdown :

Form1A, Form1 (select option “Incorporation of other companies”), Form 18 (select option “Shifting of Registered Office within ROC”, even if it’s not a shifting), Form 32.

Click on the “Calculate Fee” to get the individual form fees & add up all the individual form fees and the “Stamp Duty”. Please refer to the “Stamp Duty” link on the MCA Website. Note : Stamp Duty varies as per the “State” in which the Company is to be registered.

Step 7. Verification of documents / forms by ROC

After payment of all stamp duties and ROC fees, ROC scrutinizes all the documents and forms.  Now Form18 and Form32 are approved immediately through “STP” (Straight Through Process) and Form1 is scrutinized by ROC in detail. In case of any objections/queries raised by ROC, resubmission of forms may also require.

Step 8. Issue of Certificate of Incorporation by ROC

Once all the Forms are duly approved by ROC, the digitally signed “Certificate of Incorporation” is emailed to the Directors.

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. softcopy (having digital signature of ROC Registrar).  Once the Incorporation Certificate is received, Company can start it’s operations.

Note: The Certificate of Incorporation 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.

 

Disclaimer:
 The information/articles on this blog are provided for informational and educational purposes only. They do not constitute legal advice or legal opinions. 

The information/articles are intended, but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as an indication of future results. 

You are advised not to act or rely on any information/article contained without first seeking the advice of a Professional.

If this article helped you in any way, please recommend. Thanks!!

Related posts:

  1. Other Registrations after Company Registration / Formation / Incorporation
  2. Form 18 Major changes/MCA Notification (Situation of Registered Address of the Company)
  3. Procedure to change Company information/Name of Company
  4. Commonly asked questions/FAQ’s on Company Formation Procedure in India
  5. Procedure of LLP (Limited Liability Partnership) Formation

52 thoughts on “Procedure of Company Formation (Private Limited Company), in India.”

  1. Dear Mam,
    We have shifted our registered office in the same city. Can we get a new incorporation certificate with new address. Our new registered office address is reflecting in the master data.

    thanking you in anticipation of your quick response.

    Reply

    • Dear Mrs. Jolly,

      You cannot get new incorporation certificate with new address. You can keep copy of master data for your records.
      Thanks.

      Reply

  2. Hello Ms. Meenal,

    came across your blog while browsing some information, very helpful professional advice is been provided, thanks,

    my question is that i am incorporating a new company with one Indian and one Foreign Director, I have received the DIN no., What attestations and care should be taken in Subscribers column by the Foreign Director, Whether the whole MOA , AOA & subscribers column has to be attested in all the pages by the Indian Consulate in the Local Country of the Foreign Director.

    Thanks in Advance.

    Reply

    • Whether foreign director is also one of the subscribers? If yes, then only subscription page of foreign director needs to be notarized from home country (and not from Indian consulate since he is not NRI).
      In case of foreign subscriber notarization would be from home country. While attestation, foreign director may require to show /submit whole set of MOA/AOA for getting attestation on subscription sheet.

      If foreign director visits India then attestation can be made by any professional.

      Hope this answers your question.

      Reply

      • Appreciate for your faster response,

        you have suggested that the Foreign Director cum subscriber needs to get the attestation from the notary of the home country, One Practical problem here is that the Director is from spain and to do the notary the whole of MOA & AOA has to be translated in Spanish language ( as informed by the Director) and then to translate back to English language from the approved translator to get the MOA & AOA approved in the ROC of India.

        Kindly guide us as per the above situation.

        Thanks Amit

        Reply

        • For incorporation of company, if foreign national is director and subscriber of Proposed company, while submitting MOA/AOA with ROC of India, the subscription page (i.e. where the subscriber undertakes to subscribe no. of shares giving his full details, father’s name, address and occupation, signature) should be notarized from Home country. In your case, you shall be required to obtain notary on subscription pages of MOA and AOA which will be one in Spanish and other would be the translation of Spanish into English. You need not require to obtain whole set of MOA/AOA notarized, only last pages i.e. subscription pages shall be notarized.
          Along with that the passport as identity proof also needs to be notarized. In this case also if it is in Spanish Language you should get translation notarized.

          As per the procedure RoC would need the whole set of MOA/AOA in Spanish as well as in English (only last pages notarized).
          Hope this resolves your question.

          Reply

          • Dear Madam,

            We are planning to incorporate a Company for manufacturere, processors and dealers in earth and rock drilling equipments.
            My querry is
            - whether foreign nation be one of the subscriber in adiition to indian company.
            - our name is approved by the MCA in which we shown him a a proposed director can he be co-promoter to the tune of around 20%.
            - if yes what is the procedure to be followed and documentation required.
            - kindly suggest procedure from FIPB/RBI point of view.

            Thanking you in advance.

            Kindly reply with procedure to be followed.

            Regards,
            Prashant Mistry

          • Yes, Foreign National can be one of the subscriber in addition to Indian Company. He can be co-promoter.
            Regarding procedural and documentation part,it will require elaborate analysis & consultation, hence would be out of scope of this blog.
            Kindly get in touch with me, if you need further consultation.
            Thanks.

  3. Very much detailed and informative explanation

    Reply

  4. my pvt ltd established in sep, 2012 is having registered office in india, but it provides all the services in abroad and all the employees are also form india but provides services there only,
    so i want to know what would are the compliance to be followed as per
    (i) ROC
    (ii) service tax
    (iii) tds

    Reply

    • Please get in touch with me since the answers would be elaborate & out of scope of this blog.Thanks.

      Reply

  5. Question: I am an NRI. Together with an american we would like sell some products in the Indian market. Since both of us are not residents of India can we form a LLP? If not we go the Pvt. Ltd. way. Are there any other options to form an entity with no personal liability.

    Also I would like to understand the role of a director in a Pvt. Ltd.

    Thanks a lot. Your blog is very informative!!

    Reply

    • If both of you are NRI, for forming LLP one partners should be resident of India if others are NRI.

      In case of Pvt Ltd company, both NRI can form company in India without the condition that one should be resident of India.

      Following is a role of director in a Pvt Ltd Company :

      1) To manage the affairs of the company and control its business
      2) To make major decisions – like allotment of shares/ increase of shares/ declare dividend / invest funds/ borrow money from banks
      3) To sign and execute important deeds, documents, contracts, cheques
      4) To operate bank account of company
      5) To call meetings
      6) To adopt annual accounts

      Reply

  6. Hi Meenal,

    How to check the name availability ?

    Aatish

    Reply

  7. excellent formation details Mrs. Meenal. Thanks a lot. My question is whether a person can be appointed as a director on a remuneration basis without any stake in the company and whether it is valid. Awaiting your reply. Thanks & regards.
    d.baskaran.

    Reply

    • Yes, a director can be appointed on a remuneration basis without his/her stake in the company. In that case he/she will be a director only and not a Shareholder.

      Reply

  8. Nice & informative blog

    Reply

  9. Can one person form the company & wat is the procedur?

    Reply

    • I believe you are referring to the Companies Bill 2012 in which there is a provision that only one person can form a Private limited company (called OPC i.e. One Person Company).
      Since the Companies Act 2012 is not yet been implemented currently you can not think of forming it under the Companies Act.
      As per Companies Act 1956, minimum requirement of persons to form a Private limited company is 2.
      I hope this satisfies your question.

      Reply

  10. Pl. tell me the following.
    For Private limited co.
    1. can members/ shareholders be increased after incorporation?
    2. Can authorised capital be increased after incorporation?
    3.Can members increase their share holding i.e add money later on?
    4. can company office address given as residential address? i.e is it difficult to change address later on?

    Reply

    • For all your questions, the answer is “YES”. There is no difficulty for change of address later on. The procedure and time taken may vary depending on the new location.(i.e. from one place to another in same city or from one state to another state).
      Regards,
      FCS Meenal

      Reply

  11. very nice explanation that too in most simple language.

    Plz suggest the procedure by which MOA & AOA will be subscribed by NRI

    Reply

    • MOA will contain Details of the name of subscriber, his/her father’s/husband’s full name, address and occupation, number of shares held by him/her and his/her signature, date, place. Witness will also mention the same details in the witness column.

      AOA will contain above details except the number of shares.

      Details must be handwritten by each subscriber.

      Reply

  12. great job….really informative.

    Reply

  13. Very good and handy explanation.

    Reply

  14. Recently heard that an Individual can establish a One Man Company or One Person Company (OPC). Is it possible now to Register one?

    Reply

    • Yes, you are right, an Individual can establish a One Man Company or One Person Company (OPC) as per Company Bill 2012.
      Just now Company Bill 2012 has been passed but Act has not been implemented yet.
      You have to wait till New Companies Act, 2012 gets implemented.

      Reply

  15. wonderfull!!
    got ansrs to my all qestions

    Reply

  16. exact and accurate.

    Reply

  17. Excellent job…………. company formation all steps are clearly defined here and after formation information. your blog clearly explained sole proprietorship and benefits of pvt ltd.

    Reply

  19. As per new norms for incorporation or for change of registered address of CO. address proof is required, i want to know, What are the documents accepted by ROC as an address proof for incorporation?
    1) if office is rented?
    2) if office is owned?

    Regards
    Kumar Rajeev.

    Reply

    • Here you go..

      1) If office is rented – Lease Agreement/ Electricity bill/ Index II/ Tax receipt (All should belong to owner)
      2) If office is owned – Electricity bill / Index II /Tax receipt

      Thanks,
      CS Meenal

      Reply

  20. nice blog for company registration process

    Reply

  21. such a brief explanation step by step even the comment’s and their replies are also very valuable. Thanks for your kind explanation

    Reply

  22. Very nice and clearly discribed.
    Regards

    A.P.Singh

    Reply

  23. Very nicely narrated and free from ambiguity.
    I vouch, that it is very handy and ready reference for a rational person. Looking forward your assistance in the same. Do contact ASAP

    Best Regards,
    Yogesh Manjrekar

    Reply

  24. Excellent explanation meenal…Thanks :)

    Reply

  25. very simple excellent explanation. I have a doubt. while registering a company, does a person needs to show a physical space / address where the company is located? because my friend doesnt know whether register before or after setting up a physical things.. could you please explain me?

    Reply

    • Hi Vignesh,
      Thanks for your kind words. Before/while registering a company, a person need not show a physical business space/address. One can use his/her residential address as a Registered address. Once the company is registered , as per provisions in the Companies Act the Registered Address can be changed to the actual business address.

      Reply

      • Thanks you sir for your kind explanation. As per the above points it’s mentioned “Minimum Share Capital shall be Rs. 100,000 (INR One Lac)” . For this one, the person needs to show a cash to government on bonds / physical things like PC’s for ex.? could you please explain about this?

        Reply

        • The “Minimum Share Capital” means the Minimum Paid Up Capital. This Paid Up Capital has to be deposited in the Company’s Current Account ONLY AFTER Incorporation of the Company, so you do not need to have that amount ready before/while registering the Company.

          Reply

  26. Hello

    I would like to know if there is any benefit for the firm if we register as pvt ltd, is there any added advantage? Currently its under sole proprietorship.
    Your reply would be really valuable.

    Thanks
    regards
    Nihal

    Reply

    • Hi Nihal,

      Sorry for the delayed reply.

      Definitely there are many advantages in Registering a Private Limited Company.
      I can describe them as follows :

      1. The Private Limited Company has a legal existence seperate from it’s members/directors.

      2. From the business point of view, the Private Limited company will get more recognition and acceptance than a Proprietorship firm.

      3. A customer feels more comfortable as it creates a confidence among them since they deal with the legal entity. For the Company also it’s beneficial as it can negotiate with the Customer with more confidence. Private Limited Company can engage in bigger projects by doing association/Joint ventures with other businesses/Companies by making Contracts/agreements.
      Just as an example, if you are doing a Software freelancing, you may be getting some small projects but if you incorporate a company, the chances of getting bigger projects increases since you can bid for them as a Company, also the other party feels more comfortable dealing with you as it can make any legal contracts/agreements with you as a Company.

      4. From liability point of view, the most advantage of forming a company is that it has a limited liability. As a sole proprietor, the personal assets can be at risk in case of failure of a business. In case of Company, if it becomes insolvent/wind up, personal assets of directors and shareholders are not affected, all the debts will be cleared from the company’s assets.

      5. In a Proprietorship firm the individual has to arrange for the Capital from his own Pockets, but in case of a Private Limited Company, the burden of Capital arrangement gets divided (unless the Partners are from the same Family/Household) as different people bring in their own contribution thus it also reduces the risk/liability to the extent of the Share each member has brought in.

      6. The Company has a perpetual succession. Meaning even if the individual director retires/dies the Company still exists. i.e. could be run with other members/directors.

      7. The Income tax is directly charged on income of proprietor, and in case of company, the tax is charged on company’s profit and not on individual income of directors/ members.

      I would also like to note that many people think that there are few operational costs involved For the Private Limited Company e.g. Incorporation Fees, Consultant Fees, Other Registrations (Shop Act, PAN/TAN, Digital Signature, Importer Exporter Certificate (applicable, if any)), Maintaining Statutory record/annual filing with the Government.

      But after looking at the list of advantages in forming a Private Limited Company, i would say such costs are minimal & hence i may suggest to form a Private Limited Company.

      Best Regards,
      CS Meenal Abhyankar

      Reply

  27. very nice explanation, in a simple language.
    btw, how many days it takes to complete this whole process?
    thanks – Satya

    Reply

    • Thanks for your comment.
      Once all the documents are submitted to ROC, if no further query arises, it can be registered within 15-20 days.

      Reply

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