Company Incorporation in India

In India, various types of business entities can be established, each with its own legal structure, ownership, liability, and compliance requirements. The most common types of business entities in India include:

1. Sole Proprietorship:
   • A sole proprietorship is the simplest form of business entity, owned and operated by a single individual.
   • The owner has unlimited liability, meaning they are personally responsible for all debts and obligations of the business.
   • No formal registration is required, but the proprietor may need to obtain licenses or permits depending on the nature of the business.
2. Partnership Firm:
   • A partnership firm is formed by two or more individuals who agree to share profits and losses of the business.
   • Partnerships can be registered or unregistered, but registration offers legal recognition and certain advantages.
   • Partners have unlimited liability, and the firm is taxed as per the individual income tax rates of the partners.

1. Limited Liability Partnership (LLP):
   • An LLP is a separate legal entity formed by two or more partners, combining features of a partnership and a company.
   • Partners have limited liability, meaning their personal assets are protected from business debts and liabilities.
   • LLPs are governed by the Limited Liability Partnership Act, 2008, and require registration with the Ministry of Corporate Affairs (MCA).
2. Private Limited Company:
   • A private limited company is a separate legal entity owned by shareholders, with a minimum of two and a maximum of 200 members.
   • Shareholders have limited liability, and the company's liability is limited to its assets.
   • Private limited companies are governed by the Companies Act, 2013, and require registration with the Registrar of Companies (ROC).
3. Public Limited Company:
   • A public limited company is a separate legal entity with a minimum of seven shareholders, and there is no maximum limit on the number of members.
   • Shares of a public limited company can be traded publicly on stock exchanges.
   • Public limited companies are subject to stricter regulatory compliance requirements compared to private limited companies.
4. One Person Company (OPC):
   • An OPC is a hybrid form of business entity introduced to facilitate single-person entrepreneurship.
   • It allows a single individual to establish a company with limited liability, similar to a private limited company.
   • OPCs are governed by the Companies Act, 2013, and require nomination of a nominee director.
5. Producer Company:
   • A producer company is formed by primary producers engaged in activities related to agriculture, horticulture, animal husbandry, or any other primary produce.
   • It is registered as a company under the Companies Act, 2013, and provides benefits to its members in terms of better bargaining power, access to credit, and marketing opportunities.

1. Obtain Digital Signature Certificate (DSC):

   The first step is to obtain Digital Signature Certificates (DSCs) for all proposed directors of the company. This is necessary for digitally signing documents during the incorporation process.

2. Apply for Director Identification Number (DIN):

   Directors must apply for Director Identification Numbers (DINs) from the Ministry of Corporate Affairs (MCA). DIN is a unique identification number required for directors to incorporate a company.

3. Name Approval:

   Choose a unique name for the company and apply for name approval through the MCA's RUN (Reserve Unique Name) web service. The proposed name should comply with the naming guidelines prescribed under the Companies Act, 2013.

4. Drafting of Memorandum of Association (MoA) and Articles of Association (AoA):

   Draft the MoA and AoA, which define the constitution, objectives, and internal regulations of the company. These documents must be prepared in accordance with the format prescribed under the Companies Act, 2013.

5. Incorporation Application Submission:

   Prepare and submit the following documents to the Registrar of Companies (ROC) electronically:

   • Memorandum of Association (MoA)
   • Articles of Association (AoA)
   • Form SPICe (Simplified Proforma for Incorporating Company Electronically) - INC-32
   • Form INC-33 (e-MoA) and Form INC-34 (e-AoA) if applicable
   • Declaration by directors and subscribers
   • Address proof, identity proof, and photographs of directors and subscribers

1. Payment of Fees:

   Pay the requisite incorporation fees online as per the Companies (Registration Offices and Fees) Rules, 2014.

2. Verification of Documents:

   The ROC verifies the submitted documents and ensures compliance with the provisions of the Companies Act, 2013.

3. Certificate of Incorporation:

   Upon verification of documents and payment of fees, the ROC issues a Certificate of Incorporation. This certificate serves as conclusive evidence of the formation of the company.

4. PAN and TAN Application:

   Apply for Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) with the Income Tax Department.

5. Bank Account Opening:

   Open a bank account in the name of the company and deposit the initial share capital.

6. GST Registration:

   Register for Goods and Services Tax (GST) if the company's turnover exceeds the prescribed threshold.

7. Compliance Requirements:

   Fulfill ongoing compliance requirements, including statutory filings, appointment of auditors, conducting board meetings, and maintaining statutory registers.