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Starting a Business in India: Company Formation

Simon Colwill - December 16, 2021 - 0 comments

Starting a business in India, more officially known as incorporation, is carried out mostly via India’s Ministry of Corporate Affairs website. The MCA portal offers all the various tools, application forms and documentation you will require to incorporate a new company in India and ensure you are abiding by all the relevant laws and regulations. 

To help you conduct the process seamlessly and receive your Certificate of Incorporation to commence the operation of your business, MSC Notaries have broken down the process involved. Should you need your documents attesting, we offer a range of professional business notary services to UK businesses including the certification of documents required when setting up a company in India.

How to incorporate a company in India

When setting up a business in India, you will need to abide by the following steps and processes. 

Business entity

Before you start to fill in any type of application forms or documentation, you will need to establish the type of business you are setting up. It’s important to do this in advance of your application as it will determine various key aspects such as the minimum number of shareholders or Directors required and the forms that will need submitting during the application to become a registered company. 

Registered Companies are registered under India’s Companies Act and are only formed once a Certificate of Incorporation has been granted by the Registrar of Companies. Fail to register your company and obtain a Certificate of Incorporation before commencing operation, and your company won’t be covered under the provisions of the Companies Act. 

It’s important to note that if your company is being incorporated through a specific Act of Parliament or piece of legislation, such as for public railways or waterways, you won’t need a Certificate of Incorporation. 

Before commencing the process of registering your company, make sure you are aware of whether your company is private, public, foreign, or government, and the relevant legislation involved for each. 

The type of business entity you are setting up affects how many directors are required, for example:

  • Private Limited Companies (LTDs) require a minimum of two people to act as Directors or Partners at the time of incorporation. You are also limited as to how freely you can transfer shares across the business. 
  • Public Limited Companies (PLCs) require a minimum of seven shareholders and three Directors. You are also required to open your company for public subscription and there is no maximum on the number of shareholders.
  • One Person Companies (OPCs) require and are limited to having only one member of the company. This person can nominate one person to become a shareholder in the incident of their death or incapacity to run the business. 
  • Limited Liability Partnerships (LLPs) were only introduced in India through the Limited Liability Partnership Act in 2008. LLPs require a minimum of two partners, with no maximum limit on members. Profits and losses are shared among partners as agreed in a partnership agreement.

Company name 

You will also need to decide on a company name and check the availability online which you can do via the MCA’s ‘Check Company Name’ service. If you are setting up an LLP, you can also check your name availability via the LLP company name tool. 

If you are concerned about your proposed name being taken before you can obtain your Certificate of Incorporation, you can also reserve a company name via the Reserve Unique Name (RUN) service online. The SPICe+ form used to apply for incorporation, however, does let you submit the section regarding reserving a company name separately from the bulk of your application, so you can do so before filling out other details. 

Incorporation Certificate application

Certificates of Incorporation are provided by the Ministry of Corporate Affairs as proof of the constitution of a company. As of February 2020, applications for incorporation are handled via an integrated web form known as SPICe+ (Simplified Proforma for Incorporating Company electronically). The SPICe+ form essentially simplifies what would otherwise involve around 11 separate services into one electronic form which can be completed via the MCA portal, an effort from the Government to make it as accessible and simple as possible to start a business in India. 

Once you’ve created an account for your SPICe+ webform, you will be assigned an application number to use as a reference for your specific form until it has been submitted. 

The SPICe+ form includes all the relevant services and documentation required to incorporate and register your business ready for operation, such as Director Identification Numbers (DINs), Permanent Account Number (PAN), and Tax Account Number (TAN) right through to opening a mandatory company bank account.

Director Identification Number (DIN)

A Director Identification Number (DIN) is assigned to every director of the company being incorporated. Previously, Directors of new companies were required to apply via a DIN-1 form for a provisional DIN, however, this is now all handled via the SPICe+ form only. 

Permanent Account Number (PAN)

PAN numbers are ten-digit unique numbers issued by the Income Tax Department.

Tax Account Number (TAN)

The Government of India issues Tax Deduction Account Numbers (TAN) to all businesses required to pay tax. 

Digital Signature Certificate

Once you have completed all stages of your SPICe+ form, you will need to download these and have the PDFs digitally signed to identify and certify the Directors. Digital Signature Certificates (DSCs) must have been carried out by an Indian Certifying Authority, meaning those registered with the ministry. You will need your application number, ID, and proof of permanent address to obtain a DSC, which can then be uploaded with your documents to your web form and sent off for final approval. 

Digital signatures must be provided by all Directors and be validated and signed by an approved authority for your application for incorporation to be approved. 

Notarisation and attestation of your documents

If you are not a resident of India and are planning to incorporate a company, you will also need to be aware of the laws and regulations for having your documents attested. 

The requirements are as below:

  • If you are a resident of a country part of the Commonwealth, you will need a Proof of Residence notarising by a notary public of your country
  • If you are a resident of a country that is a party to the Hague Apostille Convention 1961, you will need a Proof of Residence notarising and apostilled by a notary public of your country
  • If you are a resident of a country that is neither of the above, you will need a larger number of specific documents attesting by a notary public and authenticated by the Indian Embassy as per the MCAs guidelines

MSC Notaries can provide notarisation and apostille services for the following documents which are associated with incorporating a company in India:

  • Digital signature certificates
  • Memorandum of association
  • Articles of association
  • Board Resolutions
  • Form DIR-2 ‘Consent to Act as a Director of a Company’
  • Form INC-10 ‘verification of signature of subscribers’
  • Form INC-09 ‘Affidavit’
  • Declarations
  • Undertakings

We offer highly competitive fees and very efficient timeframes. Enquire today for a specific quote based on the volume of documents that require attesting and the timeframe you require these in. 

Certificate of Incorporation granted

Once you have enclosed all the required documents for your SPICe+ web form, you can submit your application for final approval. India’s Registrar of Companies will then verify your application and may suggest edits to any documents. Once all edits have been made and approved, you will be granted your Certificate of Incorporation which will be sent to the email you provided when applying. 

Commence operation

Once your certificate has been issued you can officially commence the running of your company. There are, however, several other documents and certificates to be aware of that may be required depending on your business type and plans, such as the Shops and Establishment Registration, Profession Tax Certificate, and National Employees Provident Fund. 

Enquire about notarisation services for your Certificate of Incorporation

MSC Notaries have been helping businesses to start businesses overseas for decades. We provide professional, seamless, and quality notary, apostille, and digital signature services to businesses across the UK and even offer mobile services for those who are unable to visit us at our central London offices. 

Enquire today for a specific and tailored quote for your business’ needs and timeframes.

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