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Procedure Involved To Start A Company
Procedure Involved To Start A Company
in India
Posted by kumaran on September 6, 2006
This information will be useful for those who are looking in a nutshell the steps involved to
start a Private Limited company in India
1. First and foremost identify the Directors of the Company. Minimum of two directors need
to present and Maximum of 8 is allowed.
2. All Directors should have DIN (Directors Identification Number). If you do not have one
you can apply DIN online
at www.mca.gov.in. FAQ on DIN http://www.mca.gov.in/MinistryWebsite/dca/faq/faq1.html
Documents required for DIN
3. Once you have got your DIN then you need to apply for Company name. You need to go
with 5-6 names in the order which you prefer.If the name is not available then they go to the
next one in the order you have provided.
4. You need to apply online for the name availability . You need to Fill in Form 1A. Forms
are avilable at this
location.http://www2.mca.gov.in/MinistryWebsite/dca/downloadeforms/eformTemplates/103
0-Form1A_help.zip
5. Once you have got your name approved you have to apply for the Incorporation of
Company. For this you
will have to prepare Memorandum of Association which will detail what the company;s
operations the first list of directors
who are going the be in the board need to be defined in this document. This should be applied
along with Form 1
http://www2.mca.gov.in/MinistryWebsite/dca/downloadeforms/eformTemplates/1022-
Form1_help.zip. Ocne this has been approved make atleast 10-15 copies of your Certificate
of Incorporation and Memorandum of Association and have it in a booklet form.
6. Once your company has been incorporated you can open a Current account in any of the
leading banks
for carrying out your operations. You will need to submit a copy of Certificate of
Incorporation and Memorandum of Association along with Borad resolution to open the bank
account.
7. Thenyou need to apply for TAN and PAN for the Company
https://tin.tin.nsdl.com/pan/form49A.html
https://tin.tin.nsdl.com/tan/form49B.html
8. If your services are in Software related area you can apply for STPI license which will give
you certain benefits
like Company need not pay tax for 5 years, there will be no import or expurty duty levied on
software/hardware,
You will get office spaces at lower rates at STPI units. These are few of the benefits of
becoming an STPI member.
All this you can do on your own or you can outsource these to professional auditor. We did it
through Auditor and it took almost three weeks (Upto Step 7 excluding STPI) and all
charges(excluding sTPI) would approximately cost you Rs.25,000.
I am not sure how much it would cost if you do it on your own. I read in one of the blogs that
in Delhi the whole
process was completed in 30 minutes after the e-Governance was launched.
Good Luck and If you need more information or any guidance drop in a mail.
Obtain a Tax Account Number (TAN) for income taxes deducted at 8 15*
source from the Assessing Office in the Income Tax Department
Register for value added tax (VAT) before the Sales Tax Officer of 10 12*
the ward in which the company is located
Totals: 14 40
Note: Procedures sometimes take place simultaneously. Instances of this are marked with an asterisk (*). The
above procedures and timings are indicative for a typical big city in India where all the required documents are
ready with the promoters. The actual time and procedure may vary with city and state and the nature of business.
SPECIAL NOTE
NEW DIRECTOR REGISTRATION REQUIREMENTS IN INDIA
2. A Registered Office: This need not necessarily be the same address as the business is
conducted from. Quite frequently the address used for the registered office is that of
the firm's solicitor or accountant. This is the address, through, where all official
correspondence will go.
4. Share Capital: The company must be formed with a stated, nominal share capital
divided into shares of fixed amounts. Small companies are frequently formed with a
nominal share capital of Rs.100.
8. Auditors: Every company must appoint a qualified auditor. The auditor's duty is to
report to the treasurer whether or not the books of the company have been properly
kept, and that the balance sheet and profit and loss account presents (or doesn't
present) a true and fair view of the company's affairs and complies with the
Companies Act. Auditors are appointed or re-appointed at general meetings at which
annual accounts are presented, and they hold office from the conclusion of the
meeting until the next general meeting.
9. Accounts: The Companies Act lays down strict rules on accounting. Every company
must maintain a set of records, which show the financial position at any one time with
reasonable accuracy. The accounts comprise a profit and loss account and balance
sheet with the auditors' and directors' reports appended. A new company's accounting
reference period begins on its incorporation and runs until the following 31st March -
unless the company notifies the registrar of companies otherwise. Within ten months
of the end of an accounting reference period, an audited set of accounts must be laid
before the shareholders at a general meeting and a set delivered to the registrar of
companies.
10. Registers, etc.: In addition to the accounts books, companies are required to have: a
register of members and share ledger; a register of directors and secretaries; a register
of share transfers; a register of charges; a register of debenture holders; a book can be
purchased to hold all of the above. This will be provided automatically if you buy a
running concern.
11. Company Seal: All companies must have an engraved seal. This must be impressed
on share certificates and must be used whenever the company has to execute a deed.
Again, this is included in the ready-made company package.
1. Memorandum of Association;
2. Articles of Association;
5. if the proposed company is a public company, consent of very person prepared to act as a
director must be submitted in a prescribed form;
6. information about directors, managing directors and managers and secretary must be
submitted in a prescribed form;
With its large base of English speaking skilled human resource, it is most sought after
destination for business process outsourcing, Knowledge processing etc.
See also Doing Business with India Free Guide | FDI in India Sector wise Guide | Formation of
Subsidiary in India | Starting a Business in India | Opening Branch in India | Incorporating
company in India | Procedure for Formation of Company in India | Government Approvals for
Investing in India | Entry Strategies in India for Foreign Investors | FIPB Approval for Foreign
Investment in India | RBI Approvals for FDI in India | FDI in Small Scale Sector in India Further
Liberalized | Tax Rates in India | Withholding Tax Rates For Foreign Companies Doing
Business In India Under The Tax Treaties | Annual Corporate Filings in India | Joint Ventures in
India | Outsourcing to India | Legal Outsourcing
Where to Incorporate in India?
A company incorporated in any state of India can do business in all the states of India. The
following are the locations of ROC's in India:
Pune, Kolhapur, Ratnagiri, Satara, Sindhudurga, Sangli, Sholapur & Registrar of Companies Pune,
Ahmednagar districts in Maharashtra PUNE
Coimbatore, Nilgiris, Periyar Salem, Dharmapuri & Dindigul, Quaid-e- Registrar of Companies Coimbatore
Milleth districts in Tamil Nadu COIMBATORE
Assam, Tripura, Manipur, Nagaland, Meghalaya, Arunachal Pradesh, Registrar of Companies Assam, Tripura, Manipur, Nagaland, Meghalaya,
Mizoram & Shillong Arunachal Pradesh, Mizoram & Shillong
SHILLONG
Goa, Daman & Diu Registrar of Companies Goa, Daman & Diu,
GOA
Punjab, Himachal Pradesh & Chandigarh Registrar of Companies Punjab, Himachal Pradesh & Chandigarh,
JALANDHAR
The provisions for issue of Sweat Equity are covered under Section 79A of the Companies
Act. It provides that a company may issue sweat equity shares of a class of shares already
issued if the following conditions are fulfilled:
the issue of sweat equity shares in authorized by a special resolution passed by the
company in the general meeting.
The resolution specifies the number of shares, current market price, consideration, if
any, and the class or classes of directors or employees to whom such equity shares are
to be issued.
not less than one year has, at the issue elapsed since the date on which the company
was entitled to commence business.
The sweat equity shares of a company whose equity shares are listed on a recognized
stock exchange are issued in accordance with the regulations made by the Securities
and Exchange Board of India in this behalf.
In view of the above provisions, you can't issue Sweat Equity at the time of
incorporation of your Company as one year has not elapsed since the date on which
the company was entitled to commence business.
In addition to the above provision, other regulatory provisions are applicable for issuing
sweat equity shares for a private company in India. Please feel free to Contact us for further
information about sweat equity in an Indian company.
The aforesaid provisions regarding issuing of Sweat Equity under Section 79A of the
Companies Act are applicable to a public company in India.
The sweat equity shares of a company whose equity shares are listed on a recognized stock
exchange are issued in accordance with the Securities and Exchange Board of India (Issue of
Sweat Equity) Regulations, 2002. Please feel free to Contact us for further information about
sweat equity in an Indian company.