Does Registering A Company In India Differ From State To State?

With the economic environment in India being so conducive to start-ups, there has been a spurt in the number of new ventures in the country. Entrepreneurs, both young and old, are starting new businesses to fulfill their dreams and drive value into traditional and newer markets and know the right way to registering a company. One of the questions that come up when looking for ways to run the business is which type of an enterprise to set up. Proprietorship or Partnership? One Person Company or Private Limited? Among the many options available, none comes close to a company in terms of giving owners the freedom to grow their business.

There are different types of companies that you can set up:

1. One Person Company (OPC): As the name suggests requires only a single person as a shareholder.
2. Private Limited Company: This needs to have at least two shareholders.
3. Public Limited Company: This need to have at least 50 shareholders.

Companies in India are principally governed by the terms of the Companies Act, 2013 that succeeded the Companies Act of 1956. The Ministry of Corporate Affairs (MCA) is in charge of oversight. The Act mandates that companies can be formed and headquartered anywhere in India provided it is registered with the Registrar of Companies (ROC) of that region.

The ROC you have depends on the location of the registered office of your company. There are at present 22 ROCs in the country, with some states sharing a common Registrar. If you are wondering how to register a company in Bangalore or how to register a company in Delhi, then you need to respectively register with ROC Bangalore or ROC Delhi. The only state with two ROC is Tamil Nadu. If you are setting up a company in the state, then you can go for company registration in Chennai or opt for one in Coimbatore.

The ROCs are required in registering a company in the states and union territories they govern. The process of registering a company is same all over India, with the only difference being in the ROC to which it needs to send its application.

We have provided a step-by-step breakdown of registering a company in India below for your reference (note – there is another way to get it done through the SPICe format which we talk about at the end of the steps).

Steps to Register Your Company In India

1. Apply for Digital Signature Certificate

A director of the new company needs to apply for a Digital Signature Certificate or DSC. If you are trying to set up your company, then you need to submit the required application and provide copies of your ID and address proofs. The overall process from submitting the application to approval usually takes not more than 2 days.

2. Get a Director Identification Number

Every individual who wants to be a director in a company must have a unique Director Identification Number (DIN) that identifies him as a board member. The individual has to submit an affidavit, his or her PAN copy and proof of address. The time required to get a DIN is again not more than 2 days under normal circumstances.

3. Check for Availability of Name

The third step is to check for availability of the name the person has chosen for his company. The user has to go to the relevant web page of the MCA site and click on the magnifying glass to check if there is an active company with that name. They should ideally provide 2-3 name options so that the ROC can approve a suitable name, without them having to reapply because the first name they chose was rejected.

4. Draft the Memorandum and Articles of Association

This involves finalising the documents that are called the constitution of the company. These documents define what the company can and cannot do. They include all details such as nature of business, name of directors, place of business, etc.

5. Filling the Forms and Submitting the Application

Once the Memorandum and Articles of Association are finalised, the director or his / her representative has to fill the relevant forms. These include, among others, Form INC-7 that is the primary application for incorporation, INC-22 mentioning the registered office and Form INC-3 which is the nominee consent form for a One Person Company.

The other document that needs to be taken care of is the consent letter from the promoters to act as directors of the company and the appointment letter authorising the representative to act on behalf of the promoters. Once all the documents are ready, they need to be submitted with the company registration fees to the ROC office under which the registered office of the company will be located.

Once the Registrar approves the company documents, he incorporates the company and provides the company with an incorporation certificate.

Thereafter, the company needs to apply for its PAN, TAN (Tax Deduction Account Number) and GST number.

The SPICe Route

The MCA has provided an alternative option to incorporate a company. The promoters or their representatives need to file Form INC-32 which takes care of five different applications, viz., reservation of name, allotment of DIN, incorporation of the new company, allotment of PAN and the allotment of TAN. It also allows the promoters or their representative to file their Memorandum and Articles of Association electronically.

According to the new rules, some companies are required to registered under the SPICe format only. Even a company with charitable objectives (called section 8 company) can be incorporated under this process, except that they need approval of their name before they can file the application.

The MCA has mandated that the following companies can be set up by filing an application for incorporation under this process:

1. A company (including an OPC) with less than 7 share subscribers
2. A company with charitable objectives (section 8 company) with less than 7 share subscribers
3. The following companies can be set up the traditional way with a step-by-step process as detailed above:
4. A company (including an OPC) with more than 7 share subscribers
5. A company with charitable objectives (section 8 company) with more than 7 share subscribers
6. A producer company
7. A Chapter XXI (Part I) company, which includes a partnership firm, a limited liability partnership firm, a cooperative society, a society or any other business entity.

You might also want to read: How To Register A Company In India.