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Checklist for company registration in India

With initiatives like Digital India and the MCA21 program, the government has successfully digitized most of the services offered by the Ministry of Corporate Affairs, Income Tax Department, Labour Department, and other government institutions. This article discusses in detail the types of companies and the digitized process of their registration through the newly launched SPICe+ application form and the checklist of supporting documents that are required to be mandatorily attached with the SPICe+ application form for the registration of companies. 
Checklist For Company Registration In India
Companies are profit-earning business entities owned by a group of individuals or associations, with liabilities limited to their stakes in the company. However, all types of companies have a similar procedure for registration, the requirement of supporting documents, and the amount of application fee to be paid for the same.

Table of Contents

Types of Companies in India

Companies in India can be classified on the basis of their governing statutes, the liability of the owners, the number of members, the transferability of shares, the legal status, and the power of control. Classifications under each of these categories have been mentioned below in detail.

Based on the governing statutes

Indian companies are governed by different sections of the Companies Act 2013, the primary ones among which are Section 2, Section 8, Section 406, and Section 375. The types of companies mentioned in Section 2 of the act include private companies, public companies, Small companies, OPC, Holding companies, subsidiary companies, associate companies, government companies, foreign companies, Chartered companies, and listed companies. While all companies under section 2 require mandatory registration, Section 375 of the act discusses the provisions related to unregistered companies. Section 8 and Section 406 of the Act discusses non-profit and NIDHI companies respectively.

Based on the liability of the shareholders

On the basis of the liability of owners, companies can be classified into limited and unlimited entities. During a financial crisis, a limited company shall restrict the liability of its owners to the unpaid subscribed capital, whereas, an unlimited company shall make the owner 100% liable to personally pay all its debts and dues. In the absence of a shareholder, the company can have a guarantor who can guarantee the payment of debts, dues, and other liabilities of the company, if it wounds up for some reason. Such companies are also known as Guarantee companies, as they limit the liability of the owner by guarantee.

Based on the number of members

Based on the number of members, companies may be categorised into public limited, private limited, and OPC.
The minimum requirement of shareholders for setting up an OPC, a private limited company, and a public limited company, are 1, 2, and 7 respectively. On the other hand, the maximum number of shareholders for OPC and private limited companies is restricted to 1 and 200 respectively, while public limited companies can operate with an unlimited number of shareholders.

Based on the transferability of shares

On the basis of the transferability of shares, companies can be classified as private and public entities. While the former sells its shares to individual and non-individual investors privately, the latter can openly trade shares in the stock exchange markets, to the investors and the general public alike.

Based on the legal status

Registered companies can have only two legal statuses, a private company, and a public company. All other types of companies are required to be incorporated with either of the two statuses. For instance, an OPC is registered as a private limited company, a NIDHI company is registered as a public limited company, a government company, an unlimited company, and a Section 8 company can be registered as both private and public companies.

Based on the power of control

A company that has the power to control other companies may be empowered to appoint a majority of its directors, control its management, and control its policy decisions. On the basis of the power of control, companies can be categorised into holding, subsidiary, and associate entities.
A holding company is a company that does not carry out any business activity involving the sale, purchase, or manufacture of products or services. It is formed with the sole purpose of controlling its subsidiaries. This can be done either by acquiring enough stocks and receiving more than 50% of the voting rights of the company or by forming a new company with the sole purpose of acquiring it. A subsidiary company is a company in which the holding company controls the composition of the Board of Directors and possesses more than half of its voting rights, either on its own or together with other subsidiary companies. An associate company in relation to another company means a company in which that other company has “significant influence”, ownership of at least 20% of its total voting powers, or control over it under an agreement.

A Checklist for the Registration of Companies in India

The process of registering a company in India has been completely digitized by the Ministry of Corporate Affairs under its MCA21 program. Consequently, a new online application form called SPICe+ was launched in the year 2020 and was made available on the official website of the Ministry of Corporate Affairs. Besides company registration, SPICe+ integrates 10 other related services which include the applications for PAN, TAN, Shops and Establishment Registration, GST registration, EPF registration, ESIC registration, Professional Tax registration, and opening a business bank account. The application can be filled out and signed by any of the directors of the company. Other prerequisites and supporting documents needed for the form have been discussed below in detail.

Procedure for Registration

As mandated by the Central Government, companies in India must mandatorily be incorporated using the online SPICe+ application form only. SPICe+ is a web-based application form that integrates more than 10 services from the Ministries of Corporate Affairs, Labour, Finance, and the state governments of Maharashtra, Karnataka, and West Bengal. These services include an application for company incorporation, DIN, PAN, TAN, GSTN, EPF, ESIC professional tax, Shops and Establishment registrations, in addition to an application for opening a business bank account. The form is divided into two parts, each containing applications for different services.
PART A: contains an application for reserving the name of a newly established company. Two names can be proposed in a single application at a time, with only one chance of resubmission if the names get invalidated. An application fee of Rs.1000 is charged for reserving the name of a company through this form.
PART B: contains ten other applications mentioned above, including the application for a Certificate of Incorporation for the company. The Government has permitted a Zero filing fee for companies with authorized capital less than Rs 15 lakhs, beyond which a fee of Rs. 500 shall be charged.
The SPICe+ application is to be digitally signed by any of the directors of the company, using a digital signature certificate. A DSC is issued by certifying agencies licensed by the Ministry of Corporate Affairs. For obtaining a DSC, an online application must be filled out and submitted along with the proof of identity and registered address of the applicant. For the registration of a company, the applicant director should apply for and obtain a Class III DSC. The application fee for DSC is different in different states of the country.
The applicant director must have a DIN before his appointment as a director in the company. He can apply for the same in the DIR-3 application form or through Part B of the SPICe+ form itself. The application fee for both of these forms is Rs.500. The next step is to select the name of your company, in pursuance of the criteria and rules mentioned in the Companies Act, Companies Incorporation Rules, Names and Emblems Act, and the Trademark Act. The application for reserving the selected name can be filed using the RUN form or Part A of the SPICe+ form. You can propose two names at a time in each of these applications. The applicant gets two chances of resubmission in the RUN application and one in the SPICe+ application before it gets a final approval or rejection.
The MOA and AOA of a company are its most significant documents, drafted by the directors and signed by the shareholders of the company. A resolution is passed to approve and sign the two documents at the general meeting of the company. Both these documents are required to be attached with the SPICe+ application as a supporting document which is required to be mandatorily registered with the ROC. The application fee for these documents depends on the authorized capital of the company. After drafting and signing the MOA and the AOA of the company, the final application for incorporation of the company can be filed and submitted to the ROC. Once the ROC approves the application form and the supporting documents, the company gets finally registered. As proof of registration, the ROC issues the Certificate of Registration and the Corporate Identification Number to the company.
Steps to apply for company registration in India
1.
Obtain DSC for the applicant director
2.
Obtain DIN for the applicant director as well as all other directors
3.
Select and reserve a suitable name for the company
4.
Draft Memorandum of Association and Articles of Association
5.
Fill out and submit the online SPICe+ application form
6.
Attach supporting documents and linked forms
7.
Receive Certificate of Incorporation and Corporate Identification Number

Supporting Documents

The supporting documents that need to be attached with the SPICe+ application have been listed in the table below.
S.No List
1.
Proof of Identity of applicant director (Aadhar/ Passport/ Voter ID/ Driving License)
2.
Proof of registered address of the applicant director (Telephone bill/ Electricity bill/ Water Bill/ Gas bill not older than two months old )
3.
PAN card of the applicant director
4.
Proof of registered address of the rented office space (Telephone bill/ Water bill/ Electricity Bill/ Gas Bill not older than 2 months)
5.
No Objection Certificate from the owner of the office space
6.
MOA and AOA
7.
Director’s consent form to act as the director of the company (DIR-2)
8.
Nominee’s consent form (only in the case of OPC)
9.
Subscribers Sheet
10.
Declaration by first directors and shareholders that they are not guilty of a legal offense (INC 9)
11.
Declaration by independent practitioners (CA, CS, High Court Advocate) (INC 14)

Conclusion

Integrated digital solutions like the SPICe+ have reduced the time and effort required for company registration and incorporation in India tremendously. The result is that India is rapidly becoming a global start-up hub with its improved ease of doing business rankings. India has advanced 14 positions in the global Ease of Doing Business Index in 2021, just a year after SPICe+ was introduced.

About Setindiabiz

Setindiabiz is an organized team of experienced CA, CS, & Lawyers, duly supported by a pool of trained accountants & paralegal staff that provides quality & affordable compliance services to startups & small businesses in India. The views, statements and recommendations expressed in this article or post are only for the sole objective of providing information, and it does not constitute professional advice or recommendation of the company. Neither the author nor the company or its affiliates accepts any liability for any loss or damage arising from any information in this article or any actions taken in reliance thereon.
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