Starting a company is a super exciting moment for a startup, and a lack of complete information may lead to unnecessary confusion and delay in registration of the company. This article is aimed to provide all necessary information that is required to form a private limited company in India.

Our focus is on the requirements to start a company or say it is about the preparations needed to form a company under the companies act, 2013. The registration of a company is a legal process that concludes with the issue of the certificate of incorporation. We will examine all the preparations you need to do so that the certificate of incorporation is issued for your new enterprise.

Guide on how to start a company in India.

To register a private limited company, you may be wondering whether you need a professional service firm or not. The answer is definitely yes. You need services of professional service forms like The setindiabiz is in the business of helping early-stage startups to register their companies and then to assist them in managing tax and regulatory compliances. As already said, the preparation to register a company in India begins with the analysis of the requirements to register the company.

Following is the list of the requirements.

  • Number of Shareholders of Company
  • Number of Directors (Composition of Board of Directors)
  • The requirement of an Indian Resident Director
  • Proper and eligible Name (Name Approval Guidelines)
  • Registered Office Address & NOC from Owner
  • Requirement of Capital (Authorized Capital Vs Paid-up Capital)
  • Documentation for company registration.

(i) Number of Shareholders: A minimum of two shareholders is required, whereas the maximum number is capped at Two hundred shareholders for a private limited company. The initial set of shareholders are collectively known as promoters. The promoters are free to decide the shareholding ratio, and that becomes the basis in which the first shareholder’s subscribers to the number of equity shares. A shareholder can be an individual, HUF, partnership firm, or any other company. In case the shareholder is a foreign national, then the FDI rules and regulations need to comply and appropriate FDI reporting needs to be made to RBI in form FC-GPR.

(ii) Number of Directors: The directors are responsible for the day to day management of the company and to comply with the laws that apply to a company. The first directors are appointed by nominating people in the articles of association of the company. At least two people must be appointed as directors, and the maximum number prescribed is fifteen. However, if the need arises, the maximum number of directors can be increased beyond 15 by the shareholders meeting (EGM). Only an individual can become the director of the company. Please refer to our discussion on the difference between a shareholder and a director. 

(iii) Resident Director: One director of the company must be a resident person in India. A person is said to be resident if he or she stays in India for at least 182 days during the preceding financial year irrespective of their citizenship. The days of stay can be in phases. However, after the introduction of spice plus form for incorporation of the company, the PF and ESIC number gets allotted simultaneously with the incorporation of the company. In the new changed process, the resident person needs to be an Indian citizen.

(iv) Proper and eligible Name: The proposed name of the company should not resemble any existing company or LLP. Further, you must check the trademark registry to ensure that the name does not match with any registered or applied trademark in India. Please refer to our detailed analysis of the name approval process in India.  

(v) Registered Address: The company needs to maintain a registered address at all the time as required under section 12 of the companies act,2013. The registered office of the company is very important, and it should be a place where the records of the company are maintained. You may register your company at your residential address as well so long the company nameplate can be affixed there, and the owner of the premises gives their No Objection for the registering company. Read More 

(vi) Capital of the Company: The money is required to fund the initial setup and working cost of the new company. After the Companies Amendment Act of 2015, there is no requirement to have a specific amount as minimum capital in the company. Now you can keep the capital of the company as per the need of the business. The government fee for company registration is calculated based on the capital of the company.

(vii) Documentation for company registration: The documentation plays a pivotal role in company registration. There are three sets of documents that are submitted to incorporate a company in India. The first is the documents of the promoters (Pan Card, Address, and Identity proof of the shareholders and directors). The second set is for the registered address of the company, where a utility bill is submitted for registered address proof with NOC from the owner of the premises. The third set is the declarations, MOA, and AOA for the company registration. Click here to read a detailed analysis of documentation.