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Company Law in India

Company law in India, governed by the Companies Act, 2013, regulates the formation, operation, and dissolution of companies. The Act is administered by the Ministry of Corporate Affairs (MCA) and establishes the business operations. It focuses on ensuring compliance with statutory obligations, maintaining transparency, and defining accountability structures within the context of legal requirements.

While the Companies Act, 2013, lays the groundwork for governance from a legal perspective, sector-specific governance requirements may also fall under the purview of other regulatory bodies, such as the Securities and Exchange Board of India (SEBI) or the Reserve Bank of India (RBI). These authorities oversee specific industries, ensuring that entities operate according to their respective frameworks in addition to the broader provisions of the Companies Act.

What is Company Incorporation in India?

In India, incorporation of a company is the legal process of forming a corporate entity under the Companies Act, 2013. This process involves registering the company with the Ministry of Corporate Affairs (MCA), after which the company becomes a separate legal entity, distinct from its owners, and is recognized by law.

Incorporation applies to entities such as Private Limited Companies (Pvt Ltd), Public Limited Companies, Limited Liability Partnerships (LLP), One Person Companies (OPC), and Section 8 Companies. It does not apply to unincorporated entities like sole proprietorships or general partnerships.

Company structures in India

Business RegistrationInternational Business SetupCompliance ServicesOther Services

Start your business seamlessly with expert guidance. Whether you're forming a private limited company, LLP, or any other entity, we ensure a hassle-free process by managing everything from documentation to government approvals.

Private Limited Company Registration

Ideal for startups, offering limited liability and simplified venture capital raising. Secure investor funding effortlessly and protect your personal assets.

Limited Liability Partnership (LLP) Registration

LLP combines limited liability with operational flexibility. Perfect for small businesses and professionals seeking liability protection without the rigid corporate structure.

One Person Company (OPC) Registration

OPC is the ideal choice for solo entrepreneurs, offering limited liability and a corporate structure without the need for partners.

Sole Proprietorship Registration

A sole proprietorship is the simplest business structure, ideal for small businesses. Enjoy full control, minimal compliance, and easy setup.

Nidhi Company Registration

Nidhi Company is perfect for promoting savings and lending among members. Experience simplified registration and full compliance with government regulations.

Producer Company Registration

Tailored for agriculture-based businesses, Producer Company supports farmers and rural producers. Gain legal recognition with an easy setup and operational benefits.

Partnership Firm Registration

Simple and flexible, a Partnership Firm is ideal for small businesses. Easily formed with minimal compliance, allowing shared responsibility. Register your firm quickly and start operating!

Startup India Registration

Register your firm under the Startup India scheme. Enjoy tax exemptions, funding opportunities, and simplified compliance. Start today and accelerate growth!

Register your business outside India

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Not Sure About Your Business Type?

Feeling uncertain about the ideal business structure?  Consult with our experts for guidance and support in finding the right one for you

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File , MoA, AoA, PAN,TAN and Get incorporation certificate

Register Your Company in India

Register Your Company in India

Registering a company in India is the foundational step for legally establishing your business. Under the Companies Act of 2013, any entity can be formed for lawful purposes by following the guidelines set by the Ministry of Corporate Affairs (MCA). Company registration not only provides the entity with a unique legal identity but also grants various rights and protections under Indian law.

Choosing the correct company structure is critical, as it impacts operational efficiency, compliance requirements, and the ability to meet business objectives. Options include private limited companies, limited liability partnerships, and sole proprietorships, each offering distinct advantages. Registering a company in India enables businesses to access government incentives, claim legal rights, and build credibility in the market.

The MCA’s official portal offers a streamlined process for registering a company, allowing businesses to obtain their legal identity and operate with compliance.

    Benefits of Incorporating a Company in India

    The process is governed by the Ministry of Corporate Affairs (MCA) and involves registering business with the Registrar of Companies (RoC), along with obtaining a Digital Signature Certificate (DSC) and Director Identification Number (DIN).

    Separate Legal Identity

    Once incorporated, the company becomes a distinct legal entity. It can own property, sign contracts, and operate independently of its owners.

      Limited Liability Protection

      Shareholders’ personal assets are safeguarded from company debts or risks, ensuring financial security.

        Eligibility for Government Schemes

        Incorporated companies can access government schemes such as:

        • Startup India: Offers tax exemptions, funding support, and easier compliance requirements for eligible startups.
        • Make in India:Provides incentives, subsidies, and promotional support for manufacturing businesses in India

        Tax Benefits

        Companies in India enjoy competitive corporate tax rates, with special deductions and lower rates available for startups and new manufacturing units, under the Income Tax Act.

          Increased Credibility

          Registered companies are seen as trustworthy by investors, clients, and vendors, making it easier to secure funding and partnerships.

            Perpetual Succession

            The company’s existence is not affected by the death or resignation of its shareholders or directors, ensuring long-term stability.

              Ease of Ownership Transfer

              Ownership can be transferred easily by selling shares, making it simple to attract new investors or transition leadership.

                Global Opportunities

                Incorporating a company enables businesses to enter international markets, attract Foreign Direct Investment (FDI), and establish a credible presence globally.

                  Compliance and Legal Safeguards

                  Incorporated companies are required to comply with Indian company law, including annual filings, financial disclosures, and other legal obligations. This structured compliance helps reduce disputes and ensures smoother business operations.

                    Eligibility Criteria for Company Registration

                    Eligibility Criteria for Company Registration

                    As per the Companies Act of 2013 the eligibility criteria for every business entity type varies drastically. Here is a general outline of eligibility criteria for registering your company in MCA.

                    • Registered company should have at least one Indian resident director
                    • Directors should have DSC and DIN
                    • Should not conduct any illegal activities as outlined by the Indian legislature
                    • Directors and shareholders should be legally of Age
                    • Address proof and the Identity proof of the directors has to be submitted
                    • Company should have a unique name.
                    Checklist for Company Registration

                    Checklist for Company Registration

                    Based on the type of company being incorporated the requirements might vary. However, here is a comprehensive checklist for registering your company in India:

                    • Finalise the type of company that you want to register
                    • Select a name for the company as provided under the company incorporation rules of 2014
                    • Have an official address for your firm
                    • Collect all the ID and address proof of the partners
                    • Have at least two shareholders and two directors
                    • Make sure to have one Indian resident director
                    • Finalise the capital required for the company
                    • Draft the objective of the company in and memorandum of association
                    • Apply for DSC and DIN for all the directors if required
                    • Provide address proof and utility bills of the registered office address
                    • Apply for GST if required
                    • Open an current account in the companies name
                    • Appoint an auditor, chartered accountant, and CS if applicable
                    • Get your company TAN and PAN records
                    • Make sure to register your intellectual property like logos and trademarks.
                    Required Documents for Company Registration

                    Required Documents for Company Registration

                    For company registration in India the applicant should provide director and shareholder documents along with the proof of registered office address. Here is a list of the required documents for company incorporation:

                    • Passport size photos of directors and shareholders
                    • PAN card of all the directors
                    • Aadhar, driver license, passport or voter ID of the directors
                    • Proof of residence
                    • NOC of the registered office address
                    • Utility bills for registered office proof
                    • Memorandum of Association (MOA)
                    • Articles of Association (AOA)
                    • Director and Shareholder Details
                    • Digital Signature Certificate (DSC)
                    • Director Identification Number (DIN)
                    Note: The documents may vary based on the type of company you are planning to register. . For more detailed information get in touch with our experts today.

                    Company Registration Process - Step-by-Step

                    Step 1: Choose a Business Structure

                    The first decision is selecting the type of business entity you wish to register. In India, there are six main types:

                    • Private Limited Company (Pvt Ltd): Ideal for startups, offering limited liability protection.
                    • Limited Liability Partnership (LLP): Combines the flexibility of a partnership with the benefits of limited liability.
                    • One Person Company (OPC): Suitable for solo entrepreneurs who want limited liability.
                    • Public Limited Company (PLC): Designed for larger businesses aiming to raise capital from the public.
                    • Sole Proprietorship: Simple structure with full control but unlimited liability.
                    • Partnership Firm: Best for small businesses with shared responsibilities.

                    Step 2: Obtain Director Identification Number (DIN)

                    The Director Identification Number (DIN) is mandatory for anyone who wishes to be a director in the company.

                    How to Apply:

                    • Apply for DIN online via the Ministry of Corporate Affairs (MCA) portal.
                    • Use the SPICe+ form (Simplified Proforma for Incorporating a Company Electronically) during the company registration process.

                    Step 3: Obtain Digital Signature Certificate (DSC)

                    A Digital Signature Certificate (DSC) is required to sign forms electronically on the MCA portal.

                    • How to Obtain: Get a DSC from government-approved Certifying Authorities (e.g., eMudhra, Sify, Ncode).
                    • Documents Required: PAN card, Address proof, and a passport-size photo.

                    Step 4: Choose a Unique Company Name

                    Select a name that aligns with your brand and complies with MCA guidelines.

                    Ensure the name:

                    • Is unique and not similar to existing company names.
                    • Does not infringe on trademarks.
                    • Complies with the Companies (Incorporation) Rules, 2014.

                    Step 5: Apply for Name Approval

                    Once you have selected a name, you need to reserve it.

                    • Use the RUN (Reserve Unique Name) service on the MCA portal.
                    • Have a few alternatives ready in case your first choice is unavailable.
                    • Approved names are valid for 20 days.

                    Step 6: Prepare Memorandum and Articles of Association (MOA & AOA)

                    These legal documents define your company's purpose, structure, and operating rules.

                    • Memorandum of Association (MOA): Specifies the company’s objectives and activities.
                    • Articles of Association (AOA): Defines the company’s internal rules and regulations.
                    • These documents must be signed by directors and shareholders.

                    Step 7: Obtain Consent and Declarations

                    Before filing for incorporation:

                    • Directors and shareholders must provide their consent to act in their roles.
                    • Obtain declarations regarding compliance with legal requirements.
                      1. Form INC-9 for directors' declarations.
                      2. Consent forms like DIR-2.

                    Step 8: File Incorporation Documents

                    This is the most crucial step where all necessary documents are submitted online via the SPICe+ form on the MCA portal.

                    • Documents to Attach:
                      1. MOA & AOA.
                      2. DIN & DSC for directors.
                      3. Address proof for the registered office.
                      4. Identity and address proofs for directors and shareholders.
                    • Additional Forms:
                      1 .Form INC-9 for directors' declarations.
                      2. Consent forms like DIR-2.
                    • AGILE-PRO-S: For registration of GST, EPFO, and ESIC.

                    Step 9: Pay Registration Fees

                    • Fees are based on the authorized capital of the company.
                    • Payment can be made online on the MCA portal.
                    • The fee structure varies depending on the type of company and capital.

                    Step 10: Receive the Certificate of Incorporation

                    Upon successful verification of all submitted documents and payment:

                    • The Registrar of Companies (ROC) issues the Certificate of Incorporation.
                    • The certificate includes a Corporate Identification Number (CIN).
                    • This marks the legal existence of your company.
                    Company Registration Certificate

                    Company Registration Certificate

                    A Company Registration Certificate serves as the official document proving your business's legal existence. Issued by the Registrar of Companies (RoC) under the Ministry of Corporate Affairs (MCA), this certificate not only confirms the incorporation of your company but also grants you the legal authority to operate in full compliance with Indian corporate laws.

                    Types of Company Registration

                    Under the Companies Act of 2013 different types of business entities can be registered. Each and every business entity has its own set of benefits and drawbacks. Here is a complete outline of different business entities and their corresponding information.

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                    Compliance Requirement

                    companies Act, 2013

                    Registration

                    Mandatory

                    Number of Owners

                    2 -200

                    Separate Legal Entity

                    Yes

                    Liability Protection

                    Limited

                    Statutory Audit

                    Mandatory

                    Ownership Transfer

                    Yes

                    Perpetual Existence

                    Yes

                    Foreign Ownership

                    Allowed

                    Taxation Liability

                    Moderate

                    Compliance Requirement

                    High

                    Choosing the Right Business Structure

                    Choosing the Right Business Structure

                    It is crucial to select a proper business structure to avail multiple benefits from incorporation. Based on the type of business structure, compliances vary greatly. For instance, a sole proprietorship company is required to file only the income tax return; a private limited company has to file annual returns and income tax returns with the ROC. You can choose the structure of your company based on the total number of partners or owners involved. Also, the initial investment or initial payment made to start your business also plays a crucial role. You can register your company as a sole proprietorship partnership, LLP, OPC, Section 8 or a private limited company.

                      Cost of Company Registration

                      Cost of Company Registration

                      The overall cost of registering a company in India includes government fees, professional fees, DSC cost, and stamp duty. The cost may vary from one type of company to another. Get in touch with our incorporation experts to know how much it will cost you to incorporate your company.

                        Post-Registration Compliance

                        Post-Registration Compliance 

                        After registering your company in India, it is crucial to follow all the post-registration company compliances. Based on the type of company with which you have registered, the compliances vary. However, performing a statutory audit, filing annual returns, staying abreast of ROC compliance, maintaining statutory registers, and filing your GST returns are some of the post-registration compliances that you should not miss.

                          Annual Compliance

                          Annual filings, Audits, and entity-specific regulatory compliance, such as ROC filings and Tax audits

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                          Accounting & Book keeping

                          Accounting, tax planning, GST compliance, income tax filing, and financial record-keeping aligned with current accounting standards

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                          Other registration

                          MSME, IEC, ISO, FSSAI [Food License], Apeda RCMC, Liquor license, Firearm license

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                          Corporate Secretarial

                          Meetings, Governance compliance, Regulatory filings, Expert board advisors

                          docdoc
                          Secure Your Company Name

                          How to Secure Your Company Name?

                          Selecting the right company name makes a major difference in business strategy. As per law, the company name should reflect the principle activity of the business. At any cost, the company name should not contain words prohibited under the names and emblems act. The company name should be unique and not similar or identical to the names of the existing registered companies. The company name should be registered using the Spice + application on the MCA portal. A maximum of at least two names can be applied to the spice + form. The ROC will approve the company name after verifying the application.Note that the proved name will be reserved for 20 days from the approval date. Within those 20 days, the applicant should file Spice + Form b. If the Spice Plus form part B is not filed within the provided time frame, the application will be rejected, and the process has to be initiated from the beginning.

                            How Vakilsearch Helps in Simplifying Company Registration Process?

                            Vakilsearch stands out for simplifying the company registration process by offering expert guidance, a user-friendly online platform, and personalized solutions. Businesses benefit from our expert assistance in document preparation, transparent pricing, and timely updates on registration progress. Vakilsearch's commitment to legal compliance ensures that businesses navigate complexities seamlessly, receiving post-registration support for ongoing compliance requirements. With a focus on accessibility and technology, we empower businesses to complete the registration process efficiently, allowing them to concentrate on their core operations with confidence in their legal standing.

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                            Company Registration FAQs

                            After registering a company in India, it is essential to meet specific compliance requirements to remain operational and avoid penalties. Below are the key compliance obligations:

                          • Appointment of a Statutory Auditor: A statutory auditor must be appointed within 30 days of incorporation to audit the company’s accounts.
                          • Filing of Annual Returns: Submit Form MGT-7 annually to the Ministry of Corporate Affairs (MCA) to disclose shareholder and company information.
                          • Filing Financial Statement: File Form AOC-4 annually to report the company’s financial statements.
                          • Conducting Board Meetings: Hold at least four board meetings annually, ensuring compliance with company governance norms.
                          • Income Tax Filing: File ITR-6 annually, irrespective of whether the company has income or is non-operational.
                          • Maintenance of Books of Accounts: Keep accurate and updated records of all financial transactions as per legal requirements.
                          • GST Filing (if applicable): File GST returns (monthly, quarterly, or annually) depending on the company’s turnover.
                          • Yes, foreign nationals and NRIs can be directors of an Indian company if:

                            1. The company has at least one resident director who has lived in India for at least 182 days in the previous calendar year.
                            2. They obtain a Director Identification Number (DIN) and a Digital Signature Certificate (DSC).
                            3. They provide required documents, including a passport, proof of address, and a consent declaration.

                            Note: Ensuring compliance with these requirements is crucial to avoid legal issues. Platforms like Vakilsearch can help with the documentation and registration process.
                            To conduct a company name search:

                            1. Visit the MCA Name Availability Tool on the MCA website.
                            2. Enter your proposed company name in the search bar.
                            3. The system will display names that are identical or similar to your query.
                            4. Ensure compliance with Companies Act, 2013 naming guidelines:
                          • Avoid using restricted or offensive words.
                          • Ensure the name reflects the company's objectives.

                          • You can use the Vakilsearch Company Name Search Tool for quick and accurate results. Enter your proposed company name to check for identical or similar names. Ensure your name complies with the Companies Act, 2013, avoiding restricted words and aligning with your company’s objectives.

                            Pro Tip: Check the trademark database to ensure the name is not trademarked by another entity.
                            Authorized Capital: The maximum amount of share capital a company is permitted to issue as per its Memorandum of Association (MOA).
                          • Paid-Up Capital: The actual amount received by the company from shareholders for the shares issued.

                          • Example:
                          • If a company’s authorized capital is ₹10,00,000, it cannot issue shares exceeding this value.
                          • If the paid-up capital is ₹5,00,000, this means shareholders have contributed ₹5,00,000 for the shares issued so far.
                          • The cost depends on the type of company. Key expenses include:

                            Government Fees:
                          • Name Reservation: ₹1,000
                          • SPICe+ Form Filing: ₹2,000 (for authorized capital up to ₹10 lakh).
                          • Professional Fees:
                          • ₹5,000–₹20,000 charged by chartered accountants or company secretaries.
                          • Additional Costs:
                          • Digital Signature Certificate (DSC): ₹500–₹2,000 per director
                          • PAN and TAN: Included in SPICe+ filing.

                          • Note: Costs are subject to change based on specific requirements and additional compliance needs.
                            To open a current bank account, submit the Certificate of Incorporation, PAN, Memorandum and Articles of Association, Board Resolution authorizing account opening, and KYC documents of directors to the chosen bank.
                            Yes, a private limited company has perpetual existence, meaning it continues to exist regardless of changes in ownership or the death of its members.
                            The Memorandum of Association (MOA) defines a company's objectives, scope, and relationship with external parties. The Articles of Association (AOA) outline the rules and regulations for the company’s internal management and governance.
                            Penalties for non-compliance with annual filings include:

                          • A late filing fee of ₹100 per day, per form.
                          • Disqualification of directors for up to 5 years.
                          • Fines ranging from ₹50,000 to ₹5,00,000 for the company and responsible officers.
                          • In severe cases, the company may be struck off the MCA register.
                          • Additionally, non-compliance can result in operational restrictions, making it difficult to secure funding, form partnerships, or work with government agencies.

                          • It’s very important for companies to adhere to these requirements to avoid both financial penalties and long-term legal consequences.
                            If your proposed company name is already taken, you must choose a different name that is unique and complies with the MCA's naming guidelines. You can use the MCA Name Availability Tool to check the availability of a name.

                            Authors

                            Written by Nithya, Reviewed by Mithra Menon. Last updated on Nov 08 2024, 11:00 AM

                            Mithra Menon excels in Corporate Law Matters and Debt and Money Recovery. She offers assistance in company incorporation both domestically and internationally, along with partnership firm registration. Additionally, she provides advisory services on compliance and LLP registration in India.

                            Nithya Ramani Iyer, a criminologist and writer, serves as the SME and manages communications at Vakilsearch. Drawing from her experience at Seasearch Intelligence and Legal domains, she enriches our content with insightful perspectives.

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