HOW TO REGISTER YOUR START-UP IN INDIA

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A start-up is a dream, an idea, a development in society. Putting an idea in action and presenting to people gives the creator ultimate satisfaction. Your start-up is like your baby you want to protect it, give it the recognition it deserves. That’s why you need to register your start-up to provide it security for the future and taking into a new level by giving it an identity of a Company.

There are many different kinds of business structures in India. Choosing the right structure completely depends on the work you do, requirements and demands of your start-up.

There are four kind of Business structures that you can choose from:

1) Company

2) Sole Proprietorship

3) Private Firm

4) Limited liability partnership, (LLP)

Ministry of Corporate Affairs(MCA).The Ministry is primarily concerned with administration of the Companies Act, 1956, other allied Acts and rules & regulations framed there-under mainly for regulating the functioning of the corporate sector in accordance with law. The Ministry is also responsible for administering the Competition Act, 2002 which will eventually replace the Monopolies and Restrictive Trade Practices Act, 1969 under which the Monopolies and Restrictive Trade Practices Commission(MRTPC) is functioning. Besides, it exercises supervision over the three professional bodies, namely, Institute of Chartered Accountants of India(ICAI), Institute of Company Secretaries of India(ICSI) and the Institute of Cost and Works Accountants of India (ICWAI) which are constituted under three separate Acts of the Parliament for proper and orderly growth of the professions concerned. The Ministry also has the responsibility of carrying out the functions of the Central Government relating to administration of Partnership Act, 1932, the Companies (Donations to National Funds) Act, 1951 and Societies Registration Act, 1980.

COMPANY

Company is basically an association of people with the goal and desire to carry on a kind of business. Company is incorporated and registered under The Companies act, 1956.

Now Incorporating or forming a company includes registration of company. They both are the same thing.

Companies in India are of mainly two types- Public Company and Private Company.

PUBLIC COMPANY

– Is defined in section 3(1)(iv) of The Companies Act, 1956.
– Is not a private company;
– Requires a minimum paid-up capital of five lakh rupees or such higher paid-up capital, as may be prescribed for incorporation and registration.
– It is a private company which is a subsidiary of a company which is not a private company.
– A public company requires 3 directors.
– There are further two kinds of Private companies-Listed, Unlisted.
– Public company after registration have ltd. At the end of their names.
– Famous Public Companies in India are- HDFC Bank, ICICI Bank, Bharat Heavy Electricals, DLF etc.

PRIVATE COMPANY

– Is defined in section 3(1)(iii) of  The Companies Act, 1956.
– Requires a minimum paid-up capital of one lakh rupees or such higher paid-up capital as may be prescribed, and by its articles – for registration and incorporation.
– Restricts the right to transfer its shares, if any.
– Limits the number of its members to fifty (50) not including persons who are in the employment of the company.
– Persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased.
– Prohibits any invitation to the public to subscribe for any shares in, or debentures of, the company.
– Prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives.
– Requires two directors.
– Private Company have pvt. Ltd. At the end of their names after registration.
– Major Private companies in India-Reliance Industries Limited,Tata Consultancy Services (TCS),Hindustan Lever Limited,Housing Development Finance Corp. Ltd.

The procedure of setting up both private and public company is almost the same. Incorporating a public company requires just few some additional steps.

All the steps of Incorporation and Registration are done through- www.mca.gov.in

Incorporation and Registration can done online now, mca.gov.in is the only site with the authority. Other sites like vakilsearch.com, companiesinn.com etc. acts a medium to help you register and incorporate the company. As the registration process can get complicated

Where for every step of incorporation a form requires need to be filled up available on the site.

All Forms for Incorporation are available here-www.mca.gov.in/MCA21/RegisterNewComp.html

With each step in this article we will provide the Name of the Form that needs to be filled, download the form and follow the instructions. The instructions on the form will tell you the documents required, payment that needs to be done, attestation requirement, time limit etc.

You will require passport size photos, documents for address proof and identification process.

Registrars of Companies (ROC) appointed under Section 609 of the Companies Act covering the various States and Union Territories are vested with the primary duty of registering companies floated in the respective states and the Union Territories and ensuring that such companies comply with statutory requirements under the Act. These offices function as registry of records, relating to the companies registered with them, which are available for inspection by members of public on payment of the prescribed fee. The Central Government exercises administrative control over these offices through the respective Regional Directors.

 

STEP-I OF REGISTRATION

First step is to get a DIN and DSC.

Director’s Identification Number (DIN)-It is a unique Identification number provided by MCA to the directors of the soon-to-be incorporated company or the existing director. Form to b filled- DIN 1

Digital Signature Certificate(DSC)-DSC like the software version of a physical certificate/identity proof. It helps in proving your identity officially to the MCA in online form.

– Form to get a DSC- http://bit.ly/1gA3iEp

STEP-2 FIND A NAME

– This is a very important step of incorporation as it gives an Identity to your soon-to-be company. You need to decide a name that reflects the objective of your start-up.
– Your start-up should have a unique name.
– You need to check name and trademark availability first.
– Decide on 6 different names and make a list of those 6 names priority wise.
– After that you need to file Form 1A with the ROC for name availability giving the preference list of 6 names and their meanings.

After the name hunt and registration and getting a thumbs up from the ROC you can ove to step 3.

STEP-3 FILLING UP OF THREE MORE E-FORMS

This step forms the complicated part of the registration. Read on Carefully.

– Form 1 is termed as an application or declaration for incorporation of a company. It includes forming of Memorandum of association (MOA) and Articles of Association(AOA). Every Company needs MOA and AOA it creates the body of the company
– MOA is described as constitution of the company it contains 5 clauses-

a)      Name clause- States the name of the proposed company.

b)      Registered office clause-Contains the address of the to-be-registered company.

c)      Objects Clause- States the objects of the company

d)     Liability Clause-States the nature of liability of the members.

e)      Capital Clause-States the amount of capital that the company is proposed to be registered with.

– AOA is the second most important document and is filed in registration of private companies, unlimited companies and guarantee companies. AOA is basically the framework of the laws and regulations that will accordingly be followed in the company after its registration.
– Form 18 is the application to file the address of the soon-to-be registered office of the company.
– Form 32 is filed with the name of the directors and their details of the to-be company.

STEP-4 PAYING IT ALL

After all the necessary documents are filed, its time to pay ROC fees and stamp duty. To determine ROC fees go to mca.gov.in and find the necessary details under fee calculator.

STEP-5 CERTIFICATE OF INCORPORATION

– After all the documents have been submitted, ROC will go through all the applications anf forms. If ROC is not satisfied with something he will mention the required changes to be made and if he is satisfied with all the documents he will give the certificate of incorporation which indicates that the company is incorporated.
– You will find your registration number on the certificate.
– Private certificate can start working after obtaining this certificate, but for public companies to start functioning there is an additional step to be completed.

STEP-6 CERTIFICATE OF COMMENCEMENT (ONLY FOR PUBLIC COMPANIES)

Public company needs certificate of commencement to start functioning. To obtain Commencement of Business Certificate after incorporation of the company the public company has to make following compliance

– File a declaration in eForm 20 and attach the statement in lieu of the prospectus(schedule III)
– OR File a declaration in eForm 19 and attach the prospectus (Schedule II) .

This article is written by Prachi Shah, Student at National Law Institute University and Associate at Grayscale Legal

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Mohit Bansal(23) is B.Tech in Electronics and Communication Engineering from Indian School of Mines, Dhanbad, India. He has interest in business and entrepreneurship and has published couple of research articles. He is also associated with various NGOs. He is with Techaloo when it was just in concept stage. The Techaloo site was not existing even then. Currently Mohit is working with Mu Sigma as a Business Analyst Profile.

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