Company Formation in India

Companies Act

In India, the companies are registered and governed by The Indian Companies Act, 2013. This act sets down rules for the functioning of the companies in India. In general, there are two broad categories of companies in India viz. Public Limited Company and Private Limited Company.

Public Limited Company

A Public Limited Company is limited by shares in which there is minimum 7 shareholders with no restriction on the maximum number of shareholders. Such company can transfer shares and accept public deposits. The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by shareholder.

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Private Limited Company

Private Limited Company is defined as a company, in which there are minimum of 2 shareholders and maximum 50 shareholders. There is restriction on the transfer of shares. Such company neither invites public for subscription of shares or debentures nor accepts deposits from public. The liability of shareholders is limited. It is the extent of the unpaid amount of the shares face value along with the premium thereon in respect of the shares. Private Limited Company has lesser number of compliance requirements.

Procedure for Obtaining Name Approval for Company

An application is required to be filed with the Registrar of Companies (ROC). After submission, the ROC scrutinizes the application and sends the approval as well as objections to the applicant. In the application, following details need to be furnished:

  • Alternative names for the proposed company
  • Names and addresses of the promoters (Minimum 7 for a public company while 2 for private company)
  • Main objects of the proposed company
  • Authorized capital of the proposed company
  • Names of other group companies On receipt of the name approval, the Memorandum of Association (MOA) and Article of Association (AOA) are required to be drafted.

Memorandum Of Association (MOA) and Articles Of Association (AOA)

The MOA states the main, ancillary, subsidiary and other objects of the proposed company. The AOA comprises of the rules and procedures for the routine conduct for that company. The AOA also states the authorized share capital of the proposed company and the names of the permanent directors. Stamp duties are required to be paid on MOA and AOA, which depends on the authorized share capital.

Allotment of Director Identification Number (DIN)

FAfter the submission of DIN application, provisional DIN number for the intended director of the proposed company would be generated.

Acquiring Digital Signature certificate (DSC)

Digital Signature Certificate is acquired by submitting the application to one of the various authorized vendors.

Information Required

  • Details of proposed company like proposed names in order of preference, main objects and authorized share capital.
  • Complete personal details of directors along with photographs and identity proofs, 2 directors in case of private company and 3 directors for public company
  • Complete personal details of directors along with photographs and identity proofs, 2 directors in case of private company and 3 directors for public company