What is the Procedure for Company Formation

What is the Procedure for Company Formation

Curious about the procedure for company formation in India? Learn all about the step-by-step process and legal requirements for establishing your business with our comprehensive guide on Procedure for Company Formation in India.

A company is a separate legal entity, and a systematic approach is followed to get it incorporated legally. Until then, the company is merely non-existent. Regardless of a company being a public, private, or one-person company, it has to undergo the step-by-step procedure for new company registration in order to become an authenticated legal body. The Companies Act, 2013 regulates the process of incorporation of public and private companies.  

Procedure for Registration of Company:

A private limited company is often chosen by entrepreneurs and professionals not only because of the fact that it offers limited liability to its members but also because it is easier compliance-wise, for instance to avail loans from banks. The procedure for registration of the company under the Companies Act, 2013 is quite comprehensive, but once it is accomplished, it would ensure that the company’s dealings happen in a phased and systematic manner. Like in any legal procedure, the registration of a company also has a set of prerequisites that has to be adhered to as enlisted below:

The number of members:

There must be a minimum of 2 members and a maximum of 200 members.

Digital Signature and DIN:

 Digital Signature and Director Identification numbers for the directors of the company should be obtained.

Name of the Company:

An application for the name of the company should be sent to the Registrar. Usually, more than one name is submitted to the Registrar, so it would be feasible if one of them is identical or similar to the name of any other existing company. A unique name will be picked out by the Registrar from the names that were submitted. The name should have the words ‘Private Limited Company’ appended to the end.



Incorporation of the Company:

The following have to be submitted in order to get the company registered:

  • Articles of Association and Memorandum of Association.
  • Affidavits from the Directors.
  • A declaration stating that the rules of the Companies Act, 2013 have duly complied.
  • ID proofs like a PAN card and an authenticated passport copy to be submitted.
  • Ration Card or Aadhar card to be submitted as proof of address.
  • Proof of Residence such as bank statements or recent electricity bills, telephone bills, are to be submitted.
  • If the company is in rental space, the notarized rental agreement and a NOC from the owner are needed.
  • If it’s an own property, the sale deed is to be presented.

After verifying the documents, the RoC offers the certificate of incorporation, with the PAN and TAN. It is essential that once the registration is done, a current account is opened in the bank in the name of the company, to carry out the financial transactions.

Incorporation of a Public Company:

Just like a private company, a public company also has a few prerequisites in order to get registered.

  • At least 3 Directors and 7 shareholders are required to get a public company registered legally.
  • There should be a share capital of at least 5 lakhs.
  • DSC and DIN are to be obtained.
  • An appropriate name for the company is to be selected.
  • The application made for registration should comprise the main objectives of the company.
  • The Application made to the RoC should contain the MoA, AoA, form DIR-12, Form INC 7, and form INC – 22 along with the stipulated fee for registration.
  • The application for the business commencement certificate is to be made once the RoC has granted approval for the registration.

Procedure for Public Company Registration

The procedure for registration is almost similar to that of a private company. The address of the company has to be registered with the RoC of the respective jurisdiction. The name of the company has to be accepted by the RoC. Once the name is approved, the MoA and AoA are to be submitted to the RoC for validation.

If there are no disparities in the documents that were hence put forward, the RoC registers the company and awards the certificate of incorporation along with the CIN (Corporate Identification Number). It is imperative that an application for the Certificate of commencement is made within 180 days from the date on which the Certificate of Incorporation was obtained.  

Thus, the process for registration of companies, whether public or private is fairly similar, although a bit too exhaustive. Having the right hands to help, will enable the registration process to be much simpler. Thus, the first step of starting a company is going ahead with the registration in order to render a proper legal identity to the business.

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