Start a business in india

Setting up Company in India

Index1. Conditions to form Private Company in India2. Directors Identification Number3. Digital Signature Certificate4. Directors5. Shareholders6. Share Capital7. Name Applicability8. Drafting MOA and AOA9. TimeLine required in formation of Private Company10.Documents required for Company formation in India.

1. Conditions to form Private Company in India

In India there are various types of business entity like Sole proprietorship, Partnership and Private and Public Limited Companies. This section would only deal with the Private Company formation conditions in India. Formation of a private company in India requires certain basic condition. Without this private limited Company cannot be formed in India. We will deal separately with these conditions in detail , but here are the conditions at a glance : • Directors should have Directors Identification Number• Director should Have Digital Signature. • Minimum Two Directors• Minimum Two Shareholders • Minimum Capital of INR 1,00,000/-

A private company in India cannot be formed unless the proposed directors are ready to satisfy the above condition, as these are the prerequisites for the formation of Private Limited Company in India.

2. Directors Identification NumberDIN Number i.e Directors Identification Number is one of the prerequisites for the Company formation in India. No Individual can become the director of a company unless he has the DIN Number. For any person who proposes to become director in a Proposed company shall first take the DIN Number. The Requirement for DIN Number is for Indian and Foreign People following is the details for the same. Documents Required for DIN Number by Indian Person • Duly Filled DIN 1 Form – Online • Proof of Identity – PAN Card Copy.• Proof of Residence – Driving License/Passport/National ID etc Latest Utility Bill or any above documents if it has address. • Self Declaration for Correct information on Stamp paper of INR 100/- • Educational Qualification• Photograph• Government Fees of INR 100/-• Digital Signature of Person Documents Required for DIN number by Foreign Directors• Duly Filled DIN 1 Form – Online • Proof of Identity – Driving License/Passport/National ID etc – Notarized in Home Country• Proof of Residence –Latest Utility Bill or any above documents if it has address. Duly Notarized in Home Country.• Self Declaration for Correct information on Stamp paper of INR 100/- • Educational Qualification• Photograph• Government Fees of INR 100/-• Digital Signature of Director DIN Number can be obtained in One Days time subject to availability of correct documents.

3. Digital Signature CertificateDigital Signature Certificate is also known as DSC or Digital Signature, The concept and use of DSC has become well known after the process of Company formation in India has become online. All the documents filled for registration is done in soft copy hence the signature used are Digital, though on few documents manual signature are used , they are submitted in a scanned copy. Documents required for Digital Signature • Duly Filled form with Signature• PAN Card of Person. • Proof of Residence of Person• Photograph of Person• Charges for Issue of Digital Signature ranges from INR1000 – INR 3000/- In case of foreign national the following documents are required • Duly Filled form with Signature• Proof of Identity – Driving License/Passport/National ID etc – Notarized in Home Country• Proof of Residence –Latest Utility Bill or any above documents if it has address. Duly Notarized in

Home Country.• Photograph of Person• Charges for Issue of Digital Signature ranges from INR1000 – INR 3000/-

4. Directors

Directors are the key person in the operation of a company , They manage the day to day affairs of the company. Only Individuals can become directors of the Company further One Company cannot become director of another company. Every company to be formed requires Minimum 2 Directors in case of Private Company and Minimum 3 Directors in case of Public Company. A private company to be formed can have any number of directors but the public Limited Company can have maximum 12 Director. If the Public Company wants to appoint more than 12 directors than central government approval is required. PRESENCE OF DIRECTORS The company formation can be done without the personal presence of directors based on the original documents provided by directors.

5. Shareholders

• Private Company is a company held by close associates, it is not allowed to issue shares to public. It has restriction for the shareholders. It cannot transfer the shares freely.

• A private company formed shall have minimum 2 Shareholder and Maximum 50

Shareholder excluding the employees of the company. • As there is minimum requirement of 2 Shareholder, in case of 100% subsidiary

company at least one share shall be allotted to some individual director or third person on behalf of holding company to satisfy the conditions.

• A public company shall have minimum 7 Shareholder and there is no cap on maximum

number of shareholders.

• While setting up the company the shareholder have to give declaration regarding the subscription of shares in their own handwriting. The company cannot be formed without minimum capital. The shareholders are under the legal obligation to introduce this amount within six months of the incorporation.

6. Share Capital

• Share Capital is one of the primary requirements for the Company formation, Private Company cannot be formed without the minimum capital of INR 100000/- Paid up and a public company cannot be formed without the Minimum Capital of INR 500000/- Paid up.

• Government fees for company setup are based on the Authorized Capital of the company, for minimum 100000/- the Government Fees is INR 7200/-.

• There are various types of share capital in Indian Company;

most widely used type of Share Capital is Equity the other type of share capital is Preference share capital.

7. Name Availability

After taking the DSC and DIN number the Company have to first reserve the name. For this purpose the minimum 4-5 Names shall be given in order of preference after checking the availability on the MCA portal, this saves time. • There are certain basic factors to be kept in mind while applying for the companies

name reservation. • First name can be anything, but we have to provide the significance of the name. • In case the first name is similar to existing company of your group , a NOC can be

given to authorities to increase the changes of approving the name. • Incase the Indian Companies name is planned to be same as foreign Company, a

resolution or No Objection shall be given to make the chances of allotting the name stronger.

• The Second word of the Company name shall indicate the activity of the Company. • Certain word such as national Emblem cannot be used as company name. • Certain specific words used in the company name requires higher authorized

capital e.g using “India” capital shall be Minimum 5 Lacs. Details chart is given below.

8. Drafting MOA and AOA

• For company registration the two most important documents are Memorandum of Association (MOA) and Articles of Association (AOA). A company cannot be formed without these two documents.

• MOA is the document that regulates the business activities of the Company, it clearly defines the activities that a company can carry out in India. The MOA is into various section which includes the “Primary Object ” or “Main Object” i.e the object for which the company is setup and “Secondary Object” i.e other activities that a company is required to carry out the attain the main object.

• AOA is the documents that governs the Internal Rules and regulation

of the Company i.e regarding the conduct of Board Meeting , Shareholders meeting , Directors , shareholders etc. it provides details rules of company hence it is called the constitution of the company.

9. TimeLine required in formation of Private Company

As the Company Setup depends on various activity and documentation , hence the break up of time line with each activity is given below. The Timeline is after getting all required documentation and subject to the government official availability. The Shortest Company Setup time by S R Corporate is 7 Working Days. • Taking Directors Identification Number - 1 Day • Taking Digital Signature - 1 Day• Name Reservation - 5 Day• Preparation of MOA & AOA - 2 Day• Document Filling with Authorities - 1 Day• Liaison with Authorities - 3 Day• Getting Final Certificate of Incorporation - 2 Day

The above timeline is after receipt of necessary documents.

10. Documents required for Company formation in India.Formation of a company requires various types of documents from directors, shareholder and other company in case the Indian company to be incorporated would be a subsidiary. Following is the exhaustive list of documents required for the company formation in India. In case of Local Company i.e Local Directors & Local Shareholder • Proof of Identity – PAN Card Copy.• Proof of Residence – Driving License/Passport/National ID etc Latest Utility Bill or any above

documents if it has address. • Self Declaration for Correct information on Stamp paper of INR 100/- • Educational Qualification• Photograph• Digital Signature of Person• Subscriber Page , Giving declaration for buying shares of company in own handwriting. • Resolution for investment in Indian Company , if shareholder is Corporate entity.• Resolution authorizing some person for sign document on behalf of investor company• No Objection Certificate, if the similar name as holding company is to be used for Indian company.

10. Documents required for Company formation in India.

In case of Local Company i.e Local Directors & Local Shareholder • Proof of Identity – Driving License/Passport/National ID etc – Notarized in Home Country• Proof of Residence –Latest Utility Bill or any above documents if it has address. Duly

Notarized in Home Country.• Self Declaration for Correct information on Stamp paper of INR 100/- • Educational Qualification• Photograph• Digital Signature of Director• Subscriber Page, Giving declaration for buying shares of company in own handwriting. –

Duly Notarized and Certified by Indian Consulate in your country.• Resolution for investment in Indian Company , if shareholder is Corporate entity – Duly

Notarized • Resolution authorizing some person for sign document on behalf of investor company• No Objection Certificate, if the similar name as holding company is to be used for Indian

company.

About S R Corporate Services Private Limited

• A registered Company based in Mumbai• Providing turnkey services to foreign SMEs for doing business in India• Promoted and managed by experienced and qualified professionals with extensive

exposure to multiple functions of businesses in India with a total strength of 65 Semi Qualified and Qualified staff

• A comprehensive range of services :– Private Company Setup in India– Branch/ Liaison office In India– Finding Suitable Factory Location– FDI and RBI Approvals– Business Registration Services– Accounts Outsourcing Services– Statutory Compliance services– Audit Assurance Services– Services for hiring of India management team recruitment Solutions

• For details please contactRakesh Parik at rakesh@srcorporate.comCell – 91-9322216142