Register a Company in India
Everyone in India has a dream to start a business. To move forward with this dream, and turn it into a reality, everyone wants to start a company. Therefore, there exists company registration in India. Through the incorporation of a company, you can start your business in a legal way where you are not only provided an infrastructure of growth, but also assistance from the government.
What is a Company Registration?
Before we dive into company registration, let us understand the concept of a company. What is a company? A company refers to a business entity comprised of at least two directors, and members/shareholders. It is a legal business unit incorporated under the company registration online rules established under the Companies act, 2013.
Simply put, Company registration is a process to acquire a company registration number in India through which the business gets a legal infrastructure through which you can do business.
So, how to register company in India? In the process, first, you have to apply online on the MCA website and collect all documents such as DSC and DIN number. Fill out the SPICe+ form with complete details of the company, Director, and shareholder. Lastly, submit the details to the Registrar of Companies.
However, there are many factors that you have to take into account before the name of your company lands inside the company register.
Types of Companies in India
There are six types of companies, each of them taking a different approach to the company registration process in India.
- Private Limited Company
- Public Limited Company
- One Person Company
- Producer Company
- Nidhi Company
- Section 8 Company
Features common to every type of company
- Separate Legal Entity: A company is a separate legal entity from that of its directors. the company registration number that a company gets after the completion of a new company registration process, acts as a metaphorical birth certificate of the company – making a company an individual as far as the rules are concerned.
- Limited Liability: The members/shareholders and directors of a company are only liable to its losses to the extent of their share subscriptions.
- Incorporated business entity: A company is an incorporated business entity – governed under the Companies Act, 2013 by the Ministry of Corporate Affairs.
- Transferable Shares: The shares of a registered company are transferable among the members of that company.
- Perpetual existence: Since the existence of the company isn’t bound with the existence of the directors, a company continues to exist even after the death of the director.
- Common Seal: After registration of a company online (or offline), the directors of the company must put a common seal on every document related to company transactions.
Features of a Private Limited Company:
- Limited Liability
- A minimum of two directors required
- Minimum of two members/shareholders required
- Maximum 200 members/shareholders
- No minimum capital requirement
- Perpetual Existence
Features of a Public Limited Company
- Separate legal entity
- Transferability of shares among public
- Perpetual Succession
- At least 5,00,000 paid-up capital
- Inclusion of the term “LTD” at the end of the company name
- Minimum of three directors required
- Minimum of seven members required
- Annual prospectus required
Features of a One-Person Company
- Separate legal entity
- A nominee required
- No Perpetual Existence
- No minimum capital requirement
- Only one director required
Features of a Producer Company
- The business objective focuses on agricultural produce
- Must include the words producer company
- Only equity shares issued
- Minimum of five directors required
- Must maintain a general reserve each year
Features of a Section 8 Company
- Non-Profit Organization
- Dividend isn’t distributed among members
- Profits generated to promote social welfare work
Features of a Nidhi Company
- Promotes savings and thrift
- Provide short-term deposits
- Can only engage in business among members
- Provides short/long term loans with minimum documentation
Benefits of Registering a Company in India
- A Company is an entity with a real existence: After you register a new company in India, you gain access to a business entity whose existence is recognized by the government bodies. It means that unlike non-separate business entities in India, your Company will exist as per the regulations of the Companies Act, 2013.
- A Company can exist perpetually: Any limited business entity can exist perpetually. A one-person company, even though it doesn't have a direct perpetual succession benefit, can continue to exist by transferring the shares to the nominee.
- Limited Liability to the directors: The debts of the directors or members of the Company are limited by the face value of shares they have purchased.
- Transferring the shares is easy: All it takes is one board resolution to authorize the transfer of shares among the members of the Company. And, when it comes to a public limited company, the transferability of the shares is easy even when the public is involved.
- Owning Property becomes a possibility: After completing the company registration procedure in India, it becomes easy for a company to own a property.
- Power to file cases or get sued: Because a company is a legal entity that has been conferred the status of an "individual" by the government of India, it now has the potential to file court cases against others or get sued all the same.
- Increase in borrowing capacity: Company online registration leads to an increase in borrowing capacity. Because you will have a legal business entity, the banks and other institutions will now be more than willing to lend you money.
- Raising equity becomes a possibility: Company name registration in India leads to forming a business entity that is more trusted in the market and, thus, has the investors' faith. Therefore, it becomes less laborious for you to raise equity for your enterprise.
Due to these benefits, it is optimal for any starting entrepreneur to go through the registration process of a Company in India.