INDIA INCORPORATION GUIDE

TABLE OF CONTENTS

Why Incorporation?

Companies & its kind

Key Incorporation Requirements

Incorporation Procedures

Glossary

FAQ

Annexure

About Us

Our Services

Contact Us

Disclaimer
Dear Customer,

India has long been known for the diversity of its culture, for the inclusiveness of its
people and for the convenience of geography. Today, the world’s largest democracy
has come to the forefront as a global resource for industry in manufacturing and
services. Its pool of technical skills, its base of English speaking populace with an
increasing disposable income and its burgeoning market have all combined to enable
India emerge as a viable partner to global industry.

Today, India has become the world’s biggest investment hub, attracting a investment
of more than $11 billion from Foreign Institutional Investors, highlighting the growth
potential of the country. Supported by India’s natural strengths, the country offers
investment opportunities in excess of $500 billion in diverse sectors over the next five
years. As per Micksney’s report, India Stands at No.1 position in its 2007 Global FDI
Confidence Index.

India Incorporation Guide is an attempt to provide you with comprehensive knowledge

in respect of setting –up your business in India. This guide will surely help you in
deciding that corporate form of business is best business option available and how you
can establish your business under this form of business.

I Hope this guide will of immense help to you and will resolve all your queries

Namaste!
Yours Sincerely

Team
Incop.in
 WHY
INCORPORATION???
Why Incorporation?

In any business set-up, the type of business organization chosen to start up the
business plays a very important role as taxation and other polices varies from one
business form to other. Though there are various types of business forms like
partnership , proprietorship available but keeping in view the advantages and
disadvantage of various business forms available, corporate business forms stands to
be most credible and renowned form of business entity all over, overcoming the
disadvantage and combining the advantages of other business forms.

The following will help to understand Corporate Business form better:

• Benefits
• Entity Comparison
 Benefits of Incorporation

The benefits of company arises from the features it comprised off

 Liability: A Company exists as a separate legal entity from your personal life. Both
company and person who own it are separate entities and both functions
separately. Liability for repayment of debts and lawsuits incurred by the Company,
lies on it and not the owner. Any business with potential for lawsuits should
consider incorporation. Incorporating will offer an added layer of protection

 Perpetual Succession: An incorporated company has perpetual succession.

Notwithstanding any changes in the members of the Company, the Company will be
a same entity with the same privileges, immunities, estates and possessions. The
Company shall continue ton exist till its wound up in accordance with the
provisions of the relevant law.

 Easy Transferable Ownership: The shares and interest of any member in the
Company shall be a movable property and can be transferable in the manner
provided by the Articles, which is otherwise not easily possible in other business
forms. Therefore, it is easier to become or leave the membership of the Company
or otherwise it is easier to transfer the ownership

 Separate Property: A Company as legal entity is capable of owning its funds and
other properties. The Company is the real person in which all the property is
vested and by which it is controlled, managed and disposed off. The property of
Company is not the property of its shareholders

 Taxation: Another main benefit to incorporating is the taxation of a Company.

Companies are often taxed at a lower rate and are provided with better taxable
benefits as compared to other forms of business organization.

 Raising Money: Financing a small business as a sole proprietorship or partnership

can be difficult. A Company can sell shares of the Company to the public or can
accept deposits from public and can therefore raise money easier than other
business structure types. The modes of financing business carried on by company
are numerous
 Moreover, since the companies are governed by particular law and have to comply
with stringent disclosure norms, therefore they enjoy good creditworthiness with
various financial institutions

 Selling the Business: A non-corporate business is hard to valuate properly. A

business Corporation value will be based on the business, not the owner, therefore
making it easy to sell the Company.

 Capacity to sue: As a juristic legal person, a Company can sue in its name and be
sued by others. The managing director and other directors are not liable to be sued
for dues against the Company

 Better Governed: Companies are governed by Companies Act, 1956 and have to
follow various regulatory procedures during the course of its governance, moreover
they have to comply with stringent disclosure norms which let to better governed
organizations and creation of value for owners.
Entity Comparison

In order to ascertain the nature and function of corporate form of business better, it is
necessary to compare it with other forms of business

 Company V Partnership
 Company V Proprietorship
  Company V Partnership
CRITERIA COMPANY
Cost of Formation The cost of Formation is
statutory filling fees
Distinct Entity A Company has distinct Legal
Entity of its own and operates
like a artificial person
Minimum Number of Members 2 in case of Private Company
and 7 in case of Public Company
Maximum Number of Members 50 in case of Private Limited
and unlimited in case of Public
Company
Ownership Ownership lies with members
Flexibility in Ownership Ownership is easily changeable ,
as shares of Company are freely
transferable
Business Durability A Company has Perpetual
Succession, death or insolvency
of members does not effect its
existence
Management Managed by Directors elected by
members of company
PARTNERSHIP
The cost of formation is
negligible
Partnership does not have
a distinct Legal Entity,
partners of firm are
personally liable for acts
done by firm
2 persons (natural or
artificial) are required.
20 except in case of
banking business, where it
is 10.
Ownership lies with
partners
Ownership is restrictive;
any change in partnership
requires the approval of
other partners.
Death, resignation or
Insolvency of Partner,
dissolves the firm
Managed by Partners
Liability
Ownership of Property
Creditworthiness
Chances of individual fraud
Legal Formalities
Dissolution/Termination
The liability of members is The liability of the
Limited and does not extends to Partners is unlimited and
personal property extends to personal
property
A Company purchases its A Partnership firm
Property in its own name purchases its property in
the name of its partners.
Due to Stringent Compliances & The creditworthiness of
disclosures under various laws, Partnership firms depends
companies enjoys high degree of upon its goodwill and
creditworthiness creditworthiness of its
partners
Negligible, all the decisions are Very High, any act of
taken collectively by board of individual partner will
directors bind the firm
High compared to partnership Very Negligible
A Company being a creation of A Partnership being a
law, can be dissolved as per creation of will, can be
procedures laid down in Law terminated as per will of
partners
  Company V Proprietorship
CRITERIA COMPANY
Cost of Formation The cost of Formation is filing
of statutory fees
Entity A Company has distinct Legal
Entity of its own and
operates like a artificial
person
Minimum Members 2 in case of Private Company
and 7 in case of Public
Company
Ownership Ownership lies with Members
Flexibility in Ownership Ownership is easily
changeable , as shares of
Company are freely
transferable
Business Durability A Company has Perpetual
Succession, death or
insolvency of members dos
not effect its existence
Liability The liability of members is
Limited and does not extends
to its personal assets
Contractual Capacity A Company has a capacity to
enter into any contract
Ownership of Property A Company purchases its
Property in its own name
PROPRIETORSHIP
No, Statutory fees is payable
Proprietorship and Proprietor
are same persons
1 person (natural or artificial
) is required
Ownership lies with
Proprietor
The entire business needs to
be sold
Death or Insolvency of Owner
dissolves the Proprietorship
The liability of the Owner is
unlimited and extends to his
personal assets
The contracts are entered
into the name of Proprietor
A Proprietorship purchases its
property in the name of its
Proprietor.
Creditworthiness Due to Stringent Compliances
& disclosures under various
laws, companies enjoys high
degree of creditworthiness
Dissolution/Termination A Company being a creation
of law, can be dissolved as
per procedures laid down in
Law
Legal Governance It is governed by Companies
Act, 1956
The creditworthiness of
Proprietorship firms depends
upon the goodwill and
creditworthiness of its
Proprietor
A Proprietorship being a
creation of will, can be
terminated as per will
They are not governed by any
specific law
COMPANY
&
ITS KINDS
Companies-Their Kinds

Under the Companies Act in India, the companies are basically divided into following
two categories:

• Public Companies
• Private Companies

Public Company

Public Limited Company means a Company which is not a private limited Company and
has a minimum Authorized Capital of Rs 5 Lakhs. It does not carry the word `private’
in its name and also do not have the restrictions as carried out in the private limited
companies. A Private Company which is subsidiary of Public Company also functions as
Public Companies.

Basic Features are as follows:

• Minimum Authorized Capital of Rs. 5 Lakhs

• No restriction on number of members
• Shares are easily transferable.
• Can access Public in case of need of funds

Advantages:

• Better Governed due to number of compliances

• No limit to Memberships
• More financing options in form of Public Issue or Deposits
• Better Creditworthiness

Disadvantages:

• Number of legal Compliances are too large

• Intervention of Government
Private Company

Private Limited Company means a Company formed with the word ‘private’ in its
name, having minimum paid capital of Rs 1 Lakhs and the Articles of Association of
whom contains the following restrictions:-

• Restricts the right to transfer its shares

• Limitation to the number of shareholders to 50 (excluding employees and former
employees)
• Prohibition towards invitation to the public to subscribe to shares and debentures
• Prohibits acceptance of deposits from persons other than shareholders, directors
and their relatives.

Advantages

• Suitable for closely held groups

• Less Legal Formalities
• Less Government Intervention
• Better Creditworthiness

Disadvantages

• Limited financing avenues i.e. no public offer or acceptance of deposits

• Limited Membership

A Private Company has been exempted from compliance of various provisions of the
Companies Act, the exemptions & privileges of Private Company are enclosed as
Annexure -1
 CHECK OUT THE COMPARISON BETWEEN BOTH
TYPES OF COMPANIES.
PUBLIC Vs PRIVATE
CATEGORIES
Minimum Number of Directors
Maximum Number of Directors
Minimum Number of Members
Maximum Number of Members
Minimum Authorized Share
Capital
Minimum Paid Up Capital
When the Company can
commence its business
Issue of Shares to Public
Transfer of Shares
Acceptance of Deposits
PUBLIC LIMITED PRIVATE LIMITED
Three Two
Twelve No Limit
Seven Two
Infinite (no maximum limit 50 ( excluding members
is there) who are employee and
members who had been in
the employment of the
Company)
Five Lakhs One Lakh
Five Lakhs One Lakh
It first needs to obtain a Immediately after the
Commencement of incorporation of the
Business certificate , only Company
then he can commence its
business
Yes, they can be issued Yes, but to not more than
subject to the approval of 50 persons whether natural
regulatory Authorities or artificial
The shares are freely The shareholders can
transferable transfer their shares only
to other members only
Deposit can be accepted Yes but only from
from anyone shareholders , directors
and their relatives
Borrowing of Money
Management
Loan to directors
Restriction on the powers of
directors
Compliances under the
Companies Act, 1956
Conversion of Public ltd
Company into Private Ltd and
vise-versa
Degree of Governmental
Intervention
Yes but subject to certain
restrictions
Directors elected by
shareholders will manage
the company
It requires the approval of
Central Government
There are certain
restriction on exercise of
powers of Board of
Directors
The number of compliances
are very large
It can be done with the
approval of Central
Government
Approval of Central
Government is required
under various provisions of
Companies Act, 1956
There are no restrictions as
to borrowing limit
Directors elected by
shareholders will manage
the company
No approval of Central
Government is required
There are no restrictions
on powers of Board of
Directors
The number of compliances
are very less
It does not require any
approval
No such approvals are
required
 KEY
INCORPORATION
REQUIREMENTS
Key Incorporation Requirements

For incorporating a company, it is necessary to understand the following key terms

which forms part of the incorporation process:

• Directors Identification Number

• Directors Signature Certificate
• Promoters/Shareholders
• Directors
• Name
• Registered Office
• Memorandum & Articles of Association
• Share Capital
Directors Identification Number (DIN)

As per section 266A of the Companies Act, 1956, no person can be appointed as the
director of the Company until he has been allotted the eight digits Directors
Identification Number by the Ministry of Company Affairs in India.

Directors Identification Number is applied online and then the application is submitted
physically along with the proof of identity and residential address of the Director along
with prescribed fees.

It is not necessary to apply Directors Identification Number every time you are
appointed Director in a Company; once this number is allotted it would be used in all
the companies in which you will be appointed.

Check out FAQ’s

Digital Signatures Certificates

All the forms Like Form 1, Form 32, Form 18 which are required for the purpose of
incorporating a Company are filed electronically through the medium of Internet.
Since all these forms are required to be signed by the director of the proposed
Company and as all these forms are to be filed electronically, it is not possible to sign
them manually. Therefore, for the purpose of signing these forms, at least one of the
directors of the proposed Company needs to have a Digital Signature Certificate (DSC).

The Digital Signature Certificate once obtained will be useful in filing various forms
which are required to be filed during the course of existence of the Company with the
Registrar of Companies.
Check out FAQ’s

Name of Company

Selection of the name for the proposed Company to be incorporated is one of the
important processes of the entire incorporation process, ideally the name of the
company should be such which represents the business or activity intended to be
carried on by the company. Before selecting the name of the company it is necessary
to evaluate the proposed name under the following 4 given criteria’s:

 Company with Similar Name: The proposed name of the Company should not be
similar to the name of the Company which is already registered in India.

For example:

Name of Company already registered: Oasis Water Treatments Pvt Ltd

Name of Proposed Company: Oasis India Pvt Ltd
Whether Proposed Name would be available: No

 Prohibited Name: The Ministry of Company Affairs of India has prescribed certain
words, which should not form part of the name of Company intended to be
incorporated in India, such words are prohibited under The Emblems and Names
(Prevention of improper use) Act, 1950.

Annexure-II to check out list of Prohibited Names

 Names based on Authorized Capital: The Ministry of Company Affairs in India has
prescribed certain words, which if forms part of the name (whether at Beginning or
in Middle) of the Company, than the proposed Company to be incorporated shall
have a prescribed minimum amount of Authorized Capital.

Annexure-II to check out the list of Names based on Authorized Capital

 Names Based on Approval: Various government regulatory authorities operating

in India like Securities & Exchange Board of India, Reserve Bank of India, has
prescribed certain words, which if forms part of the name of the proposed
Company to be incorporated, requires there first hand approval

Annexure-II to check out the list of Names based on Approvals

Promoters/Shareholders

Promoters /Shareholders are persons who are interested in incorporating the

company and who will invest there hard earned money in the form of capital in the
Company, they are the persons who ultimately run and own the Company. The
shareholders of company are also known as members of the company

Private Company: There must be Minimum 2 and Maximum 50 Shareholders (excluding

employees and former employee who are shareholders).

Public Company: There must be Minimum 7 and there is no limit for maximum number
of Shareholders but in case the number of members increases to more than 50 ,than
there should be public offer by the company to increase the number further subject to
fulfillment of requirement laid down by Securities Exchange Board of India.

Directors

Directors are the people who are elected by the shareholders and who manages the
Company on behalf of the shareholders, in most cases the shareholders themselves are
the directors of the Company. The Directors are responsible for day to day
management and overall business of the Company, they stand in a position of trust
with the shareholders.

Private Company: There must be Minimum 2 Director and no Maximum limit is

prescribed

Public Company: There must be Minimum 3 and Maximum 12 Directors which can be
increased subject to approval of Central Government
Memorandum & Articles of Association

Memorandum of Association is the principal document of the Company which

defines its constitution and lays the down the foundation on which the
structure of the Company stands. It defines the scope of business activity and
its relationship with outside world.

The Memorandum of Association is divided into the following six clauses:

• Name Clause: It states the name of the Company

• Situation Clause: It states the State in India in which the Company is registered

• Main Object Clause: It is divided into

o The Main Activities, which would be immediately carried on by the

Company after its incorporation
o The Ancillary Activities, which are necessary for carrying on the
activities as mentioned above
o Other Activities, which the Company may intends to carry on in future.

• Liability Clause: It states whether the liability of members is limited or

unlimited

• Capital Clause: It states the maximum Authorized Capital of the Company with
which its is registered and the classes of shares in which it is divided

• Association/Subscription Clause: It states that all the promoters have agreed

jointly to be formed as Company.

Articles of Association: This document of the Company states the bye-laws or

rules and regulations that govern the management of its internal affairs and
conduct of its business. It defines the duties, rights and powers of governing body
as between themselves and the Company at large. Some of the issues which are
covered under this document are mentioned herewith:

• Share Capital
• Procedure & Rights regarding Transfer or Transmission of shares.
• Directors & their remuneration
• Powers of Board of Directors
Registered Office

The Registered office of the Company is the place where all correspondence
related with the Company would take place. A registered office is required
for following purposes:

• All the statutory records and books of accounts of the Company will be
maintained at this office.
• The meeting of shareholders will be held at Registered Office of the
Company.
• The Jurisdiction of Registrar of Companies is based on the registered
office of the Company

One should keep in mind the following criteria’s while selecting the place of its
registered office

⇒ Management Convenience
⇒ Administrative Convenience
⇒ Stamp Duty.

Note: The stamp duty differs from state to state in India.

Share Capital

The share capital of the Company has following two major components:

Authorized Share Capital: Authorized Share Capital is the maximum amount of

capital which can be raised by the Company by issue of shares during the course of
its existence. The registration fees for incorporation also depend upon the
Authorized Capital of the Company. The amount of Authorized Capital can be
increased by the Company during the course of its business according to his needs.

There is no limit as to the maximum amount of Authorized Capital which a

Company may have, but the Companies Act, 1956 has prescribed the minimum
amount of Authorized capital which every Company should have:

• Public Companies: Rs 5 lakhs

• Private Companies: Rs 1 lakhs
In certain cases the minimum Authorized Capital also depends upon the Name of
the Company.

Paid-up Share Capital: Paid-up share Capital is that part of Authorize Share
Capital which is actually being allotted to the shareholders and on which
they had paid money to the company.

The Companies Act, 1956 has prescribed the minimum amount of paid-up
capital every company incorporated in India:

• Public Companies: Rs 5 lakhs

• Private Companies: Rs 1 Lakhs
INCORPORATION
PROCEDURE
Incorporation Procedure

A Company can be incorporated by two types of person i.e. by an Indian or by a

Foreign Promoter but the process of its incorporation is same except that in case of
foreign promoters some additional documentation is required.

Process of incorporation by both type of promoters have been outlined below:

Incorporation by Indian Promoters

Incorporation by Foreign Promoters
 PROCESS OF INCORPORATION

STEP I: DECIDING THE FORM OF COMPANY TO BE INCORPORATED

STEP II: OBTAINING DIN & DIGITAL SIGNATURE CERTIFICATE

STEP III: CHECKING OUT THE NAME AVAILABILITY

STEP IV: STAMPING OF MEMORANDUM & ARTICLES OF ASSOCIATION (MOA/AOA)

STEP V: FILING OF FORM 1, 18 & 32 ALONG WITH MOA/AOA

CERTIFICATE OF INCORPORATION
Incorporation by Indian Promoters

FIVE STEPS OF INCORPORATION

 Step I: Deciding the Type of Company to be Incorporated

 Step II: Obtaining Directors Identification Number & Digital Signature Certificate
 Step III: Checking Name Availability for Proposed Company
 Step IV: Drafting of Memorandum & Articles of Association, Agreement & Other
Documents
 Step V: Preparing & Filing of Incorporation Forms
 Certificate of Incorporation

Ω STEP I: Deciding the Type of Company to be Incorporated

As per the Companies Act, 1956, basically there are two types of Companies which can
be incorporated in India, with an objective of profit making:

Public Companies

Private Companies

For the purpose of deciding the type of Company to be incorporated, it is necessary to

evaluate & understand the basic difference between both the companies; we can help
you decide the type of company which would be suitable for you.

Ω STEP-II : Obtaining Director Identification Number & Digital Signature

After deciding the nature of company to be formed, it is necessary to have the

following before starting the incorporation process

Directors Identification Number: As per section 266 of the Companies Act, 1956,
no person can be appointed as the director of the Company until he has been
allotted the eight digits Directors Identification Number by the Ministry of
Company Affairs in India.
 The DIN can be applied by making an online application to Ministry of Corporate
Affairs and submitting the physical application along with necessary identity and
Address proof of the person applying and prescribed fees.

Therefore, it is necessary for the person incorporating a Company in India to apply

for DIN of all persons, who are going to be directors in the Proposed Company.

Digital Signature Certificate: All the incorporation forms like Form 1, Form 32,
and Form 18 are filed electronically through the medium of Internet. Since all
these forms are required to be signed by the director of the proposed Company
and as all these forms are to be filed electronically, it is not possible to sign them
manually. Therefore, for the purpose of signing these forms, atleast one of the
directors of the proposed Company needs to have a Digital Signature Certificate
(DSC).

Therefore, one of the proposed directors of proposed Company should obtain a

digital signature before starting the process of incorporation

Ω STEP-III: Checking the Name Availability for Proposed Company

The next step is to decide the name for the proposed Company to be incorporated,
anyone intending to incorporate a Company has to evaluate his proposed name under
the following 4 given criteria’s:

Company with Similar Name: The proposed name of the Company should not be
similar to the name of the Company which is already registered in India.

For example:
Name of Company already registered : Oasis Water Treatments Pvt Ltd
Name of Proposed Company : Oasis Water India Pvt Ltd
Whether Proposed Name would be available: No

Prohibited Name: The Ministry of Company Affairs of India has prescribed certain
words, which should not form part of the name of Company intended to be
incorporated in India, such words are prohibited under The Emblems and Names
(Prevention of improper use) Act, 1950.

Names based on Authorized Capital: The Ministry of Company Affairs in

India has prescribed certain words, which if forms part of the
 name(whether at Beginning or in Middle) of the Company, than the proposed
Company to be incorporated shall have a prescribed minimum amount of
Authorized Capital.

Names Based on Approval: Various government regulatory authorities operating

in India like Securities & Exchange Board of India, Reserve Bank of India, has
prescribed certain words, which if forms part of the name of the proposed
Company to be incorporated, requires there first hand approval

To check out whether the particular name is available for incorporating a Company
in India, an application in Form 1A is required to be submitted with the concerned
Registrar of Companies.

Note: In case of incorporation a subsidiary Company, a copy of Board Resolution of

parent Company for incorporating a Subsidiary Company in India will be required.

Ω STEP-IV: Drafting of Memorandum & Articles of Association, Agreements and

Other Documents

The next important step in the process of incorporating a Company is to draft, prepare
and stamp the charter documents or Memorandum & Articles of Association of the
Company:

Memorandum of Association: This is the most fundamental document of the

Company which lays down the stone of its very foundation; it defines the main
constitution, activity, liability, capital with which the Company intends to carry on
after its incorporation.

Articles of Association: This document is secondary to the Memorandum of

Association and defines the rules and regulations governing the relation of the
Company with its shareholders.

Note: Both the Memorandum & Articles of Association are required to be stamped
to pay the stamp duty which is levied under the respective Stamp Law of the State
in which the registered office of proposed Company will be situated

Subscriber Sheet: subscriber sheet is part of both Memorandum and

Articles of Association. The promoters while incorporating the Company,
 are required to fill the subscriber sheet in their own hand writing giving their
identity in form of name, address, fathers name, occupation, number of shares
they will subscribe and all the subscriber will also be required to sign the same.

Ω STEP V- Preparing and Filing of Incorporation Forms

Along with the stamped Memorandum & Articles of Association, all the information
related to proposed Company like details of directors, promoters will be filed through
the medium of certain e-forms, which are briefly described below

eForm 1: Compliance Declaration

This form is in form of declaration, which states that the all the necessary legal
requirements, which are required to be fulfilled for incorporating a Company in
India have been complied with.

eForm 18: Registered Office Info

This form carries information in respect of address of registered office of the

proposed Company.

eForm 32- Information as to Directors

This form provides information in respect of the first directors of the Company.

All the above given forms shall be signed by any director of the proposed Company
for filing with the Registrar of Companies.

Power of Attorney

To-coordinate the process of incorporation with the officials of Registrar of

Companies, it is necessary for the promoters to authorize a professional, who can
co-ordinate the whole process on behalf of the promoters. Therefore the
promoters through a power of attorney authorize a professional like Company
Secretary, Advocate to carry on necessary formalities with regards to formation of
company at the office of Registrar of Companies.
Ω Certificate of Incorporation

After the officials at the office of Registrar of Companies are satisfied that all the
requirements in respect of incorporation have been complied with, thereafter they
will issue a Certificate of Incorporation, which is conclusive evidence that the
Company has been incorporated.
Incorporation by Foreign Promoters

Five Simple Steps to

Incorporate

 Step I: Deciding the Type of Company to be Incorporated

 Step II: Obtaining Directors Identification Number & Digital Signature Certificate
 Step III: Checking Name Availability for Proposed Company
 Step IV: Drafting of Memorandum & Articles of Association
 Step V: Preparing & Filing of Incorporation Forms
 Certificate of Incorporation

Ω STEP I: Deciding the Type of Company to be Incorporated

As per the Companies Act, 1956, basically there are two types of Companies which can
be incorporated in India, with an objective of profit making:

Public Companies

Private Companies

For the purpose of deciding the type of Company to be incorporated, it is necessary to

evaluate & understand the basic difference between both the companies, we can help
you decide the type of company which would be suitable for you.

Ω STEP-II Obtaining Director Identification Number & Digital Signature

After deciding the nature of company to be formed, it is necessary to have the

following before starting the incorporation process

Directors Identification Number: As per section 266A of the Companies Act, 1956,
no person can be appointed as the director of the Company until he has been
allotted the eight digits Directors Identification Number by the Ministry of
Company Affairs in India.
 The DIN can be applied by making an online application to Ministry of Corporate
Affairs and submitting the physical application along with necessary identity and
Address proof of the person applying and prescribed fees.

Therefore, it is necessary for the person incorporating a Company in India to apply

for DIN of all persons, who are going to be directors in the Proposed Company.

Note: Proofs of Identity and Address needs to be notarized in home country of

Director

Digital Signature Certificate: All the incorporation forms like Form 1, Form 32,
and Form 18 are filed electronically through the medium of Internet. Since all
these forms are required to be signed by the director of the proposed Company
and as all these forms are to be filed electronically, it is not possible to sign them
manually. Therefore, for the purpose of signing these forms, atleast one of the
directors of the proposed Company needs to have a Digital Signature Certificate
(DSC).

Therefore, one of the proposed directors of Proposed Company should obtain a

digital signature before starting the process of incorporation

Ω STEP-III: Checking the Name Availability for Proposed Company

The next step is to decide the name for the proposed Company to be incorporated,
anyone intending to incorporate a Company has to evaluate his proposed name under
the following 4 given criteria’s:

Company with Similar Name: The proposed name of the Company should not be
similar to the name of the Company which is already registered in India.

For example:
Name of Company already registered : Oasis Water Treatments Pvt Ltd
Name of Proposed Company : Oasis Water India Pvt Ltd
Whether Proposed Name would be available: No

Prohibited Name: The Ministry of Company Affairs of India has prescribed certain
words, which should not form part of the name of Company intended to be
incorporated in India, such words are prohibited under The Emblems and
Names (Prevention of improper use) Act, 1950.

Names based on Authorized Capital: The Ministry of Company Affairs in India has
prescribed certain words, which if forms part of the name(whether at Beginning or
in Middle) of the Company, than the proposed Company to be incorporated shall
have a prescribed minimum amount of Authorized Capital.

Names Based on Approval: Various government regulatory authorities operating

in India like Securities & Exchange Board of India, Reserve Bank of India, has
prescribed certain words, which if forms part of the name of the proposed
Company to be incorporated, requires there first hand approval

To check out whether the particular name is available for incorporating a Company
in India, an application in Form 1A is required to be submitted with the concerned
Registrar of Companies.

Note: In case of incorporating a subsidiary Company, a copy of Board Resolution of

parent Company for incorporating a subsidiary Company in India duly notarized and
consularized with Indian embassy in their home country will be required.

Ω STEP-IV: Drafting of Memorandum & Articles of Association, Agreements and

Other Documents

The next important step in the process of incorporating a Company is to draft, prepare
and stamp the charter documents or Memorandum & Articles of Association of the
Company:

Memorandum of Association: This is the most fundamental document of the

Company which lays down the stone of its very foundation; it defines the main
constitution, activity, liability, capital with which the Company intends to
carry on after its incorporation. For more information click here

Articles of Association: This document is secondary to the Memorandum of

Association and defines the rules and regulations governing the relation of the
Company with its shareholders. For more information click here

Note: Both the Memorandum & Articles of Association are required to be stamped
to pay the stamp duty which is levied under the respective Stamp Law of
the State in which the registered office of Proposed Company will be
situated

Subscriber Sheet: Subscriber sheet is part of both Memorandum and Articles of
Association. The promoters while incorporating the Company, are required to
fill the subscriber sheet in their own hand writing giving their identity in form
of name , address, fathers name, occupation, number of shares they will
subscribe and all the subscriber will also be required to sign the same.

Note: The subscription sheet which would be filled by the promoters in their own
hand writing shall be duly notarized and consularized with the Indian embassy in
there home country if the person is filling the same outside India

Ω STEP V- Preparing and Filing of Incorporation Forms

Along with the stamped Memorandum & Articles of Association, all the information
related to proposed Company like details of directors, promoters will be filed through
the medium of certain e-forms, which are briefly described below

eForm 1: Compliance Declaration

This form is in form of declaration, which states that the all the necessary legal
requirements, which are required to be fulfilled for incorporating a Company in
India have been complied with.

eForm 18: Registered Office Info

This form carries information in respect of address of registered office of the

proposed Company.

eForm 32- Information as to Directors

This form provides information in respect of the first directors of the Company.

All the above given forms shall be signed by any director of the proposed Company
for filing with the Registrar of Companies.

Power of Attorney

To-coordinate the process of incorporation with the officials of Registrar of

Companies, it is necessary for the promoters to authorize a professional, who can
co-ordinate the whole process on behalf of the promoters. Therefore the
promoters through a power of attorney authorizes a professional like Company
Secretary, Advocate to carry on necessary formalities with regards to formation of
company at the office of Registrar of Companies.

Ω Certificate of Incorporation

After the officials at the office of Registrar of Companies are satisfied that all the
requirements in respect of incorporation have been complied with, thereafter they
will issue a Certificate of Incorporation, which is conclusive evidence that the
Company has been incorporated.
GLOSSARY
Glossary

1. Articles of Association
2. Authorized Share Capital
3. Board of Directors
4. Certificate of commencement of business
5. Certificate of Incorporation
6. Companies Act
7. Crores
8. Digital Signature Certificate
9. Directors Identification Number
10. eform 1
11. eform 18
12. eform 1A
13. eForm 32
14. Equity Shares
15. Foreign Company
16. Foreign Promoter
17. Incorporation
18. Indian Promoter
19. Indian Company
20. Lakhs
21. Memorandum of association
22. Ministry of Corporate Affairs
23. Paid-up Share capital
24. Power of Attorney
25. Private company
26. Promoters
27. Public company
28. Registered office
29. Registrar of companies
30. Resolution
31. Share
32. Shareholders
33. State
34. Subscriber sheet
35. Subsidiary Company
ARTICLES OF ASSOCIATION

This document of the Company states the bye-laws or rules and regulations that
govern the management of its internal affairs and conduct of its business. It defines
the duties, rights and powers of governing body as between themselves and the
Company at large.

AUTHORIZED SHARE CAPITAL

This represents the maximum amount of shares which can be issued by the company;
it can also be increased further

BOARD OF DIRECTORS

The Directors of a company is collectively called as Board of Directors

BOARD MEETING

Meeting of board of directors

CERTIFICATE OF COMMENCEMENT OF BUSINESS

A Pubic Company cannot commence its business unless it has obtained certificate of
commencement by the Registrar of Companies

CERTIFICATE OF INCORPORATION

Certificate of Incorporation is a certificate given by Registrar of Companies , which is

the conclusive evidence of formation/incorporation of company in India

COMPANIES ACT

Companies Act, 1956 is the principal statute governing the law relating to companies
in India
COMPANY SECRETARY

Company Secretary is principal compliance officer of the company, only a person who
is the member of the Institute of Company Secretaries of India, a statutory body
constituted by government of India can be appointed as Company Secretary

CRORES

1Crore is equal to 10 million

DIGITAL SIGNATURE CERTIFICATE

Digital Certificates serve as your identity in the digital world. Just as a passport or a
driver's license is used to uniquely identify individuals in the physical world, digital
certificates are used to identify entities in digital transactions. Based on Public Key
Cryptography, these Digital Certificates associate every entity with a unique pair of
credentials - the public key and the private key. Only the owner of a Digital
Certificate has access to the private key and can use it to digitally sign and encrypt
any digital information such as emails, forms, files etc

DIRECTORS IDENTIFICATION NUMBER

An 8 digit numeric number issued by Ministry of Corporate Affairs to every person who
is a director or who intends to be director

eFORM 1

This form is in form of declaration, which states that the all the necessary legal
requirements, which are required to be fulfilled for incorporating a Company in India
have been complied with.

eFORM 18

This form carries information in respect of address of registered office of the proposed
Company.
eFORM 1A

This form is filed for the purpose of checking the name availability for companies

eFORM 32

This form provides information in respect of the first directors of the Company

EQUITY SHARES

Shares issued by the company carrying voting rights and which are not preference
shares.

FOREIGN COMPANY

Every company incorporated outside India under the laws of that country

FOREIGN PROMOTER

A Foreign national whether who wish to incorporate a company in India.

HOLDING COMPANY

A Company which holds more than 50% of the share capital of an Indian Company or
controls the composition of more than 50% of the Board of Directors of an Indian
Company is termed as Holding Company of that Indian Company

INCORPORATION

Process of formation or establishment of a Company

INDIAN PROMOTER

Indian national who wish to incorporate a company in India

INDIAN COMPANY

A Company registered under the Companies Act, 1956

LAKHS

1 Lakh is equal to 100 thousand or .01 million

MEMORANDUM OF ASSOCIATION

Memorandum of Association is the principal document of the Company which defines

its constitution and lays the down the foundation on which the structure of the
Company stands.

MINISTRY OF CORPORATE AFFAIRS

Wing of Government of India constituted to administer corporate law and affairs in

India.

PAID UP SHARE CAPITAL

That potion of authorized share capital which is actually been subscribed/purchased

Power of attorney

A legal instrument used to delegate power to others for special or general purposes

PRIVATE COMPANY

Company formed with the word ‘private’ in its name, having minimum paid capital of
Rs 1 Lakhs and the Articles of Association of whom contains the following restrictions:-

• Restricts the right to transfer its shares

• Limitation to the number of shareholders to 50 (excluding employees and former
employees)
• Prohibition towards invitation to the public to subscribe to shares and debentures
• Prohibits acceptance of deposits from persons other than shareholders, directors
and their relatives.

PROMOTERS

First shareholders of the company, who subscribe/purchase the initial paid-up

capital of the Company.
PUBLIC COMPANY

Company which is not a private company and has a minimum paid-up capital of Rs 5
Lakhs

REGISTERED OFFICE

Office which determines the jurisdiction of Registrar of Companies and on which

Income tax department and other regulatory authorities will serve their official
communication

REGISTRAR OF COMPANIES

Regulatory authority constituted by Ministry of Corporate Affairs for handling all filings
under Companies Act, 1956 and general administration related therewith.

RESOLUTION

General mode of taking a decision

SHARES

Unit of share capital of the company

SHAREHOLDERS

Every person who holds share of a Company

STATE

State means 28 states comprised in India.

SUBSCRIBER SHEET

Sheets attached to Memorandum & Association in which the initial shareholders

mention name & other particulars and number of shares subscribed along with
their signatures.
SUBSIDIARY COMPANY

A Company which holds more than 50% of the share capital of an Indian Company or
controls the composition of more than 50% of the Board of Directors of an Indian
Company is termed as Holding Company of that Indian Company and that later
company is known as Subsidiary Company
 FREQUENTLY
ASKED QUESTIONS
(FAQ)
FAQs

GENERAL
• What is an Indian Company?
• What is a Foreign Company?
• Is physical presence of shareholders/directors in India, is required to incorporate a
company in India?
• Are there any citizen or residency requirements in forming a business entity in the
India?
• Whether a foreign national can incorporate a company in India?
• I am a foreign company, which type of company should I incorporate in India?
• How can a Foreign Company establish a business in India?
• After I form a business entity in the India, what do I need to do in my home country?
• What are the documents which are required to be signed manually?
• By whom the manual documents are required to be signed?
• How I can get the physical documents
• What is the requirement of power of attorney?
• In case a Company registered outside India wants to incorporate a company, what
additional documents are required?
• What documents are required to be Consularized and Notarized for incorporation?
• What is a subscription sheet?

SHAREHOLDERS & DIRECTORS

• Can non-residents own shares in an Indian Company?

• Can a non-resident form a partnership firm in India?
• Whether a foreign national can be appointed as director of an Indian Company?
• It is necessary to have an Indian resident as a director of a company in India?
• What are requirements in respect of appointment of Company Secretary in India?
• Can a person be appointed as Nominee Director?
• Can a nominee shareholder be appointed?
• Is appointing a Nominee Shareholder secure?
• What are the eligibility criteria for Directors?
• Who is responsible to ensure compliance with company regulations?
• What responsibilities does a director have towards companies?
• Can directors be prosecuted?
NAME

• Can i choose any name i want for my company?

• Could my choice of name be rejected?
• What does "the same as" or “identical” mean?
• Which names need approval?
• What kind of company can be exempt from using 'limited' or ‘Private Limited’ in its
name?
• How can I change the name of my Company?

DIRECTORS IDENTIFICATION NUMBER

• Why is Directors Identification Number Required?

• Who will apply Directors Identification Number for proposed Directors?
• What are the additional documents required for applying Directors Identification
Number?
• How much time it takes to get the Directors Identification Number approved?

DIGITAL SIGNATURES

• What are the documents which are required to submit for obtaining Digital
Signature Certificate?
• Can I procure a Digital Signature from outside India?
• Is their any validity period of Digital Signatures?

AUTHORIZED & PAID-UP CAPITAL

• What are requirement in respect of share capital of a company?

• What are the minimum number of shares that are required to be subscribed to
incorporate a company
• When I will be required to bring in the required paid-up capital?
• Can authorized capital, be increased after incorporation?
• Is it possible to own 100% shares of a company in India?

REGISTERED OFFICE

• Why is registered office required?

• Can I change my registered office?
• Is it necessary to have a self-owned registered office?
• Can there be a single registered office for more than one company?
GENERAL
What is an Indian Company?

An Indian Company is a Company whether private or public, incorporated in India as

per the Companies Act, 1956.

What is a Foreign Company?

A Foreign Company is a company incorporated outside India under the laws of any
other country.

Is physical presence of shareholders/directors in India, is required to incorporate a

company in India?

No, physical presence is not required for incorporating a company in India.

Are there any citizen or residency requirements in forming a business entity in the
India?

No, there is no citizenship or residency requirement for setting up business entity in

India, any foreign resident can set-up and own any business entity in India except the
following businesses:

• Railways,
• Atomic Energy and Atomic Minerals,
• Postal Service,
• Gambling and Betting, Lottery and
• Retail Trading (except single brand)

I am not based in the India, what is the best entity to use for the formation and
operation of my business in the India?

In any business set-up, the type of business organization chosen to start up

the business plays a very important role as various taxation and other polices
varies from one business form to other. Though there are various types of
business forms like partnership , proprietorship available but keeping in view the
advantages and disadvantage of various business forms available, corporate business
forms stands to be most credible and renowned form of business entity all over,
overcoming the disadvantage and combining the advantages of other business forms.

The following will help to understand Corporate Business form better:

• Benefits
• Entity Comparison

Moreover corporate business can be controlled from outside India as there is no

requirement as to residency of the owners or directors

Whether a foreign national can incorporate a company in India?

A foreign national can incorporate a company in India and subscribe the equity shares
of that company but under the foreign Investment Policy of India, such investments
are categorized under two routes:

• Automatic Route:

Under the Automatic Route, the Government of India has prescribed the limit of
foreign investment in various sectors and if you are incorporating a company to
operate in that sector and within the limits of foreign investment allowed in that
sector, you can establish your company in India

In case their investment falls under the automatic route, a company can be
incorporated without any permission

• Approval Route

If you do not fall under the above route or you are making investment in sector more
that limit of foreign investment available in that sector, than you will be required to
take the permission of Foreign Investment Promotion Board for incorporating a
company in India

In case their investment falls under approval route, they have to take the permission
of relevant regulatory authority before incorporating a company.
I am a foreign company, which type of company should I incorporate in India?

Normally as per the data available, most of the foreign companies prefer to
incorporate a wholly owned subsidiary company in form of private company in India
due to following reasons:

• Functions in a closely held manner

• Minimal Government Intervention
• Less Legal Compliances

How can a Foreign Company establish a business in India?

A Foreign Company can establish business in India, through any of the following
modes:

• Incorporating a Subsidiary Company

• Entering into a Joint Venture
• Establishing Foreign Office

Incorporating a Subsidiary Company:

Subsidiary Companies is a private or public company in which more than 51%

shareholding is held by the another Company (whether Indian or Foreign), this mode is
the most commonly used method of establishing a business entity by Foreign
companies in India as these companies operate under full control of their parent
company and they also represent their parent company in India by using the name of
their parent company.

Entering into Joint Venture

Business established outside India, who are not familiar with the business environment
in India or who are not interested in directly entering into Indian markets, normally
find the business partners in India with whom they can enter into a joint venture and
create a joint venture company , in which they and their Indian partner owns capital
in agreed ratio
Establishing Foreign Office

Depending upon the need of business, there are other options available for setting up-
business in India , which are commonly known as foreign office, which are outline
below:

• Liasion Office
• Branch Office
• Project Office

After I form a business entity in the India, what do I need to do in my home

country?

The Indian laws do not provide for any such legal formality in your home country after
you set any business entity in India but the laws of your country any provide for
fulfilling certain legal compliances

What are the documents which are required to be signed manually?

The following documents are required to signed manually:

• Application for obtaining Directors Identification Number (if directors don’t have it)
• Application for obtaining Digital Signature Certificate
• Letter of Consent to act as Director of the proposed company
• Power of attorney by shareholders to appoint Professional to carry on incorporation
formalities
• Subscription sheet by shareholders mentioning their name, fathers, residential
address, occupation and number of shares
By whom the all documents required for incorporation will be signed?

Documents Signatory
Application for obtaining Directors Directors who do not have Directors
Identification Number Identification Number

Application for obtaining Digital Signature Director

Certificate

Letter of Consent to act as Director Directors

Power of attorney Shareholders

Subscription sheet Shareholders

Incorporation eforms Director who have Digital Signatures

What is the requirement of power of attorney?

Under the incorporation process, the Memorandum & Articles of the company are
vetted by registrar officials and in case they suggest any changes in the same, the
changes need to be verified by a professional and moreover to coordinate with
Registrar of Companies during the incorporation process, a professional is required.

Therefore, power of attorney is required to appoint such a professional. You will give
a power of attorney in the name of professionals empanelled by Incorp.in

In case a company registered outside India wants to incorporate a company

in India, what additional documents will be required?
A copy of resolution passed in the Board meeting of the company mentioning the
intention of the company to incorporate a company in India will be required.

What documents are required to be Consularized and notarized for incorporation?

The requirement of notarizing and consularizing any document only arises, when those
documents belong to any foreign national issued by an foreign authority or the
document have been prepared outside India.

Following documents are required to be notarized only:

• Identity Proofs of Directors

• Residential Address Proofs of Directors
• Copies of Passport of Directors.

Note: All the above documents are required for applying the Directors Identification
Number of proposed Director and if, the directors have already got it, no above
document will be required.

Following documents needs to be both notarized and Consularized:

• Copy of Board Resolution, in case a foreign company is incorporating the company.

• Subscription sheet .

What is a subscription sheet?

Subscription sheet is a part of Memorandum & Articles of Association of company to be

incorporated and is a declaration by the shareholder, that they intend to form a
company, it also contains the Name, Father Name, Address, Occupation and Number
of shares purchased by them and their signatures. It will be filed by shareholders in
their own hand writing.
SHAREHOLDERS & DIRECTORS

Can non-residents own shares in an Indian Company?

Yes, a non-resident can own shares in an Indian company subject to the fulfillment of
requirement of Foreign Investment policy, for more details click here

Can a non-resident form a partnership firm in India?

No, only a Non-Resident Indian (NRI) can form a partnership firm in India

Whether a foreign national can be appointed as director of an Indian Company?

Yes, a foreign national can be appointed as a director of an Indian Company

incorporated, there are no restrictions as to his appointment.

It is necessary to have an Indian resident as a director of a company in India?

No, it is not necessary to have any Indian resident as the director of Indian Company.

What are requirements in respect of appointment of Company Secretary in India?

As per section 383A of the Companies Act, 1956 every company who has paid-up
capital of more than Rs 2 Crore, will be require to appoint a whole time Company
Secretary and such person shall be a member of the Institute of company Secretary of
India

Can a person be appointed as Nominee Director?

Only Financial Institutions who has provided any type of financial assistance or
company, who is holding any share in another company, can a person as Nominee
Director to safeguard his interest

Can a nominee shareholder be appointed?

Yes, a nominee shareholder can be appointed and after the appointment the person ,
who is the real owner of the shares held by the nominee shareholder is
required to file a deceleration to the company as to his ownership to the
shares held by Nominee Shareholder and the nominee shareholder himself is
require to file a deceleration that the real owner of share held by him is some one
else.

Is appointing a Nominee Shareholder secure?

Yes, appointing a nominee shareholder is secure due to the following reasons:

a) He cannot transfer/ sell the shares without the written permission of real
owner of shares
b) He can only vote at meetings of shareholders with express instructions of the
real owner.

What are the eligibility criteria for Directors?

There is no eligibility criteria prescribed for being appointed as director of any Indian
Company but the Companies Act, 1956 provide that any person who fulfils any of the
following conditions, would be disqualified to be appointed as Director:

• He has been found to be of unsound mind by a Court of competent jurisdiction and

the finding is in force;
• He is an un -discharged insolvent;
• He has applied to be adjudicated as an insolvent and his application is pending;
• He has been convicted by a Court of any offence involving moral turpitude and
sentenced in respect thereof to imprisonment for not less than six months, and a
period of five years has not elapsed from the date of expiry of the sentence;
• He has not paid any call in respect of shares of the company held by him, whether
alone or jointly with others, and six months have elapsed from the last day fixed for
the payment of the call; or
• An order disqualifying him for appointment as director has been passed by a Court
in pursuance of section 203 and is in force, unless the leave of the Court has been
obtained for his appointment in pursuance of that section.
• Such person is already a director of a public company which,-
o Has not filed the annual accounts and annual returns for any continuous
three financial years commencing on and after the first day of
april,1999; or
o has filed to repay its deposit or interest there on due date or deem its
debentures on due date or pay dividend and such failure continues for
one year or more:

Provided that such persons shall not be eligible to be appointed as a director

of any other public company for a period of five years from the date on which
such public company in which he is a director failed to file annual accounts and annual
returns under sub-clause (a) or has failed to repay its deposit or interest or redeem its
debentures on the due date or pay dividend referred to in clause (b).

Who is responsible to ensure compliance with company regulations?

Basically the directors of the company are the person those who are responsible to
ensure the compliance of the provision of the Companies Act, 1956 and in certain
cases, the directors can assign to any person with his consent the responsibility to
ensure the compliance of particular provision of the Act. Section 5 of the Companies
Act, 1956 provides that in event of default of any provision of the Act, the following
persons shall be held responsible:

a. The managing director or managing directors;

b. The whole-time director or whole-time directors;
c. The manager
d. The secretary;
e. Any person in accordance with whose directions or instructions the Board of
directors of the company is accustomed to act;
f. Any person charged by the Board with the responsibility of complying with that
provision Provided that the person so charged bas give his consent in this behalf to
the Board;
g. Where any company does not have any of the officers specified in clauses (a) to (
c), any director or directors who may be specified by the Board in this behalf or
where no director is so specified, all the directors

What responsibilities does a director have towards companies?

The directors are the people who are responsible to manage the company; they hold a
position of trust towards the company and are accountable to the shareholders as to
the performance of the company.

Can directors be prosecuted?

Under various provision of the Companies Act, 1956, a director can be prosecuted, if
found guilty of default.

How many members are required to incorporate a company in India?

Private Company: There must be Minimum 2 and Maximum 50 Shareholders (excluding
employees and former employee who are shareholders).

Public Company: There must be Minimum 7 and there is no limit for maximum number
of Shareholders but in case the number of members increases to more than 50, than
there should be public offer by the company to increase the number further subject to
fulfillment of requirement laid down by Securities Exchange Board of India.

NAME

Can i choose any name i want for my company?

No, you cannot choose any name for your company, the Companies Act prescribed
guidelines for determining the name of your company, under the said guidelines, any
name of the company should pass the following test:

• The name of the company should not be identical with a already registered name
• The name should not be prohibited.
• The company has prescribed authorized capital to have that name
• In case, the name requires the consent of any regulatory authority, the consent has
been obtained.

Could my choice of name be rejected?

Yes, your name can be rejected, if it fulfills any of the below conditions:

• It is identical with an already registered name

• It contains any prohibited word
• It does not have the required permission from any regulatory authority.

What does "the same as" or “identical” mean?

The terms “Same as” or “identical” signifies that the proposed name of company
should not be similar or identical with an already registered name, normally a name is
considered as identical, if 2 starting words of any name matches with an already
registered name.

For example:
Already Registered Name: Oasis water products limited

New Name: Oasis water India Limited.

Which names need approval?

The following names require approval:

Proposed Name Approval Required

Venture Capital/Venture Capital Department of Economic Affairs/ SEBI
Company/Venture Capital
Fund/Venture Capital Finance
Company
Stock Exchange/Mutual Funds Securities and Exchange Board of India

Bank, Banking Reserve Bank of India

What kind of company can be exempt from using 'limited' or ‘Private Limited’ in its
name?

Non-Profit Associations, which are incorporated with the following objectives:

• For promoting commerce, art, science, religion, charity or any other useful
objects ; and

• The Company prohibits payment of any dividend to its members but intends to
apply its profit and other income in promotion of its objects

And those who have been granted approval by the Government of India, are exempted
from using the words 'limited' or ‘Private Limited’ as part of their name

How can I change the name of my Company?

The name of company can be changed by passing a special resolution (3/4th Majority)
in a meeting of the shareholders of the company and after obtaining the consent of
Registrar of Companies but the new name should signify the current business activity
of the company.
DIRECTORS IDENTIFICATION NUMBER
Why is Directors Identification Number required?

As per the provisions of the Companies Act, ever person who is going to be appointed
as Director of any company in India needs to obtain Directors Identification Number

Who will apply the Directors Identification Number for Directors?

Applying Directors Identification Number comes as part of Incorp.in’s Incorporation

package, you only need to provide us the information , document and just sign the DIN
application, generated by us and rest of part will be taken care by us.

What are documents that are required for applying Directors Identification
Number?

Following documents are required:

Indian National Foreign National

Identity Proof Identity Proof

Present Residential Proofs Present Residential Proofs

One Photo One Photo

Passport
Note:

• The Identity / Residential Proofs/Passport are need to notarized by a notary in their

country, in case of foreign National
• Proofs like Electricity Bill, Phone Bill, Bank Statement should not be more than two
months old.
• In case, the proofs are in language other than English, translated and notarized
copies of same should be provided

How much times it takes to get the Directors Identification Number approved?

It takes atleast 2-3 days to get the Directors Identification Number approved from the
time, the application along with required documents is provided.

DIGITAL SIGNATURES
What are the documents which are required to be submitted for obtaining Digital
Signature Certificates?

Following documents are required:

Indian National Foreign National

Identity Proof Identity Proof

Present Residential Proofs Present Residential Proofs

One Photo One Photo

Certificate from Bank verifying the

signatures or certificate from an Indian
Company, if any in which he is a Director

Note:

• The Identity / Residential Proofs are need to notarized by a notary in their

country, in case of foreign National
• Proofs like Electricity Bill, Phone Bill, Bank Statement should not be more than two
months old.

Can I procure Digital Signatures from outside India?

No, only Digital Signatures issued by companies in India which has been authorized by
Controller of Certifying Authority of India is acceptable.]

In their any validity period for Digital Signatures?

Yes, the validity period for digital signatures is one or Two year, which can be
renewed after the expiry of, said period.

AUTHORIZED & PAID-UP SHARE CAPITAL

What are requirement in respect of share capital of a company?

Companies have share capital, this share capital is divided into various equity shares
of certain value i.e. it may of Rs.1, Rs. 10, Rs 100 or any other denomination.

For incorporating a company, you needs to purchase these shares, the number of
shares required to be purchased depends upon the nature of company whether its is
public limited Company or private Limited Company
For example : A Private Limited Company needs to have minimum paid-up share
capital of Rs 1 Lakhs, for incorporating a private limited Company you needs to
purchase such number shares , so that the share capital is not les than Rs 1 Lakhs

For example: 10000 shares @ Rs 10/- equals to Rs 1 Lakhs

What are the minimum number of shares that are required to be subscribed to
incorporate a company?

Paid-up share Capital is that part of Authorize Share Capital which is being actually
being allotted to the shareholders and on which they had paid money to the company.

The Companies Act, 1956 has prescribed the minimum amount of paid-up capital every
company incorporated in India:

• Public Companies: Rs 5 lakhs

• Private Companies: Rs 1 Lakhs

When I will be required to bring in the required Paid-up Capital?

As soon as the company is incorporated, the required paid-up capital will be brought
in. The company will open a bank account, in which the shareholders will deposit the
money either by cheques or transfer through their bank account.

Can authorized Capital, be increased after incorporation?

Yes, the authorized capital can be increased with approval of shareholders of the
company.

Is it possible to own 100% shares of a company in India?

An Indian national can own 100% shares of an Indian Company but in case of Foreign
National, he can also hold the same subject to the Foreign Direct Investment Policy.

REGISTERED OFFICE
Why is registered office required?

Registered Office is required for following purposes:

• For holding the Annual Meeting of shareholders

• For receiving the correspondence from statutory authorities and shareholders
• Determining the jurisdiction of Registrar of Companies

Can I change my registered Office?

Yes, you can change your registered office

Is it necessary to have a self-owned registered office?

No, a self owned registered office is not required, company can also have leased or
rented registered office

Can there be a single registered office for more than one company?

Yes, more than one company can have the same registered office.
ANNEXURE
ANNEXURES
Annexure 1

EXEMPTIONS FOR PRIVATE COMPANIES

CRITERIA EXEMPTION/PRIVILEGES

Membership Minimum number of member required is only 2

Flexibility in issue of Further shares can be issued without approval of shareholders

shares and Central Government and even without offering to existing
shareholders

Commencement of Business can be commenced immediately on incorporation

Business and without obtaining certificate of commencement of
business

Conducting of No statutory meeting needs to be conducted

Statutory meeting

Commencement of Company can commence business mentioned in other objects

new business of Memorandum of Association without the approval of
Shareholders

Directors Only 2 Directors are required

Increase in number of No, approval of Central Government is required for increase

Directors in number of directors beyond 12.
Consent of Board of No consent of board of directors is required for actions:
Directors • Sell/dispose of wholeor substantially the whole of
undertaking of the company
• To invest otherwise than in trust securities amount of
compensation received by company in respect of
compulsory acquisition of property
• Borrow money exceeding the aggregate of companies
paid-up capital and free reserves
• To contribute to charitable and other funds exceeding Rs
50,000 or 5% of the Companies average net profits during
proceeding 3 financial years

Retirement of Directors need not retire every year

Directors

Appointment of No approval of central Government is required for

Managing or appointment of Managing or Wholetime Director
Wholetime Director

Loan to Directors Can easily provide loan to Directors without any approval

Remuneration to There is no limit as to the amount of remuneration which can

Directors be paid to Directors or managers

Participation by Interested Directors can also participate and vote on a

interested directors business, in which he is interested

Financing of Purchase Company can provide financial assistance for purchase or

subscription of its own shares

Provisions concerning Articles of Association of the Company can provide for

shareholders meetings regulations relating to general meeting without being subject
to statutory provisions of the Act.
No restriction on There are no restrictions as to the amount that can be given
inter-corporate by way of inter-corporate loan or investment
investments or loans

Ascertainment of Provisions relating to method of ascertainment of profits and

profits and ascertainment of depreciation does not applies
depreciation

Restriction on Company Law Board cannot restrict any change in Board of

Company Law Board Directors which can be prejudicial to the Company
Annexure II
PROHIBITED NAMES
NAMES
National, Union, Central, Federal, Republic,
President, Rasthrapathi, Small Scale Industries,
Cottage Industries, Financial Corporations,
Municipality, Panchayat or any other word
imparting connection Union or State Government
State together with the name of Particular State
for e.g. Delhi state corporations Ltd
Ashoka Chakra, Dharma Chakra, Name of
Parliament , Sate Legislature
Rama Krishna Math, Ramakrishna Sarada Mission,
Bharat Scouts, Interpol
Chhatarpait Shivaji Maharaj, Mahatma Gandhi or
the name of any Prime Minister/President of
India
REASONS
It signifies Government Patronage
or Participation
It gives an impression that the
state is also participating in the
paid up share capital of the
company
Prohibited Under Emblems &
Names (Prevention of Improper
Use ) Act, 1955
Prohibited Under Emblems &
Names (Prevention of Improper
Use ) Act, 1955
Prohibited Under Emblems &
Names (Prevention of Improper
Use ) Act, 1955
NAMES BASED ON AUTHORIZED CAPITAL

The following Key words if forms the part of the proposed name of the company, then
the company must have a prescribed minimum Authorized Capital which is given
below:
KEY WORDS MINIMUM
AUTHORIZED
CAPITAL
Corporation 5 Crore

International, Globe, Universal, Continental,, Inter- 1 Crore

Continental,, Asiatic, Asia, being the first name of the
company For e.g. International Rubber Ltd

If International, Globe, Universal, Continental,, Inter- 50 Lakhs

Continental,, Asiatic, Asia is used within the name (whether
with or without bracket) for e.g.: Jindal International Ltd or
Jindal (International) Ltd

Hindustan India, Indo, Bharat, being the first name of the 50 Lakhs
word for e.g. Hindustan Latex Ltd

If Hindustan India, Indo, Bharat is used within the name 5 Lakhs

(whether with or without bracket) for e.g.: Jindal India Ltd or
Jindal (India) Ltd

Industries or Udyog 1 Crore

Enterprises, Products, Business, Manufacturing 10 Lakhs

Investment/Leasing/Hire-Purchase/Finance 2 Crore
Asset Management Company 5 Crore

Equity Brokers/Stock Brokers/ Securities 10 Lakhs

Commodity Broker 50 Lakhs

Insurance Broker 50 Lakhs

CERTAIN NAMES WHICH REQUIRES PREVIOUS APPROVALS

PROPOSED NAME APPROVAL REQUIRED

Venture Capital/Venture Capital Company/Venture Department of Economic

Capital Fund/Venture Capital Finance Company Affairs/ SEBI

Stock Exchange/Mutual Funds SEBI

Bank, Banking Reserve Bank of India

French, British or name of any country Unless the proposed
company has any business
collaboration in that
country
Annexure III

STATUTORY FEES FOR INCORPORATING A COMPANY IN INDIA

Statutory fee for incorporating a company in India is a combination of following

two fees:

 Statutory Fees for filing Memorandum of Association

 Statutory Fees for filing Articles of Association, eForm 1, 18 & 32.

Statutory Fees for filing of Memorandum of Association

Particulars Amount
For incorporation of company whose authorized share Rs 4000
capital dos not exceed Rs 100000
For incorporation of company whose authorized share
capital exceeds Rs. 100,000, the above fess of Rs 4000
with the following additional fees regulated according to
authorized capital:

For every Rs.10,000 of nominal share capital or part Rs. 300

of Rs. 10000 after first Rs. 1,00,000 upto Rs 5,00,000

For every Rs.10,000 of nominal share capital or part
of Rs. 10,000 after the first Rs.5,00,000 upto Rs. Rs 200
50,00,000

For every Rs. 10,000 of nominal share capital or part
of Rs. 10,000 after the first Rs. 50,00,000 upto Rs. 1 Rs. 100
Crore

For every Rs. 10,000 of the nominal share capital or
part of Rs. 10,000 after first Rs 1 Crore Rs 50
Statutory Fees for filing of Articles of Association, eForm 1, 18 & 32

Amount
Particulars (per document)
For incorporating a company having authorized capital of Rs 200
Rs 1,00,000 or more but less than Rs. 5,00,000
For incorporating a company having authorized capital of Rs .300
Rs 5,00,000 or more but less than Rs. 25,00,000
For incorporating a company having authorized capital of Rs. 500
more than Rs. 25,00,000
ABOUT US
ABOUT US

Incorp.in, is a venture promoted by Corporate Professionals group, India’s leading

incorporation service provider. The Company has to its credentials, the setting-up of
first online company in India and setting-up of company in One Hr.

Incorp.in is designed to facilitate and ease the process of setting-up of business in

India by providing the required information and support. We have developed
customized solution and products, that best suits all your business set-up needs, we
are the pioneers in the filed of incorporations in India and have developed the
requisite skills and knowledge to serve you the best in the business.

We are committed in helping entrepreneurs and business owners learn about

incorporation, how to set-up business in India and its benefits, as well as helping them
easily and affordably to undertake this important business step without compromising
quality.
 OUR
SERVICES
Our Services

Our boutiques of services to meet your needs are underlined below:

Incorporation of Companies

Establishing Foreign offices

Complete Business Set-up Services

Shelf Company

Nominee Incorporations

Corporate Kit

Certified True Copy

Registered Office

Bank Account opening

Tax Numbers

Audit Services

Book Keeping

Secretarial record keeping

Amendment Services

Conversion Services

Corporate e Search

Legal Opinions

IPR Registrations

Drafting Joint Venture Agreements

Due-Diligences
CONTACT US
CONTACT US

Indian Office

Corporate Professionals (India) Pvt. Ltd

D-28 South Extension-I
New Delhi 110049
Tel: +91 11 40622200
Fax: +91 11 40622201
Email: info@indiacp.com
http://www.corporateprofessionals.com

Overseas Office
Corporate Professionals UK Limited
Spaces Business Park, Elstow Road
Bedford MK 42 8PL (UK)
Tel: +44 07766104291
Fax: +44 01234262871
Email: samrat@corporateprofessionals.co.uk
Disclaimer

This paper is a copyright of Corporate Professionals (India) Pvt Ltd. The author
and the company expressly disclaim all and any liability to any person who has
read this paper, or otherwise, in respect of anything, and of consequences of
anything done, or omitted to be done by any such person in reliance upon the
contents of this paper.