Company Registration in India involves the following steps:
Step 1: Obtain approval for the name
As a first step in obtaining approval for a company name, the Ministry of Corporate Affairs must be consulted to reserve it. Name approval applications can be submitted with up to two names that express the business objectives of the company. If a name approval application is rejected, it can be resubmitted with up to two additional names. All name approval applications are typically approved in less than five working days by the MCA.
Step 2: Director’s digital signature
There is an official policy of the Indian Ministry of Corporate Affairs that wet signatures are not allowed. Consequently, all signatures required for filing with the MCA must be completed with a digital signature that has been issued by a Certification Authority in India. Therefore, digital signatures for the Directors are mandatory for incorporation.
The Directors will be able to obtain a digital signature from IndiaFilings through an Authorized Certifying Authority that will handle the process for them. Directors will need to submit a copy of their identification proof as well as a video KYC process in order to obtain their digital signature. If the Director is a foreign national, the passport and other documents submitted must be apostilled by a local embassy if they are foreign nationals.
Step 3: Submitting an application for incorporation
When the digital signatures are obtained, the incorporation application can be submitted with all necessary attachments to the MCA in SPICe Form. The Memorandum of Association and Articles of Association of the company are filed with the incorporation application. An Incorporation Certificate and PAN of the company are granted if the MCA finds the incorporation application complete and acceptable. Most incorporation applications are accepted by the MCA within five working days.
Private Limited Company Compliances
The following is a list of the various compliances a company would need to maintain after company registration in India in order to avoid penalties and prosecution:
Chartered Accountant Appointment: Within 30 days of incorporation, every Indian company must appoint a practicing and licensed Chartered Accountant registered with the ICAI.
DIN KYC for directors: Directors who hold a Director Identification Number (DIN), which is assigned during incorporation, are required to submit DIN KYC every year to confirm their phone number and email address.
Business Start-Up: The company must open a bank current account within 180 days of incorporation, and the shareholders must deposit the subscription amount mentioned in the company’s Memorandum of Understanding. The shareholders must deposit Rs. 1 lakh in the company’s bank account and file the bank statement with the MCA before the company can issue a certificate of commencement of business. Assume that the company will have a paid-up capital of Rs.
MCA Annual Filings: The Ministry of Corporate Affairs requires all companies incorporated in India to submit financial statements every financial year. Incorporating between January and March allows a company to submit its first MCA annual return at the end of the next financial year. MCA annual returns consist of Form MGT-7 and Form AOC-4, which must both be digitally signed by the Directors and a professional.
Filing an income tax return: Each financial year, all companies must file a Form ITR-6 income tax return. Companies must file income tax returns for each financial year by the due date – regardless of when they were incorporated. A director’s digital signature must be used to sign the income tax return of a company.