Company Formation in India

🏢 Company Formation in India

India has become a prominent global business centre with significant potential for startups, established companies, and international investment opportunities. The first formal step to establishing a legal presence in India is to register your business with the Companies Act, 2013.

All entities that wish to register their business in India must choose one of the following corporate structures: Private Limited Company, Public Limited Company, One Person Company (OPC), Limited Liability Partnership (LLP), or establish a branch office or liaison office of a foreign corporation. Foreigners are allowed to hold up to 100% equity in some sectors of Indian business, and they may also act as directors in addition to a resident director.

In order for a business to apply for registration in India, it must first acquire a digital signature certificate (DSC), obtain a director identification number (DIN), obtain approval for its company name, and submit its memorandum of association (MoA) and articles of association (AoA) with the registrar of companies. After the registrar issues the business with a certificate of incorporation along with its permanent account number (PAN) and tax collection account number (TAN), the business will need to continue annual compliance filings, audit requirements, tax registrations, and obtain necessary licenses based on industry type.

Private Limited Company

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A Private Limited Company in India is a respected sign of that a company has been created according to the highest standards hence providing credibility to business entities and being able to provide investor-related features that are attractive to different investors.

Key Advantages

Separate legal entity, can own assets, enter into contracts
Limited Liability protects personal assets
Perpetual Existence
High credibility for investors and loans
Eligible for corporate tax benefits

Basic Requirements

Directors: Minimum 2 and up to 15 Directors
Shareholders: Minimum 2 and up to 200 shareholders
Residency of Directors: One must be a resident of India
Capital Requirement: No minimum capital requirement
Registered Office: Must maintain a valid registered office in India
Company name: Must be unique and end with "Private Limited"

Incorporation Steps

Obtain digital signatures and apply for digital identification numbers
File an application for name approval using SPICe+ Part A
Draft Memorandum of Association and Articles of Association
File the SPICe+ application to obtain PAN, TAN, EPFO and ESIC
Pay any fee associated with obtaining your Certificate of Incorporation

Upon incorporation, companies must remain in compliance by filing annual returns, conducting meetings and maintaining statutory records.

Public Limited Company

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Public Limited Companies are an appropriate choice for organizations that intend to carry on business on a large scale and raise money from the public. In India, public limited companies are mainly governed by the Companies Act, 2013. Public Companies can be both listed on Stock Exchanges or unlisted.

Key Advantages

Issue shares to the general public and list on stock exchange
Separate Legal Entity
Free Transferability of Shares
Full transparency through Prospectus

Basic Requirements

Shareholders: Minimum of 7, no upper limit
Directors: At least 3, maximum 15
Authorized Capital: Minimum ₹1 lakh
Company name: Must end with "Limited"
Registered Office: Required with NOC if renting

Registration Process

Obtain a Digital Signature Certificate (DSC)
Apply for Director Identification Number (DIN)
Reserve Company Name
Prepare MOA and AOA
Fill out the SPICe+ Form
ROC Review and Issue COI
Open Bank Account and Certificate of Commencement

Wholly Owned Subsidiary

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In India, a company is classified as a Wholly Owned Subsidiary if a foreign parent company holds 100% of its share capital. A Wholly Owned Subsidiary is the preferred entry option for companies seeking a strong, independent, and long-term presence in India.

Key Advantages

Complete ownership and control
Full autonomy in decision making
Separate legal entity with limited liability
Flexibility under FDI Policy

Criteria

100% shareholding by foreign parent
Minimum 2 directors, one Indian resident
Minimum 2 shareholders (parent holds 99%)
Registered Office in India

Procedure

Name Reservation
Obtain DSCs
Apply for DIN
Draft MOA and AOA
File incorporation documents
Allot PAN/TAN, open bank account
Foreign Capital Infusion and RBI filing

One Person Company (OPC)

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The OPC or One Person Company is a new type of Company introduced in the Companies Act, 2013 to provide an individual Entrepreneur with all the benefits.

Key Advantages

Single member ownership
Limited liability protection
Separate legal entity
No minimum capital requirement
Simplified compliance (no AGM required)

Pre-requisites

1 natural person member (Indian resident or NRI)
1 nominee (Indian resident)
Minimum 1 director
Name ends with "(OPC) Private Limited"
Registered Office in India

Registration Process

Name Reservation
Obtain DSC & DIN
Prepare documents (MOA, AOA, INC-3)
File SPICe+ Form (Part B)
Additional registrations (PAN, TAN, etc.)
Obtain Certificate of Incorporation

Limited Liability Partnership (LLP)

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An LLP may be used to form partnerships that have limited liability, allowing professionals to conduct business in a manner similar to how corporations operate.

Key Advantages

Limited liability to capital contribution
Separate legal entity
No maximum capital required
No double taxation
Perpetual succession

Basic Requirements

At least 2 partners
2 designated partners (one Indian resident)
Unique name ending with "LLP"
Registered Office in India

Registration Process

Obtain DSCs
Get DPIN
Reserve LLP Name
Complete FiLLiP Form
File LLP Agreement (Form 3)
Start Operating

Company Formation in India