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All you need to know for registering a company

As startups, we all stay focused on initial growth, but often overlook legal aspects. Read this to know some important requirements and processes to register a company.

Starting a business, especially when it is a corporate entity is very essential step taken by any entrepreneur. Every person seeks to get a flawless start of the business when it comes to Compliance with Legal Provisions. Not necessarily, a layman would be aware about the provisions applicable and to be complied with while registering of any organisation; pros and cons associated with the Organisation structure; pre and post incorporation steps including maintenance, etc. Hence, if you are willing to know about what is must while registering as a Limited Company and what shall not be overlooked, do read this blog and safeguard your Private and Public Limited Company.


First,  let’s know about the provision with respect to Persons involved in Registering Limited Company. In a company, being Private or Public Company, the owners and Managerial Personnel are to be called as Members and Directors respectively.

The members are also known as Shareholders or Subscribers to Memorandum. However, these three terms are having minor differences with their meanings. The shareholders of a company can be any Individual or Body Corporate or any Association thereof. In case of an individual, any person other than minor can be owner.

The shareholders can be Resident in India or NRI or even foreign Individual or Entity. However, in case of person being foreigner has to look after the FDI norms before investing in any company.

The personnel responsible for the management of the company are Directors of the company. The Directors are the decision maker and hence are known as “Brain of the Company.”

The company can be registered as a private company with a minimum 2 directors and Public Company with minimum 3 Directors. Maximum number of Directors that can be appointed by Ordinary Resolution is 15. Further, in any Indian Company, at least 1 Resident Director shall be appointed. A Resident Director is one who has been residing in India for not less than 182 days during in the previous calendar year.

Secondly, the object of the Limited company is an important aspect. Of course, any entity is established with the intention to carry on some business activities. The object of the company shall be chosen very carefully as it is to be approved by the Ministry. The object of the company shall be legal and not opposed to public policy or prohibited by any provisions of any law applicable in the Country. Further, diversified activities under one roof are also not acceptable by ministry.

The main object of registering limited company can be drafted after consulting with the Professionals. Further, in additional to the main object of the company, ancillary objectives and activities are also to be provided as the company cannot indulge activity other than that mentioned in the Object clause of the MOA.

Where the activities require the approval of any authority, such as RBI or IRDA or any such authorities, the approval of the same shall be obtained in advance. Companies whose activities includes activities of Insurance, Electricity manufacturing and distribution, Financial Intermediaries, Stock Market and Stock Broker, etc. requires in-principle approval of appropriate authority before filing application of Name Approval. Also, these companies require following the Rules and Regulation lay down by appropriate authority.

Third, significant aspect to be considered is the Name of the company. The name of the company shall be decided keeping in mind two main parts, being uniqueness and shall have some linkage to the main object of the Company.

The whole name or part of name of the company can be newly invented or can be a coined word with mixture and combination of two words. This ensures the uniqueness of the name. This word can be added as prefix in the company name so that it provides different and distinguished identity to the company.

As mentioned, other part of the name shall suggest the activities of the company so that any targeted consumers can easily identify the activity and approach the company for their requirement. These works as middle part of the name.

The company by virtue of its nature and registration shall add “Private Limited” or “Public Limited” or “(OPC) Private Limited” at the end of its name.

Considering the legal aspects, the name shall be chosen very carefully, which does not involve any legal consequences. The name of the company shall not be prohibited by any law prevailing in the country. There are certain lists of words, which are prohibited to use as a part of company name or requires permission of Government. Also, it shall not be very identical or similar to any existing any Company or LLP existing or any Trademark in India. The availability of name can be checked in MCA portal at following link http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do.

Fourth, requirement to be looked after is capital to be introduced.

Capital in any company can be classified into Authorised Capital and Paid-up Capital. Authorised capital shows maximum amount of capital, a company raise by way of issue of shares at present or in future whereas the Paid-up Amount shows the actual amount raised by the company i.e. paid by shareholders to the company on issuance of shares. A company can be incorporated by any amount of Paid-up capital, which can be less than authorised capital but not exceeding such.

The capital of the company decides the share in ownership of the company. In a Private Company, the minimum authorised capital is Rs 1 lakh whereas in case of Public Company, the minimum authorised capital is Rs 5 lakh. However, there is no minimum requirement for the amount of paid-up capital.

Documents are to be submitted for verification of application; hence importance of the same cannot be overlooked. We have already discussed the requirement of the documents in another blog "documents required for a private limited company registration ". In addition to the documents discussed in the blog, two documents in form INC 9 and DIR 2 are submitted along with the application of Incorporation.

Form INC 9 is an affidavit given by the Directors and Subscribers to MOA, who affirms that the director/ Subscriber himself is not convicted for any offence in connection with an incorporated company  and all the documents filed with RoC are correct and complete in every manner. This affidavit makes the person liable for any false statements in any documents or information submitted.

Form DIR 2 is provided by the proposed directors of the company to give the consent to act as Director in the company.

In addition to these two forms, the most significant documents in the company are MoA and AoA of the company. Significance and requirement of the same are to be discussed in the next blog.

In addition to above point one topic, which seeks high attention is the role of Practising Professional, which has always been highly controversial. People think that there is no requirement of Practising Professionals like Company Secretaries or Chartered Accountant as one can easily register their business as limited company. However, it is very true that the role of professional is very much vital in Incorporation of company.

The law itself mandates involvement of Professional in this procedure. Any discrepancy or mistake in the Incorporation may lead to non-compliance of law applicable. Further, the Professionals such as Company Secretaries and Chartered Accountants are relied for stated purpose because of their expertise and knowledge regarding the procedure and provisions. Various Certifications are provided by professional in incorporation process, which makes the organisation highly credible than other types of entities.

Also, if any false statement or fraudulent actions are found during the process, such professionals are criminally liable and can be punished as per the law applicable.

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