Registration of any legal entity that is recognized under law, to carry out business related activities, is mandatory under the Companies Act 2013. The Ministry of Corporate Affairs (MCA) manages all aspects related to company registration in India and all types of corporate affairs. The selection of the type of company registration depends on the objectives of the business and the required structure of the business entity.
How to register a company?
There are different rules and regulations for registering different types of companies in India. The features, benefits, company registration processes, investment opportunities, tax regulations, documents required, maximum turnover limits, shareholding patterns and regulatory compliance depends on the type of company’s registration. If the applicant needs financial support for registering his/her company, they can visit paisabazaar.com to gain information regarding the types of registration processes.
Further let’s discuss popular types of company registration processes applicable in today’s financial market. Some of the important types of company formations include the following:
- Private Limited Company
- Public Limited Company
- Sole Proprietorship Firm
- Limited Liability Partnership
- Partnership Firm
- Non-Banking Financial Company
- Micro Finance Company
- Nidhi Company
Types of Companies and their registration process
The Private Limited Company is the most-popular type of new company registration in India. A Pvt. Ltd. Company is a privately-owned business entity in which minimum 2 directors are required to register a private limited company.
- Apply for a Digital Signature Certificate (DSC) and Director’s Pin (DPIN).
- Provide at least 3 optional company names which denote the company’s business.
- Draft the Memorandum of Association (MOA) and Articles of Association (AOA).
- Apply for a Corporate Identification Number (CIN) and Incorporation Certificate.
- Get your Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) of the company.
Public Limited Company
A Public Limited Company is large-scale company which can raise funds from the people in lieu of certain number of shares. There should be at least 7 shareholders in the company out of which 3 should be directors and the company should have minimum share capital of INR 5 lakh.
- To form a public limited company, minimum 7 shareholders are required
- Minimum 3 directors are required to form public limited company
- Minimum capital share of Rs. 5 lakh required
- Digital signature certificate (DSC) of one of the directors is required
- Directors will require to have DIN
- Submission of application form along with MoA and AoA and form to filled, including Form DIR – 12, Form INC – 7 and Form INC – 22
- Payment of Registration Fee to ROC
- After getting approval from ROC, company should apply for the ‘Certificate of Business Commencement’
Sole Proprietorship Firm
Sole Proprietorship Firms is a legal entity in which there is no distinction between the company and its proprietor. This type of firm is a sole trader or individual entrepreneurs who are responsible for running the company but they do not enjoy limited liability protection.
- There is no set procedure for registering a Sole Proprietorship Firm but these are recommended procedures
- Apply for a Small and Medium Enterprise (SME) registration online
- Obtain a Shops and Establishment Act license, as per the local laws of the land
- If the annual turnover crosses Rs. 20 Lakh, apply for GST registration
- Obtain an address proof for the office of the Sole Proprietorship Firm
A Limited Liability Partnership is a firm in which all the partners have the right to manage the operations of the business but limited liability of the actions of the firm. There is no minimum capital contribution required to establish an LLP.
- Apply for the DSC of all the designated partners in the LLP for online application
- Get a DIN for all the directors of the LLP through CS/CEO or the MD of company
- Reserve a unique name for the LLP that is not similar to other firms
- Create the LLP agreement that governs the rights and duties of the partners
- Submit all the required partners’ documents and LLP’s documents for registration
A partnership firm is a legal agreement in which two or more people come together through a partnership deed, to carry out business and share its profits. There are no requirements of minimum capital contribution for registering a partnership firm.
- Select a unique name for the partnership firm that is valid as per MCA
- Draft a partnership deed that contains details of contribution of partners, duration of partnership, solvency rules, profit sharing ratio, etc.
- Finalize the deed on stamp paper and get it notarized
- Apply for a PAN card in the name of the partnership firm
- File a registration form along with the partnership deed to the registrar
- Submit all other necessary documents along with the application form
- Pay the registration fees and stamp duties as per prevailing laws of the land
- Obtain a registration certificate from the registrar
Non-Banking Financial Company
An NBFC is a finance company that offers loans, credit and insurance. The NBFCs are different from the banks though they can offer some services similar to the banks. There are two types of NBFCs – one which can accept deposits and other which cannot accept deposits.
- Firstly, the company should be registered under the Companies Act 2013 or 1956
- Rs. 2 crore should be the minimum net owned funds of the company
- There should be minimum 1 director with the same background
- Company should possess clean CIBIL records
- Online application form to be filled on the RBI’s official website along with the required documents, once all the above conditions have met
- CARN number will be generated
- Hard copy of the application form is also required to be sent to the regional branch of RBI
- After the application is verified and approved, license will be issued to the company
Micro Finance Company
Micro Finance Company is a company that offers financial services such as savings, credit, loans, and insurance to the small companies and low-income individuals without asking for collateral or security. MFCs must have a minimum paid-up capital of Rs. 5 crore.
- Register the company under the Companies Act and obtain a certificate of incorporation
- Open a bank account and deposit the received amount after incorporation as a fixed deposit in the bank account
- Apply for the license to function as an MFC online at RBI’s official website, along with all the required documents
- Upon submission, the RBI will assign a Company Application Reference (CAR) number against your company
- If the application and documents are authentic, the RBI will grant a license and the company can start doing business as a MFC
Nidhi Company is a financial institution which can accept deposits and lend money to the members. All the transactions can be done by the members of the company only. They are a type of NBFCs registered with RBI but some of the functions are controlled by the MoCA.
- Nidhi company can be formed by minimum 7 members out of which 3 should be directors
- Nidhi company should have minimum 200 members within 1 years of commencement
- Obtain DSC and DIN of the company’s directors
- Submit the Memorandum of Association (MOA) and Articles of Association (AOA)
- The formation of Nidhi Company requires submission of 2 forms – INC 9 and DIR 2
- The company fulfilling all the eligibility criteria can submit the NDH – 1 with the required fees and documents, within 90 days form the end of first financial year after incorporation. The form should be certified by practicing CA/CS/CWA
Therefore, the applicant can choose from the above mentioned types of company’s registration and fill in the application form by following the steps involved in the registration process. For any further information the applicant can visit paisabazaar.com and get the detailed information regarding each and every type of company formation.