Entrepreneurship has been the talk of the town and due to this, several colleges, these days have been offering short-term and long -term courses. Almost everybody dreams of owning their own business and the process has just been made easier. Expertise and resources are readily available for anyone who wants to start their own business.
But does running a business just needs expertise and resources? The answer to this question is, No. Being a citizen of this country, you also need a legal license to operate and run your business, something many use a Registered Company Formation Agent to help with. You can obtain this license from the Ministry of Corporate Affairs. MCA will issue you a license based on the type of company and when you fulfil all the prerequisites. For the different types of company and different incorporation procedure, read the rest of the blog.
So delay not, it is your time of fulfilling your dreams. Decide the type of company you want to establish, familiarise yourself with the incorporation procedure and bang, you get to start and run your own business.
Types of Company:
There are different types of companies that a person can form. To establish your business, it needs to be registered with the MCA. Every company follows a different set of procedure for registration. The registration process shall be discussed in detail in the following sections but for now, let’s discuss the different types of companies:
- Private Limited Company
- Limited Liability Partnership (LLP)
- One-person Company (OPC)
- Public Limited Company
- Nidhi Company
Private Limited Company
A private limited company is the most popular amongst the types of companies as it does not allow liquidation of controlling power in many hands. Additionally, it has minimum requirements like to register a Private Limited Company, it needs a minimum of 2 shareholders and 2 directors.
The registrations of such types of companies are overlooked by the Ministry of Corporate Affairs (MCA). The general public is not allowed to buy shares of a private limited company.
Features of Private Limited Company:
- Capacity to raise funds from the investor
- Extends legal protection to the shareholders
- Holds a separate legal identity
- Members and shareholders have limited liability
Reserve Unique Number:
‘Reserve Unique Number’ is to apply for the name of the company. According to the Companies Act, the name of your company should not be similar to the name already registered with the Ministry of Corporate Affairs. It is a quick system to check the availability of the name for the company. Follow the steps mentioned below to quickly run your suggested name in the company database.
To undertake this process, you need to have an account with MCA. If you don’t have an account with MCA, follow the steps mentioned below for
Registration on MCA Portal
- Go to the website of the Ministry of Corporate Affairs by clicking on this link: http://www.mca.gov.in/MinistryV2/homepage.html.
- At the beginning of the page, you will see a grey bar with ‘Corporate Seva Kendra’ written on it. You need to click on ‘Register‘.
- You will be taken to a different portal once you have clicked on ‘Register‘. You will see a ‘New User Registration‘ form. Fill this form, choose an appropriate password and then click on ‘Create My Account’. Once you scroll down, you will be able to see the complete form.
Your account will be created with MCA. If you already have an account, follow the steps mentioned below for checking the availability of the name.
Check availability of your business name
- Click on ‘Reserve Unique Name‘ which is available under ‘MCA services‘.
- Once you have clicked on it, you will be redirected to another portal. Herein, you need to log in your MCA account using your credentials.
- After logging in, you will find a screen seeking a few information as shown in the image below. In this form, you will see three different tabs like: Entity type, CIN, and Proposed name.
- Under Entity type, you will be required to select Private Limited Company, you need to select option one, i.e, ‘Select new company’.
- CIN: CIN is Corporate Identification Number. You need not fill this option. You need to fill this option only when your company is already registered with MCA and you wish to change the name of the company.
- Proposed name: the suggested name of the company needs to be entered here. You need to make sure that the suggested name is not similar to any other existing name.
- After filing in all the information, click on ‘Auto check’. If the name matches an entry in the database, it will show an error. Once the proposed name is error-free, you need to pay a minimum amount of Rs. 1000 run the similarity test and to reserve the name. This fee does not guarantee the approval of the name by the Ministry.
- If the proposed name is approved by the Ministry, you will receive a notification about the same on your registered email address. It is imperative that you are registering your company with the Ministry within 20 days of receiving the approval on the name.
Now to register your company with the MCA, you need to fill and submit some forms. To download the forms mandatory for the registration of the company, follow the steps mentioned below:
Forms required for the registration process
- Go to the homepage of the Ministry of Corporate Affairs by clicking on this link.
- On the homepage, you will see grey tab holding information like ‘Skip to main content Corporate Seva Kendra’. On this tab, you will see an option of ‘Forms and downloads‘.
- You need to click on this tab and you will be taken to ‘Company Forms Download‘ page.
- Scroll down this section and go to ‘Incorporation services‘. Under this section, you need to download forms like SPICe, SPICe MoA, and SPICe AoA.
Once you have all the forms and documents in place, you can start the registration process.
Registration Process on MCA Portal
You can begin the process by filling the forms as you will have to upload the duly filled forms. Start with SPICe form.
SPICe simply stands for ‘Simplified Proforma for Incorporating Company Electronically‘. It is also known by ‘FORM NO. INC – 32‘. When you download this from the MCA website, it is downloaded as a zip file. This file contains two different documents: one is the SPICe form and other is the SPICe help document. It is basically an instruction kit on how to fill the SPICe form. Check the image below to see if you have got the right form.
- Begin by selecting the language you are comfortable in. At the next step, you need to select ‘Yes’ for Whether the name is already approved by the Registrar of Companies.
- Move further by filing the form. Under section 2 (a), ‘Main division of industrial activity of the company’. You need to enter the code of the division and the same can be found in the instruction kit – Annexure 1/A which is at the end of the document.
- Under section 6, you need to fill the DIN (Director Identification Number) of the directors. To apply for the same, you can fill in the number of directors/subscribers who need the DIN number. Earlier, people had to fill a separate form to apply for DIN and were also liable to pay extra fees.
- In the next section, you need to provide details of the stamp duty that you have paid. If you will scroll down the form, you will see a table asking for the detailed information about the stamp duty. Fill in all the correct details about the stamp duty you paid in this table.
- Once you are done with section 8, move to section 9 which seeks information about the PAN (Permanent Account Number) and TAN (Tax deduction Account Number). You can apply for PAN and TAN via the same form for your company.
- Fill in the rest of the form until you reach the ‘Attachments‘ section’. You need to attach all these documents to validate your application for company registration. The next section is of ‘Optional Attachments’. You can attach documents in support of the registered address of the company. For this, you can attach utility/electricity bills which should not be more than 2 months old and other documents containing the address of your company.
- Next part of the form is the ‘Declaration‘ section. The first part of the declaration section needs to be filled by the director(s). The digital signature of the director is a mandatory prerequisite. The next part of under the declaration section needs to be filled by a professional and it could be a Chartered Accountant (CA), an Advocate, a Company Secretary, and a Cost Accountant.
- With this, you have completed your SPICe form.
It is a ‘e-Memorandum of Association‘ form. Just like SPICe form, it also comes with an instruction document which contains detailed information on how to fill the form. It is an important document as it explains the objectives of the company you are planning to register. It also discusses the powers which will be vested in the company.
- Start by selecting the language you are comfortable in. All the fields marked with an asterisk (*) are mandatory.
- Because yours is a private limited company, you need to select option ‘A’ for ‘Table applicable to the company as notified under schedule I of the Companies Act, 2013‘.
- Fill in all the information that has been asked in the form. In the end, click on ‘Check form’ to see if you have missed anything. Once the form is complete, save the form and move to the next form, i.e, SPICe AoA.
This is an ‘Article of Association‘ form. It reflects on
- The internal rules and regulations of the company.
- It also deals with the rights of the shareholders, transfers related policies and framework on how general meetings are to be conducted.
- Like SPICe and SPICe MoA, it also comes with an instruction manual which comes handy while filing the form.
- This is how your SPICe AoA form should look like. For the first step, select the language in which you want the form to be in.
- Click on ‘Prefill’ to fill SRN of RUN.
- For a Private Limited Company, you need to select table ‘F’ for table notified under schedule I of the Companies Act, 2013 is applicable to the company. Once you have done this, a pop-up box will appear on the screen asking you to choose the name of the company.
- To complete the form, fill in all the details required and in the end, click on ‘Check form’ to check for any mistakes.
- If your form is error-free, save the form as it will be uploaded along with other forms and documents.
Upload Company Registration Forms on MCA Portal
Once you have filled all your forms, you need to upload them via your MCA (Ministry of Corporate Affairs). Follow the steps mentioned below:
- Log in to your account using your access credentials.
- You will see an option of ‘Upload e-forms‘. Click on the option and upload your SPICe form. You need to keep in mind that SPICe MoA and SPICe AoA are attached to the SPICe form along with an affidavit by the director/subscriber.
- A challan will be generated after you have uploaded the form. This will be a consolidated Challan (inclusive of PAN, TAN, and stamp duty charges). Pay the challan and the process will be completed from your end.
- MCA will undertake the verification process and once all your documents are approved, you will be allotted a CIN (Corporate Identification Number). With this number, you can establish your company and start commerce.
Limited Liability Company:
Limited Liability Company or an LLP is a company which came into existence with the Limited Liability Partnership Act of 2008. It has flexible partnership policies along with the benefits of limited liability. It is a good business option for small and medium enterprises as it is a risk-free venture. Each partner in an LLP is not liable for the entire company and has limited liability. Another added benefit of this type of company is that even if one or more partners wish to leave the company, it will continue to exist.
Features of the Limited Liability Company:
- LLP is the easiest form of business
- Limited liability of the owners
- Limited liability protection for the owners
- Partners can manage the business directly
Reserve Unique Number – Limited Liability Partnership
The introduction of RUN-LLP has abolished the process of filing a separate Form – 1 for reserving a name for LLP. Like Reserve Unique Number (RUN), RUN-LLP is also an easy and quick web service which is used to reserve a name for a new LLP or to change the name of an existing LLP. It is a very simple process as it only requires you to fill four fields.
To reserve a name for your LLP, you need to have an account with MCA (Ministry of Corporate Affairs). If you don’t have an account and wish to register for the same, then you can read the second paragraph of Reserve Unique Number under Private Limited Company. By following the steps mentioned, you can create your own account.
To run the web service test, follow the steps:
- Go to ‘MCA Services‘ >> ‘LLP Services‘ >> ‘RUN – LLP’ (Reserve Unique Number – LLP).
- You will be taken to another portal where you will be asked to log in using your account credentials.
- Once you have logged in, you will see RUN-LLP form where you need to fill some information.
- If you are registering a new LLP, you need to click on ‘New request‘ and if you wish to change the name of your existing LLP, you need to click on ‘Resubmission‘.
- CIN/LLPIN: CIN is to be entered when you wish to convert an existing company into LLP. You need to enter LLPIN in case of changing the name of existing LLP and for the same purpose reserving a new name.
- Under this, you can enter up to 2 names for your LLP. After this, you can click on ‘Auto check‘.
- In the ‘Comments‘ dialogue box, you need to mention the objectives of the LLP and any other relevant information.
Form required to register LLP on MCA Portal:
For the incorporation of an LLP, you need to fill form FiLLiP (Form for Incorporation of Limited Liability Partnership). To download the form, follow the steps mentioned below:
- Go to MCA Services >> LLP Forms download which is mentioned under ‘e-filing‘ tab.
- From the list of forms displayed, you need to download ‘Form for Incorporation of Limited Liability Partnership‘.
The form will contain two documents: one of them is the FiLLiP form and the other is the instruction manual which contains necessary guidelines about filing the form.
- You also need form Addendum to FiLLiP if the designated partners of your LLP exceed the minimum number of 2. If you have more than 2 partners for your LLP, you need to fill this form by providing the details of partners.
- Once the incorporation process is done, you will have to fill Form – 3 containing information on the LLP agreement. You will find this form under LLP forms download section.
LLP Registration Process on MCA:
- Start by acquiring a DSC (Digital Signature Certificate) as it will be needed for e-signing the incorporation forms.
- Open the downloaded FiLLiP form and start filling. Select ‘Yes’ for ‘Whether the name is already approved by Registrar of Companies’. This is because we already did a name test with RUN-LLP and the suggested name was approved and reserved. Check the image below to see if you have got the right LLP incorporation form.
- Under section 2, you need to choose the type of corporation. If your corporation is new, you need to select option 1 from the dropdown menu. If you are converting the firm into an LLP, then you need to select option 2. And if you are converting any private company or any other unlisted company into an LLP, then you need to select option 3 from the dropdown menu.
- Under section 7 of the form, you need to fill the details regarding DIN/DPIN (Director Identification Number/Designated Partner Identification Number) of the designated partners and partners of the LLP. Through this form, a maximum of 2 DINs/DPINs can be allotted.
- In section 11, you need to decide if you will need to fill the form Addendum to FiLLiP. If you have more than 2 subscribers, then only you need to fill the Addendum to FiLLiP form. If you just have 2 subscribers, then you need to fill the details of those subscribers in section 12 of the form.
- Under the attachments section, you need to attach the following documents:
- Appointment of the nominated designated partners/nominee on the letterhead of the company
- Document attesting the address of the registered LLP office
- List of all the subscribers along with their consent
- If required, approval of the principal authority
- Document stating the designations of the company’s partner/designated partner
- Trademark approval
- If the proposed name needs approval from the central government, then that document needs to be attached as well
- If there is a collaboration/connection with anything international, then appropriate approval is also required
- Address and identity proof of both the applicants
- No objection certificate
- The next section of the form is the ‘Statement’ section. This section needs to be filled by the person whose name exists on the incorporation documents. The designated partner needs to fill this and then sign it using his/her digital signatures.
Once the form is complete, you need to upload this form via your account. Log in to your account using your access credentials. Look for an ‘e-Upload form’ option. Click on that option and upload your duly filled FiLLiP form after attaching all the required documents.
If your application for incorporation is accepted by the Central Registration Centre (CRC), you will be notified about the same via an email on your registered email address. The CRC will issue you a ‘Certificate of Incorporation‘ in the form of Form – 16.
Once your LLP is incorporated, you need to fill Form – 3 within 30 days of receiving the notification about the incorporation of your company. You can find this form under ‘LLP Forms download‘ section. This form will contain information about the agreement of your LLP. Like all the other forms, even this form comes with an instruction manual to help you fill Form – 3. The picture below is the true depiction of Form – 3 which is available at the site of MCA.
- Fill the complete form and attach the documents that have been asked.
- Once you have filled and filed this form, you will have a legal license to run the business through your LLP.
One- Person Company
A one-person company is a company which is headed by a single person and can have up to 15 directors. A one-person company is entitled to all the benefits that a private limited company avails.
Features of the Company:
- Tax – saving
- Quick decisions
- Can easily avail loans from commercial banks and other financial institutions extending this facility
- It has a separate legal identity
Registration Process of OPC (One Person Company) on MCA Portal
Registration of One-Person Company is similar to the registration of a Private Limited Company. You need to fill form SPICe in order to initiate the process of incorporation. You can do this either by taking the RUN test or without taking the web service.
Registration Process of OPC (One Person Company) without RUN (Reserve Unique Number)
Fill up the SPICe form (Form no. INC – 32) and with this one form you can apply for
- The reservation of the name for your company,
- For DIN (Director Identification Number)’,
- For the incorporation of your company, and
- Lastly for PAN and TAN.
For detailed instructions on how to fill SPICe form, you can read ‘Registration Process‘ mentioned under Private Limited Company.
OPC Registration process on MCA Portal With RUN (Reserve Unique Number):
You can seek the name approval before filling the SPICe form. You can do so by selecting the ‘RUN‘ option from under ‘MCA services‘ which is located on the home page of MCA. After receiving the name approval, you need to fill the SPICe form for the incorporation of the company within 20 days from the date of receiving the approval.
Once you have filled the form, Ministry will take up the verification process and once it’s complete, you will be allotted Corporate Identification Number (CIN).
Public Limited Company
A public limited company is more of a voluntary association of the people who come together and establish a company. This company is granted a title of a separate entity and members of this company have limited liability. This type of company needs at least 7 people and there is no upper limit on the number of people (shareholders) associated with this company. This company raises money by selling shares and whoever buys the share becomes a member of the company.
The registration process of this company is similar to Private Limited Company and One-person Company. For the registration, all you need to do is fill up the SPICe form and submit it by logging in your MCA account.
It is a public company which is established with the objective of cultivating the habit of savings amongst people. It only accepts deposits and lends money to its members. While incorporating this company, it is mandatory that every Nidhi company registered should have ‘Nidhi Limited’ in the name. Such type of company is prohibited from issuing preference shares. To be eligible for incorporation, the company should have at least seven members and a minimum of three directors. It is imperative that the name suggested for the company should be unique in nature and should not match any other existing name.
While filing the form, you need to select ‘public’ under the type of the company for smooth incorporation.
Features of the Nidhi Company
- Limited amount of capital required
- Less intervention and less regulations from RBI
- License from RBI is not a mandatory requirement
- Manifests small savings
Registration Procedure of Nidhi Companies on MCA Portal
Like all the other companies, you need DSC (Digital Signature Certificate) for this company as well.
- The first step is to check if the name you have suggested for your company is available. For this you need to run a webservice test, RUN (Reserve Unique Number). To know how to do so, you can read about the procedure under Private Limited Company section.
- The application for the incorporation of a Nidhi company can be made using the SPICe form. You download this form from under ‘Forms and Downloads’ which is located on the official website of MCA.
- With the SPICe form, you can reserve a name for your company, you can apply for DIN for the directors, you can also apply for TAN and PAN for the company.
- Once you have filled the form, attach the mandatory documents to your SPICe form and upload it by logging in your MCA account.
Other types of company like Producer Company, Unlimited Company, IFSC Company, and Section 8 Company can also be incorporated by using the SPICe form and by following the same procedure.
So what are you waiting for, go register your company and be the entrepreneur that you always wanted to be.
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