1. Company Registration
1.1 Memorandum and Articles of Association: Before approaching the Registrar of Companies (RoC), it is preferable to complete the process of preparing the draft Memorandum and Articles of Association, bring in the share application money and appoint the directors. First director is usually a shareholder of the company and a minimum of 2 directors is required for a company that is going to be a Private Limited Company.
1.2 Ascertaining Name Availability: The proposed name of the business needs to be checked for availability. This can be done online at the official Ministry of Company Affairs (MCA) website. It is also advisable to check for presence of other similar sounding names as this may not be acceptable to the RoC. Once the name has been decided, e Form 1A needs to be submitted, usually with 3 name options, to the RoC to apply for the name, along with the fee of INR 500 (can be done online through the MCA website).
1.3 Registration: On obtaining the name approval from the RoC, Form 23 needs to be submitted to them. A copy of the Board resolution to adopt the name of the company also needs to be submitted. Registration fees needs to be paid at this stage. The fee amount depends on the share capital of the new business and can be determined online by entering the details in the MCA website (https://www.mca.gov.in/).
1.4 Incorporation Certificate: Duly filled Form 1B needs to be submitted to the RoC to obtain an Incorporation Certificate. Check the MCA website for fee details, if any.
1.5 Director Appointment: Duly filled Form 32 needs to be submitted to the RoC to notify Director Appointment. Check the MCA website for fee details, if any.
1.6 Address Proof: Duly filled Form 18 needs to be submitted to the RoC to provide address proof of the business. Check the MCA website for fee details, if any.
On submission of Forms 1B, 32 and 18 completely filled, Incorporation Certificate will be provided in about 1 month. The Incorporation Certificate is to be attached as the 1st page in the Memorandum and Articles of Association document.
1.7 Allotment of Share Capital: For allotment of Shares to various shareholders, Form 2 needs to be submitted to the RoC.
1.8 Increase of Share Capital: Form 5 needs to be submitted in case of increase in the Authorized or Paid-up share capital.
2. Digital Signature
For online submission of forms in the MCA website, Digital Signatures of the authorized signatories is required. Therefore, this may be obtained before commencement of Step 1.2 above in case online submission of forms is going to be done to the RoC through the MCA website. Digital Signatures are currently given by TCS and SIFY and there is a charge for this. The application forms for obtaining Digital Signatures should also be available with TCS and SIFY.
3. Director Identification Number (DIN)
3.1 DIN Application form: On obtaining the Incorporation Certificate, the DIN Application form can be downloaded from the MCA website, filled and sent to the Noida MCA office from where DIN is allocated and notified by post to the Director’s address provided in the form.
3.2 DIN 2: On allotment of DIN, the Director needs to notify the DIN details to the company using the DIN 2 form.
3.3 DIN 3: The company needs to inform the RoC about the DIN details of the Directors using the DIN 3 form.For more details on the DIN related steps, refer to the MCA website.
4. Sales / Service Tax Registration
4.1 Sales Tax: On obtaining the Incorporation Certificate (required), the company needs to apply for Taxpayer’s Identification Number (TIN) and CST Number at the Commercial Tax Office. For more details and the forms, refer to the State Government’s Commercial Tax Office websites.
4.2: Service Tax: In case the newly formed company is providing services (e.g.: Consultancy services etc.), registration for Service Tax is necessary. The registration needs to be done with the Central Excise Commissionerate (https://www.servicetax.gov.in/).
5. Income Tax Registration
5.1 Company Permanent Account Number (PAN): On obtaining the Incorporation Certificate, PAN for Income Tax needs to be obtained by submitting Forms 49A and 49B to the Income Tax department. Check thier website, https://incometaxindia.gov.in/, for more details.
5.2 Company Tax deduction Account Number (TAN): For Tax Deduction at Source (TDS) by the company, TAN needs to be obtained from the Income Tax department.
6. Import Export Code (IE Code)
In case the new business involves Export and Import dealings, it is necessary to get an IE code. For more details, refer to explanation document provided at https://www.ap.nic.in/jdgft/iec.htm, where steps for obtaining the IE code and its purpose have been elaborated.
7. Trademark Registration
Trademark registration can be done by applying to the Office of the Controller General of Patents, Designs & Trade Marks (https://ipindia.nic.in/) using Form TM1. The application has a validity of 10 years and the fee is INR 2500. Only if the Trademark is registered can the “R” symbol be used next to the name.
8. Current Account Opening
A Current account is usually opened to conduct the financial transactions of the business. This can be done at any bank and the fee for opening and operating a current account varies across banks and the type of account chosen. For opening a current account, the usual requirement is to fill a Bank Account Opening form and provide the Incorporation Certificate, Address proof of the company and PAN card and Address details of Authorized Account operators.
9. Share Certificates
Share certificates need to be issued (usually by the appointed CA) when application money is converted to shares on submission of Form 2 to MCA.
10. Administrative Issues
On obtaining the Incorporation Certificate, rubber stamps for the authorized signatories needs to be made as this will be useful while filling up physical forms.
11. Shareholders Agreement
This is an agreement entered into by the shareholders that details out the agreed terms, conditions, roles, responsibilities, remuneration and any other details which the shareholders want to record. This is an internal document to ensure transparent dealing among the Shareholders.
Conclusion
All the above points are based on what I did in the year 2007 for starting up my company (registered as Dilsebol Customized Apparel Pvt Ltd.); the relevance of these points at a future time period should be thoroughly checked as the laws, rules and regulations are evolving all the time! Good luck for a successful incorporation and an even more successful venture!
Ravi Kumar is one of the founders of the Chennai-based e-commerce company, https://dilsebol.com
After graduating from IIMA, Ravi worked as Area Sales Manager with one of the world’s largest beverage companies and as Business Consultant with one of the big 4 Consultaning companies before establishing DilSeBol in 2007.
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