Company Formation in India

Companies Act

Companies incorporated or registered in India are governed by the Companies Act 1956.

Shareholders and Directors

  • There is no need to appoint local director to incorporate a company in India.
  • Foreign nationals can incorporate company in India and hold foreign equity to the extent of 100%, which is dependent upon sector in which company will operate and is subject to approval from either Reserve Bank of India (RBI) or Foreign Investment Promotion Board (FIPB).

Memorandum & Articles of Association

The Memorandum of Association states the main, ancillary / subsidiary and other objects of the proposed company. The Article of Association contains the rules and procedures for the routine conduct of the proposed company. It also states the authorized share capital of the proposed company and the names of its first / permanent directors. After that Memorandum of Association and Article of Association are required to be stamped. A stamp duty is required to be paid on Memorandum of Association and Article of Association. The stamp duty depends on the authorized share capital. Share Capital Shares must be expressed in a fixed amount. “No par value” or “bearer” shares are not permitted. Shares to be subscribed must be expressed in Indian rupees.

Accounts & Auditors

Every company is required to appoint an auditor each year at its AGM. An auditor must be qualified by virtue of the Institute of Chartered Accountants of India Act 1949 and completely independent of the company. Audited accounts of the company serve as tool for various stakeholders like creditors, bankers, investors and revenue authorities.

Public Filings

The names and personal particulars of the directors and secretary, register of charges, share capital, registered office address etc. must be filed with the Companies Registry for public inspection upon incorporation and if there is any change thereafter.

Annual Meetings

An annual general meeting (AGM) must be held once in every financial year and not more than 6 months after the end of financial year. However, a company need not hold its first AGM until 18 months of its incorporation.

Applicable law

The Indian Companies Act, 1956.
For company registrations In India, the Companies Act of 1956 sets down rules for the establishment of both public and private companies.

Allotment of Director Identification Number (DIN)

Application in Form DIN-1 shall be submitted online and provisional DIN number of the person intending to become director of the Company shall be generated.

Acquiring Digital Signature certificate (DSC)

Digital Signature Certificate is acquired by submitting the application along with prescribed fee to one of the various vendors. On submission of documents, DSC is allotted in 1-2 days. ARC & COMPANY as well is authorized to help clients generate their DSC.

Name Approval of the company

An application in Form No. 1A needs to be filed with the Registrar of Companies (ROC) online through Digital Signature of one of the proposed director. On submitting the application, the ROC scrutinizes the same and sends the approval / objections in about 3-4 days to the applicant through e-mail.

Procedure after name approval of the company

An application for registration should be submitted to the Registrar of Companies with the following documents:
  • Memorandum of Association;
  • Articles of Association;
  • A declaration in Form 1 by a person named in the articles of the proposed company as a director, manager, or secretary of the company, or by an advocate of the Supreme Court or High Court, or by an attorney entitled to appear before the High Court, or by a Chartered Accountant practicing in India stating that all the requirements of the Companies Act 1956 and the applicable rules with respect to the registration and other matters have been complied with.
  • A list of persons who have consented to act as directors of the company.
  • Consent of every person prepared to act as a director.
  • Information about directors, managing directors, managers and secretary must be submitted in a prescribed Form 32
  • Information about the registered office in prescribed Form 18
  • Power of attorney in favour of one of the promoters or any other person, authorizing him/her to make corrections in the documents submitted to the Registrar of Companies.
  • Applicable registration fee payable to the Registrar of Companies

Details of proposed company to be incorporated

  • Proposed names of the company in order of preference.
  • Main objects of the company.
  • Authorized share capital of the company

Details of Directors

  • Complete Name
  • Address including (city, state, pincode, country)
  • Father’s Name
  • Date of Birth
  • Nationality
  • Occupation
  • Three photographs of every proposed Directors. (scanned photographs will do)
  • Copy of passport as a proof of identity and copy of proof of address (electricity bill/ telephone bill/ bank statement/driving license).