In a previous blog post I wrote about incorporation and the different activities related to ROC (Registrar of Companies) and preparing Memorandum of Association (MOA) and Articles of Association (AOA) for the proposed company. MOA and AOA should be filled in the applicant’s handwriting, and the applicant must be one of the directors or registered company secretary. The applicant must, in the presence of a witness, mention their full name, their father’s name, occupation, residential address, number of shares subscribed for, etc.

If you’re a foreigner, your approved document for proof of identity and residency is your passport. For a few countries, prior authorization of the photocopy of passport by the Consulate or Embassy is mandatory. For Indians, there are many options of identity and address-related documents for submission. Three passport size photographs of all the directors or shareholders are required. Get MOA and AOA stamped by paying a stamp duty, which depends on the certified share capital of the proposed company. The price of stamp duty differs from state to state in India. The authorised and paid-up capital should be mentioned in the AOA.

It is mandatory to obtain Director’s Identification Number (DIN) by filling Form DIN-1 and getting digital signatures for two directors (this is required for filing documents with ROC). A temporary DIN is instantly issued, which must then be printed, signed and sent to the Ministry of Corporate Affairs for its consent along with the identity and address proof. Digital signature is mandatory for completion of company registration system under MCA 21.

You’ll need what’s called Form No. 1 printed on “non-legal stamp paper” (that costs less than a dollar) and signed by one of the company directors or attorneys or advocates, etc., mentioning that all the obligations of the Companies Act have been observed. Form No. 18 should be authorised and signed by one of the company directors, notifying the registered company address to ROC. Form No. 29 is not required if you are registering a private limited company. All directors should submit filled-in Form No.29 to operate as directors in the public limited company, though. Form No. 32 contains the details of the proposed board of directors from the date of company incorporation and should be signed by one of the acting directors.

In a few states (Karnataka, Maharashtra, Andhra Pradesh, New Delhi and others), the above forms are available online in the Ministry of Company Affairs website, namely e-form 1, e-form 18 and e-form 32. Along with above documents, submit the original “Company name allotment certificate” and power of attorney (or board resolution) signed by all the MOA subscribers certifying one of the subscribers to operate on their behalf for the purpose of registration and to acknowledge the certificate of incorporation. There are other supplementary steps for registering and starting operations of a public limited company in India. It is best to have a company secretary or legal advisor to coordinate ROC activities and draft guidelines to avoid problems in the future. Private companies can immediately begin operations after incorporation. A certificate of incorporation given by the Registrar in respect of any company shall be conclusive evidence that all the requirements of this Act have been compiled, and that the company is duly registered under the Companies Act.

To start company operations, you need a company seal (or common seal) to deliver share certificates and to issue letters. Open a current account of company in any of the nationalised banks. Banks require copies of the company name allotment certificate, name incorporation certificate, proof of registered office address, passport size photographs of directors (who will operate the account) and an initial deposit in Indian currency. If directors are Indian residents, then their residential address proof, permanent account number (PAN) card and photographs are required. Once the bank account is operational, apply for Company PAN and tax account number (TAN) from a certified franchise or agent of income tax department, namely National Securities Depository Limited (NSDL) and Unit Trust of India (UTI) Investors Services Limited.

Submit your company registration certificate along with the identity and residence proof to get PAN application Form No. 49A and TAN Application Form No. 49B from IT PAN Service Centers or TIN Facilitation Centers. PAN is important to credit tax under Income Tax Act, 1961 and TAN for submitting tax deducted or gathered at source (TDS). Enrol with the Office of Inspector, Shops & Establishment Act (State or Corporations or Municipal) certificate for the registered company address. The office board must have company name and address in two languages, namely the state’s official language (compulsory) and in English (optional). Under this procedure, a proclamation consisted of names of company, employer, manager and company address must be delivered to the local shop inspector with the pertinent fees.

Depending on the type of business and services, each company has to apply and obtain Value-Added Tax (VAT) and Commercial Sales Tax (CST) codes at the Commercial Tax Office (in the respective states). Fill out VAT Form No.101 and submit attested copy of MOA and AOA, residence proof, company address proof, one passport-sized photograph of applicant, PAN card and payment of fees in Form No. 210. Register for professional tax (PT) within 3 months of the company’s operation. If your company’s business involves manufacturing of goods and the disposal of clinical or toxic wastes, then obtain clearance from the Environment and Pollution Board.

The company registration process looks lengthy, but you can complete it within two to three weeks. Good luck and enjoy business in India. Write to me if you have specific questions or need any other help in setting up company in India. You can reach me here: pgbagali@geneflux.net.my

Prashanth Bagali

Biotech companies in India have witnessed a huge growth over the past decade, and the future is bright with the emerging economic and liberalization policies. Growth in the customer base has drastically supported aggressive investments in the biotech sector. Indian biotech industry is expected to be valued at $75 billion -$90 billion by 2020. The high demand for biotech products has also allowed foreign companies to set up bases and reap great profits. Public-private partnerships and strong support from Indian government have boosted the biotech industry to greater heights. You can read many market survey reports and studies carried out by different companies about the opportunities in India, but you’ll need to plan thoroughly and read comprehensively about India and Indian culture before exploring opportunities in the subcontinent. Obviously, it is easy to register a company in India for an Indian citizen, compared to a foreigner. But it can be done, and I’m going to concentrate on the official procedures that are required for starting (interchangeably used for registering or founding) a company in India.

Background preparation: If you are an Indian citizen, then you can register about six to seven types of business entities in India, namely, Private Limited Company (limited by shares), Public Limited Company (limited by shares), Public Company (with unlimited liabilities), Company limited by guarantee, Partnership firm, Sole Proprietorship firm and co-operatives as producer company. Non-Indians (foreigners) are allowed to register private limited company (with 100% equities), private limited company (joint venture with Indians) and public limited company (with minimum of one shareholder and director of Indian citizen). You have to decide which business entity fulfils business requirements. Private limited company is preferred by almost all foreigners (individuals or entrepreneurs), because it has minimal agreement constraints, and it’s the best choice if you do not have any intentions to raise public funds.

For non-Indian citizens, I advise availing the services of a company secretary or chartered accountant – someone competent or authorized to register the company in the specific state or Union Territories of India. All the official procedures will be carried out by them, and it is easy for you to manage him or her as a “single point of contact.” The service charges of such consultants differ from state to state. In Karnataka state, it ranges between $700 and $900 and they will complete all the formalities within a week or ten days. The Companies Act (1956) is one of the governing laws for the registration of companies in India. All registered companies are under the Ministry of Corporate Affairs by means of office of Registrars of Companies (ROC). The guidelines, statutory requirements and official procedures are the same throughout the nation except different official languages and stamp duties in different states and Union Territories. The administration, company names, registry of records, transactions and forms in ROC are carried out in English language through the respective regional directors.

Registration of company name: Registering your company name is the first step in the pre-registration of company or company incorporation in ROC. The process of company registration begins with filling out application Form No.1A, available in the ROC office of the state. You have to submit the filled-in Form No.1A to ROC office by payment of prescribed fees. Pre-requisite for this submission is the address proof of the Registered Office of the proposed company, and name and signature of one of the promoters (director or subscriber). “Promoter” means a person or persons who have control over the affairs of the company directly or indirectly, whether as a shareholder, director or otherwise, and includes any person or persons named as promoters in any offer document or document by reason of his acting in the professional capacity. You have to rent a house or business office, because you might require a “lease agreement” or “rent agreement” as “address proof” of the promoter (director or shareholder). You have the option to propose a panel of three to five company names quite distinct from each other for consideration.

ROC staff will search the proposed names for availability or any resemblance with other company names in India. ROC staff will let you know if they find it difficult to approve names that might create confusion in the minds of the public and harm the interest of the promoters. You will be given up to two opportunities for re-submission of the new panel of company names against the fee paid in the first instance for name availability after the original application is filled. Within a day or two, the name will be allotted for a company. If the name is not adopted 60 days after it is allowed, you may apply for extension for retention of such name for further period of 30 days on payment of 50% of the fees prescribed for the application at the initial stage. The name allowed shall lapse after expiry of sixty or ninety days, as the case may be, from the date it is allowed first. If you agree to the allotted name, the “name allotment certificate” will be issued to you. This is called pre-registration process.

After the “name allotment certificate” is obtained from the ROC, you have to prepare the Memorandum of Association (MOA) and Articles of Association (AOA) for the proposed company. The format and description are almost similar to other countries of the world. MOA mainly covers the primary, auxiliary and other business activities of the proposed firm. AOA incorporates the guidelines for the standard operations and conduct of the proposed company along with the certified share capital, first directors or founding directors, the names and addresses of first directors and so on. Private limited company must have two directors and two share holders; and in case of a public limited company, there should be three directors and seven share holders.

We shall discuss more about the documentation stage of the company registration in the next article. 

Prashanth Bagali