Incorporation of Company in India

Registering a company in India is one of the major difficulties which entrepreneurs have to face to set up a business in India. India has been ranked142^nd on the Ease of Doing Business Index and 158^th on Ease of Starting a Business.

Ministry Of Corporate Affairs, (Government of India) regulates the corporate affairs in India through the Companies’ Act 1956, Companies Act 2013 and other corporate sector related acts, bills, and regulations. Ministry Of Corporate Affairs provides protection for investors and offers services to stakeholders.

Incorporation of Company in India

A company may be incorporated for any lawful purpose by seven or more persons in case of public company and two or more persons for private company and one person for one person company i.e. private company by subscribing their names to a memorandum of association and complying with requirements of Companies Act 1956 (of which certain provision are still in force) and Companies Act 2013.

Incorporation of one Person Company in India

In case of one Person Company the memorandum of one Person Company shall specify the name of the other person with his prior consent in the prescribed form who becomes the member of the company after the subscriber’s death and incapacity to contract becomes the member of the company and written consent of such person shall be filed with the registrar as well at the time of incorporating a one person company in India with its MOA and AOA. Such other person may withdraw his consent in the prescribed manner. The member of One Person Company at any time change the name of that other person by giving notice in prescribed manner. It is the duty of the member of one Person Company to inform about the change in the name of the other person nominated by indicating his name to the memorandum of association in the manner prescribed, and the company has to inform the registrar of company within such time and manner prescribed.

The aspects which need to be carefully evaluated for starting a business in India are:-

Foreign Exchange Management Act, 1999 (“FEMA”) and circulars, notifications and press notes issued under the same; Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Amendment) Regulations 2004.
Corporate Laws — Companies Act, 2013 and the regulations laid down by the Securities and Exchanges Board of India (“SEBI”) for listed companies in India;
Sector Specific Laws general legislations, specific Laws relating to Financial Services (banking, non-banking financial services); Infrastructure (highways, airports) and other sectors are also applicable.
The Income Tax Act, 1961 (“ITA”); indirect tax laws including laws relating to value added tax, service tax, customs, excise etc.;

One of the major steps of Indian government is to make its “make in India” campaign a successful event through improvement in the World Bank ranking of ease of doing business in India by introducing a INC-29, a five-in-one e-form, integrated by the Ministry of Corporate Affairs (MCA) in the webinar on 28^th of April, 2015 which introduced w.e.f. May 1st, 2015. The new e-form can be used instead of separately filling up at least five e-forms i.e DIR-3, INC-1, INC-7/2, DIR-12, INC-22, the Ministry has provided ease of doing business by only filing single e-Form i.e. INC-29, which covers all the details as required in five aforesaid e-forms. It would be in addition to other separate forms that are already available for registering a company in order to facilitate the registration of foreign companies in India. The new e-form has been introduced as part of amendments made to the Companies (Incorporation) Rules.

The newly introduced E-Form INC-29 deals with the single application for approval of name of the Company, incorporation of a new company and/or application for allotment of DIN. This eForm is accompanied by supporting documents including details of Directors & subscribers, MoA and AoA etc. Once the eForm is processed and found complete, company would be registered and CIN would be allocated. Also DINs gets issued to the proposed Directors who do not have a valid DIN. Maximum three Directors are allowed for using this integrated form for filing application of allotment of DIN while incorporating a company.

The following types of companies can be registered using Form INC-29:

However it is to reminisce that the earlier process of registering a company by filing five different forms i.e DIN-3, INC-1, INC-7/2, DIR-12, INC-22 will continue to exist. The newly introduced Form INC-29 don’t not replace the existing forms rather provides an option to file a five different forms in a single e-form i.e Form INC-29 by paying Rs. 2000 extra in lieu of time saving provision along with other nominal registration fees of the existing five different e-forms.

Now, the two options available for Registering a Company:

Present option: Filing various forms for various purposes.
E-form INC-29: Filing one form for various purposes.

Essentials of INC-29:

Filing of e-Form INC-29 is not mandatory but optional.
The INC-29 requires only one name and not six as in INC-1
If Directors and shareholders already got the DIN (Director Identification Number) from central government then the separate Identification Proofs and Address Proofs are not required
There are two re-submissions.
Provision of refund also available in case one’s form gets rejected, one can claim refund through Re-fund forms.
It is also to be examined by the Registrar of Companies.
It will also require all the attachments as it requires with the present forms, but the duplication of attachments will be reduced.
There is a limit of 3 Director Identification Number at the same time through this form.
Registration fee is Rs. 2000 with the existing nominal registration fee for each form separately.
Form INC-29 is not available for Section 8 companies (companies with charitable objects etc.) of the Companies Act 2013.

For the startups that are registering their company for the first time can attach the following documents with the INC-29 form to obtain the Director Identification Number DIN the following essentials.

Personal Details, Educational Qualification and Occupational Details

PAN Number – In case of Indian National

Passport Number – In case of Foreign National

Email Address of the Director

Address information of the Director

Proof of Identity – Voters ID Card / Drivers License / Passport / Aadhar Card

Proof of Address – Bank Statement / Electricity Bill / Telephone Bill / Mobile Bill

The Government objective of introducing a common e form is to provide a simple fastest solution to entrepreneurs to get their company registered in India. Government aim is to improve the India’s ranking globally in terms of ease of doing business in India. According to the World Bank report India stands at the position of 142^nd. However, it is one of the great initiatives of the Government of India in reforming the structure of the companies’ registration by introducing a common e- form but there are still loopholes which need to be addressed in order to provide ease of doing business in India.

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