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How to start a private limited company

Mr. Mahesh an IT professional along with his colleague Mr. Bhupathi visited our office seeking our services in setting up a private limited company. Though they had read (in internet) about setting up a company, they wanted to know the entire process from us. When I asked, they said “The objective of the company is outsourcing of IT product development for a US company.” They thought of a name for the company as ‘MB InfoTech India Pvt Limited’

The gist of what I told them is listed below:

  • To set up a Private Limited company there should be a minimum of 2 people.

 

  • Minimum of Rs.1 Lakh to be invested as the capital of the company. Aas per company Act 2013, provision for minimum capital requirement for private limited company removed)

 

  • Each director has to obtain a number called Director Identification Number (DIN). Obtaining DIN is a fairly simple process. You have to submit your credentials such as address proof, ID proof and photograph, duly filled application form to the DIN processing centre along with the requisite fees. That’s it; you will get DIN.

 

  • All the Directors have to get Digital Signature. The documents have to filled and signed manually, scanned and then uploaded to the site of ROC. While uploading the documents, it has to be countersigned by one of the directors (applicant) of the company. The counter signature in the digital form is called Digital Signature. (Digital Signature is stored in a USB token that is similar to a pen drive) 

 

  • You can’t keep the name of your company as per your wish. The name has to be approved by Registrar of Companies (ROC). So, as a first step, apply for a name approval. ROC will check the name and if they find no similar names for companies in any part of the country; they will approve the name. If not, they will ask you to prefix or suffix or change or tweak the name and reapply. Please note that certain names like National, Industry, etc are not allowed to be used. The ROC has a long list of Name guidelines. (don’t worry about it, when you decide to set up the company, your consultant will help you)

 

Recommended Read: Name approval Guidelines

 

  • Once the name is approved, the incorporation documents  are to be filed (online) with ROC. The incorporation documents are Memorandum and Articles of Association, (something like a deed mentioning do and don’ts of your proposed company), forms mentioning the directors name, shareholders name, registered office address, requisite fee etc.

 

  • ROC, after scrutiny of all the documents issues a Certificate of Incorporation. The certificate of incorporation will contain a unique number for your company and it is called Corporate Identity Number (CIN).

 

These are the main steps of incorporation. Post incorporation, certain forms have to be filed with ROC; they are more procedural in nature. The total duration of the entire process will be around 20 working days.

Both Mahesh and Bhupathi were satisfied with the explanation; they wanted to know the next steps –

Documents required from both of them are –

  • Address Proof
  • Identity Proof
  • Photographs

 

Details required

  • Proposed name of the company (better to get 2 more alternative names)
  • Objectives of the company
  • Address of the proposed company (till they identify the place, they can use residence address of one of them)

 

Post incorporation, the company has to get all Business registrations such as PAN, TAN, service Tax, Profession Tax or any other registrations applicable to them. I will mention about business registrations in separate articles.

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