Setting up a Private Limited Company

Finally... After one year of completing my M.Tech, I've begun preparations for setting up a company in my core area of specialisation. I'm writing the procedures I follow to set up a private limited company as and when I complete a particular step. More detailed information on this topic can be found on a number of good websites in India such as http://legalservicesindia.com/.

Now-a-days, the government of India is moving towards e-governance at various levels of governance. Just in the past couple of months, I witnessed a couple of new features being added in the mca portal such as e-stamping of important documents (instead of the regular stamp paper which should be submitted to the ROC). This had made the process of setting up of a company just a few clicks away. You can still opt for a good charted accountant or a consultant to set up a company in a hassle free manner for a nominal charge. But, I decided to try my patience and experiment in setting up my company...

Before setting up a private limited company, the directors (a minimum of two for a private limited company), should have obtained a Director Identification Number (DIN), post 2007, for all practical purposes. This process takes hardly 7 - 10 days, given that you have all the necessary documents in proper order. The procedure of obtaining a DIN and the common hassles encountered en-route are detailed in this post. Meanwhile, You need to create a login id in the ministry of company affairs site.

At least one of the directors is supposed to have obtained a class II Digital Signature (DSC), issued by a number of authourised agencies in India, for the purpose of signing the documents that are meant to be e-filing. This removes the necessity of paper works while maintaining the authenticity of the document and the person signing it, as a DSC is identified with a single individual as is the signature of a person.

Then after obtaining the DIN and the DSC, proceed to file the form-1A, which can be downloaded here, for the registration of a name for your company.

Complete the Form-1A in all respects and submit it in the MCA website for presrutiny using your login. it opens a Java applet window for this purpose, which scrutinsies the form for the final submission. If the filled in form is verified to be complete in all respects in the pre-scrutiny stage, the go to e-forms section of your mca login and select thed e-form upload to upload the same form that you uploaded for the pre-scrutiny, without making any changes. After that pay the requisite fees, Rs. 500 (five hundred) as of now, through any of the avalabe means.

Then you'll have to wait until the name of your company is registered by the MCA, which is supposed to take about a couple of weeks. Since it's been only 4 days I completed this stage.... So, please wait till my Form 1-A is approved for further produre...

Oh finally, I am back...

Once the form 1-A is approved, one of the proposed name of your company is approved.

Then, you have to prepare the Articles of Association (document managing the internal affairs of the company ) and Memorandum of Association (document describing the business relationship of the company with the public) and submit it in the MCA website along with the requisite stamp duties for the respective documents and fees for their processing. This may vary depending upon your state of origin and the paid up capital of the proposed company. The MCA site has a fee calculator, that can be accessed in the other services of the e-services section of MCA21 for calculating the exact amount to be paid online at the time of registration.

After this, Fill in the following forms

• Form 1     - Application or declaration for incorporation of a company
• Form 18   - Notice of situation or change of situation of registered office
• Form 32   - Particulars of appointment of managing director, directors, manager and secretary
• Power of Attorney (typed in a Rs. 50 non-judicial bond paper) - in case you process this application through a CA

Of the above forms, Form 18 and Form 32 require the digital signature of either 

• A Charted Accountant (or)
• A Cost Accountant (or)
• A Company Secretary

You need the following details for the respective forms

For Form 1,

• Category & Sub-Category of Comapny
• Main Division of Industrial Activity of Company (provided in the Instruction kit of form 1)
• Authorised and Paid up Capital of Comapny
• Details of the First promoters of the Company (Either an induvidual or a company)
• Articles and Memorandum of Association (both containing scanned copy of the manually filled in subscribers' detials along with their respective signatures and the signature of a CA/CS)
• Duely filled in and digitally signed Form 18 and Form 32 and Power of Attorney (if required) to be attached in the appropritate section of Form 1

For Form 18

• Proposed address for the registered company
• The Address of the police station within whose policing the proposed address for the registered company falls
• The RoC of the home state

For Form 32

• Details of the proposed Managing Director/ Directors/ Nominee/ Additional Director, etc., (Name, Address, Date of Birth, DIN, nationality)

After completing these forms, log onto your MCA portal user login and go to the submit forms section and start uploading the appropriate forms one after the other. After the upload is complete, it will prompt for you to make the appropriate payments online, where you can pay through credit/debit cards or through net banking.

Then you will get your certificate of incorporation, post successful processing of your forms, at the registered address of your company.

But before this, you need to do a couple of things:

• Print a name Banner/Board of your company, with the approved name in English and your local language (or as per your local norms) along with the address and erect it at the address of your company.
• Prepare rubber stamps of the company, directors, and authorised signatory. The rubber stamp shop will have a ready made template.
• And Finally, Submit a letter (printed in the letter head of your company) to the nearest post office within whose region your company's address lies, stating that your company is located at the stated address and that the signees are authorised to accept any letter addressed to the company (If you don't do this, you'll be subjected to undue delay or will end up paying 'mamool'!!! In my case, the letter was returned to the Regional RoC office where I had to collect my CoI after much dillydallying by the substaff present there! luckily I chanced upon the Asst. RoC, on my second visit, who immediatedly resolved the issue without much ado!!! else God knows what!).

Hopefully, you'll get your Certificate of Incorporation in a couple of weeks by Speed Post. I received mine in less than a week, which I could lay hands on only after about 2 months, due to my ignorance and my CA's callousness !!!

I hope that this was a useful post for those who start out in this direction with no directions!!! Let me know of how I could make this better!!!