Company Formation: Documents, Eligibility Criteria & Procedure

Introduction

Company Formation is the process of registering a company in India. In order to form a company in India certain documents such as DIN, DSC, MoA, AoA, etc, are required. The process of company formation includes various steps which can be too complex for individuals to understand. In this article, we’ll discuss everything related to Company Formation including Documents, Eligibility Criteria & Registration Process with Bizfoc.

What is Company Formation?

Company Formation is a process of incorporating a company in India. Usually this process is known as Company Registration in India. Company Formation in India is governed under Companies Act, 2013. For Company Formation in India, approval from MCA (Ministry of Corporate Affairs) is needed. Company Formation is considered as the most favourable business structure among people due to its various advantages. Also, in order to form a company in India, an individual needs to follow certain eligibility criteria.

Types of Company

Before starting Company formation it is important to understand which type of company is more suitable for your business. The classification of Company can be divided into two major category and they are as follow:

Private Limited Company: A Private Limited Company is a business structure which is owned privately. A Private Limited Company is a separate legal entity and offers limited liability which means the owner's personal assets are protected from any unexpected liability.

Public Limited Company: A Public Limited Company is another business structure which is owned by the public based on traded shares. Any decision in a Public Limited Company is made through the voting and the voting right is given to each shareholder equally. A Public Limited Company can be classified into 2 categories: Listed & Unlisted.

Documents Required for Company Formation

The Documents required for the formation of a company either Public or Private are usually the same. Following is the list of documents required for Company Formation in India:

• Identity Proof: Identity Proof such as Aadhaar Card, PAN Card of all the directors & shareholders (for Public Company) is required.
• Address Proof: Address Proof of all the directors (for Private Company) and all the members (for Public Company) is required. It can be a Voter ID or Driving License.
• Passport Size Photograph: Passport size of all the directors and members (for Public Company only).
• Email ID & Contact Number: Contact details such as email ID & Mobile Number of all the directors is required for both the structures.
• Registered Office Address Proof: Any utility bill not more than 2 months is required. It can be electricity bills, telephone bills, water bills, etc.
• Proof of Ownership: Proof of ownership is required and in case of rented property, rent agreement or NOC from the owner is required.

Note: Some extra documents may be required depending on the state in which the company is incorporated.

Company Formation Procedure

Company Formation Procedure includes various steps from obtaining DSC to filing the Incorporation Form. These steps are crucial and might require expert guidance. Following is the procedure for Company Formation in India:

• Step 01: Obtain DSC & DIN: Obtain the Digital Signature Certificate for all the directors and Directors Identification Number for all the Proposed Directors of the company.
• Step 02: Company’s Name Reservation: Once you obtain DSC & DIN, apply for the Company’s Name. Company’s Name should be unique and easy to recognize. It can be filed using the SPICe+ Part A form. However, for better time management one can check the name availability using the MCA website.
• Step 03: Prepare MoA & AoA: After preparing for Company’s Name, prepare MoA (Memorandum of Association) & AoA (Article of Association). These documents outline the company’s objective, rules & regulations.
• Step 04: File Incorporation Form: Once all the required documents are prepared, file the Incorporation Form using the SPICe+ form and submit it to the Registrar of Companies (RoC).
• Step 05: Incorporation Certificate: Once you submit the application along with the government fees, RoC will verify all the details and your application and on the final approval from the RoC side, you’ll get the Incorporation Certificate.
• Step 06: Post Incorporation Steps: Once you get the Incorporation Certificate, the steps don't end here, you need to open a bank account through the company's transactions. Also there are some major registration which need to be obtained depending on your business structure, they include GST License, Import/Export License, etc.

Eligibility Criteria for Company Formation

For the Company’s Formation certain eligibility criteria is required to be kept in mind. This eligibility criteria differs for Private or Public Company. Following is the detailed eligibility criteria for company formation:

For Private Limited Company:

• A Private Limited Company must have a minimum of 2 members (shareholders) and can have a maximum of 200 members. The company also must have 2 directors. At least one director must be a resident of India.
• The name of the company should be unique and not similar to any existing company or trademark. It must include "Private Limited" or “Pvt Ltd” at the end.
• The Company must have a registered office address in India where official communications and notices can be sent.
• There is no minimum paid-up capital requirement, but the authorized capital should be at least ₹1 lakh.

For Public Limited Company:

• There must be at least 3 directors required and there is no upper limit on the number to start a Public Limited Company.
• Any Public Company either Listed or Unlisted must add a word ‘Limited’ or ‘Ltd’ at the end of its name as it helps in indicating that the company is legally a public entity.
• A Public Limited Company must prepare a prospectus. It is a document that includes the company’s operational activities and financial health. This document helps investors to get attracted and invest in your company.

Why Bizfoc?

BizFoc is a one stop solution that you can trust to register your Public/Private Limited Company. Our team of qualified Chartered Accountants can help you in your Company Formation. We simplify the process, advise on document requirements and support business beyond starting. We get your name applied within 4 hours of our engagement and our success rate for name reservation stands at 98.5%. Start now with Bizfoc as your trusted business partner for all your company formation services.

Conclusion

Company Formation is the process of registering a company in India. Individuals can choose a Private or Public Limited Company depending on their business needs. In order to form a company in India, certain eligibility criteria is required to be followed. Company Formation in India is governed by the Companies Act 2013, under the MCA (Ministry of Corporate Affairs). Company Formation can be done by obtaining major documents such as DSC, DIN, MoA, AoA, etc. It is always recommended to take the guidance of a professional expert for Company Formation.

Frequently Asked Questions