By Nevin Clinton, Flywork.io Team, Flywork.io.
Whenever one starts a company, it is mandatory to get it registered. Forms of business like sole proprietorship and partnership can be unregistered, but if one wants his/her company to have a legal existence of its own, registration is a necessity. The process of registration is a bit time-consuming but the benefits outweigh the burden. This is because registration ensures that there is protection for the company in case of crisis, lawsuits, or bankruptcy. Further, it ensures that money can be raised more easily through private equity. And most importantly, registration ensures that the company will go on irrespective of whether a founder, director, or member quits. So very clearly, registration is a process that is of paramount importance and hence, it is essential to understand how to do it.
Steps to register a company
- DIN and DSC: To register a company, first and foremost, it is essential to apply for and obtain the Director Identification Number (DIN) and Digital Signature Certificate (DSC). The former is a unique identification number given to the director who is applying for registration while the latter is a digital key that has details about the director and the company. This can be done on the official website of the Ministry of Corporate Affairs (https://www.mca.gov.in/content/mca/global/en/home.html) where these options can be found under ‘MCA Services’. Various details will be required such as identity proof, residence, contact details, passport, and so on.
- Name of the Company: After obtaining the DIN and DSC, one must get the name of the company approved. For the same, eForm 1A which can be found on the website must be filled. There are a total of six names that can be selected in order of preference. These names must be chosen carefully and it must be ensured that there is no overlapping with an already registered company. The provisions of the Prevention of Improper Use Act, 1950, and its directions on names must also be adhered to. Rs. 500 must be paid as a fee here and a digital signature must be attached.
- MOA, AOA, and Certificate of Incorporation: After getting the name approved from the Registrar of Companies, one must fill in Forms 1, 18, and 32 within 60 days to obtain the certificate of incorporation. The Memorandum and Articles of Association must be drafted in this period and they must be printed and stamped. They must also be signed by at least two subscribers. These must be sent as a physical copy to the concerned Registrar of Companies. Once every detail is verified, the Certificate of Incorporation will be provided by the RoC.
- Commencement: After registration, Form 19 has to be filled and the prospectus must be attached. There is an alternative in this regard which is to file Form 20 and provide a statement instead of the prospectus. Applications for GST number, Permanent Account Number, and Tax Deduction Account Number can then be made. A certificate of commencement will finally be issued following which the company can begin functioning.
The process might vary depending on the nature of the enterprise
It is noteworthy that the procedure discussed above is for a private company and the documents to be submitted and the various compliance mechanisms vary depending on the nature of the enterprise. For example, entities covered under Part IX of the Companies Act, 2013 must file two extra forms for registration – eForm 37 and 39. Meanwhile, for smaller entities like micro, small and medium enterprises (MSMEs), just furnishing details of PAN and Aadhaar Card is sufficient to register. In the case of a sole proprietorship, there is no need for registration and it is the same with partnerships.
MCA21 V3 provides for ease of registration
For ease of use, the MCA has planned to revamp its website (MCA21 V3) to ensure that it is user-friendly and all the forms required for the registration of a company are easily available and accessible. A tutorial document has been released in this regard (https://www.mca.gov.in/bin/dms/getdocument?mds=mSnkNJBMIaj3qhkshCvlhA%253D%253D&type=open) and the changes are expected to be made very soon.