Register a Company in India: Everything You Need to Know

Choosing the right business structure, submitting accurate documentation, and meeting compliance deadlines are crucial to avoid delays. Read further to explore essential aspects of company registration in India including the documents required, the complete registration process, post-registration compliances and how Wisemonk ensures a hassle-free company registration in India.

Introduction

Registering a company in India marks a crucial step for entrepreneurs and businesses looking to establish a formal presence in one of the world's fastest-growing economies. As experts in company registration in India, we can confirm that the process is governed by the Companies Act, 2013, which outlines several key steps and compliance requirements. In our extensive experience guiding international clients, we've observed that India offers a diverse range of business structures, each with its own advantages and regulatory frameworks. While the registration process has been significantly streamlined in recent years through digital initiatives, it still requires careful navigation of legal and procedural complexities. Our team has successfully guided numerous global companies through this process, and we can attest to the importance of understanding the nuances of company registration in India.

Whether you're a local entrepreneur or an international corporation, this guide will equip you with the knowledge to make informed decisions and successfully establish your business presence in India.

What are the options to access talent in India?[toc=Options to Access Indian Talent]

When a global company decides to expand its operations to India, particularly to access the country's talent pool, there are two primary approaches to consider: setting up a legal entity or using an Employer of Record (EOR) service. Each option has its own set of advantages, challenges, and timelines.

Setting up a legal entity in India

Setting up a legal entity such as a subsidiary, branch office, or joint venture traditionally remains one of the most popular ways for businesses to enter India. This process involves registering a company with the Ministry of Corporate Affairs (MCA) and following the necessary compliance and governance protocols.

Using an Employer of Record (EOR)

An Employer of Record (EOR) is a service provider that acts as the official employer for your employees in India, without the need for you to establish a legal entity. The EOR hires, pays and manages employees on your behalf while ensuring compliance with local labor laws and tax regulations. Your company can have employees working for you in India, but the EOR handles the HR, payroll, and legal aspects. This is ideal for businesses that want to enter the market quickly without needing a physical entity.

Setting up a legal entity provides long-term stability and control but requires time, cost, and compliance management. On the other hand, an EOR is a quicker, cost-effective solution for those looking to test the market or enter India with less administrative burden. Having successfully assisted multiple companies in navigating the complex Indian business landscape, we understand that the choice between these options depends on your business goals, budget, and timeline for market entry.

If you want to understand more, we have a comprehensive article on "Detailed Comparison of Entity Establishment vs. Employer of Record (EOR)" that provides in-depth insights into these options.

What documents are required for company registration in India?[toc=Documents Required]

Based on our extensive experience in guiding entrepreneurs through the company registration process in India, we can confidently outline the essential documents required. Our experience has shown that these documents are crucial for ensuring compliance with the Companies Act, 2013, and facilitating a smooth registration process. For each director, the following documents are required:

Proof of Identity:

Each director must provide proof of identity to verify their personal details. Indian residents must submit a PAN Card, which is mandatory for the registration process. Alternatively, a Driving License, Voter ID Card, or Aadhar Card can also be accepted. For foreign nationals, a valid Passport is mandatory, and it must be notarized in their home country. Additionally, all foreign documents need to be apostilled or legalized by the Indian Embassy in the respective country to ensure their validity.

Proof of Address:

Proof of address is required to confirm the residential address of each director. The documents submitted must be recent, not older than two months. Acceptable options include a utility bill (such as electricity, water, or landline phone bill) or a recent bank statement. We advise our clients to submit the most recent utility bills or bank statements, ensuring they're not older than two months. For Indian residents, the residential address can also be verified with a rental agreement or lease deed if it differs from the address mentioned on their identity proof. For foreign nationals, we have observed that a notarized and apostilled or legalized address proof is mandatory.

Photographs of Directors

All directors must submit recent passport-sized color photographs as part of the documentation process. The photograph must meet specific requirements to ensure uniformity. It should be 3.5 cm by 3.5 cm in size, have a white background, and display a front-facing, full-face view with a neutral facial expression. The photograph should be recent, taken within the last six months, to accurately reflect the director's current appearance.

Proof of Registered Office Address

The company must provide proof of its registered office address to complete the registration process. If the premises are rented, a rental agreement or lease deed must be submitted along with a No Objection Certificate (NOC) from the property owner.

In cases where the premises are owned by a director, property ownership documents and, if applicable, a NOC from other directors must be provided. For shared office spaces, an agreement with the service provider and a NOC from them are required.

Consent Forms and Declarations

The consent forms and declarations are critical components that require careful attention. In our experience, Form DIR-2 and Form INC-9 are particularly important as they establish the legal standing of the directors. We always advise our clients to review these forms thoroughly before signing, as any discrepancies can lead to significant delays.

For companies with share capital, we've found that Form INC-20 often requires detailed financial planning to ensure compliance with minimum paid-up capital requirements. Form MBP-1 is another area where we guide our clients carefully, ensuring all relevant interests are disclosed to maintain transparency and legal compliance.

By ensuring all these documents are properly attested, notarized (where required), and accurately filled out, entrepreneurs can streamline the registration process and avoid unnecessary delays.

What are the steps to register a company in India?[toc=Steps]

Whether you choose to set up a legal entity or use an EOR, understanding the company registration process in India is crucial. Having guided numerous US companies through the company registration process in India, we can confidently outline the key steps involved. Our extensive experience has shown that while the process has been streamlined in recent years, attention to detail remains crucial for a smooth registration.

Step 1: Decide the type of company

The first step in registering a company in India is deciding on the type of company you want to establish, as this determines the structure, legal requirements, and operational flexibility of your business. The most common types of companies include Private Limited Company, Public Limited Company, One Person Company (OPC), Limited Liability Partnership (LLP), Sole Proprietorship, and Partnership Firm. Among these, the Private Limited Company is particularly suitable for startups and small businesses because of its advantages, such as limited liability for its shareholders, ease of raising funds from investors, and a professional corporate structure.

Step 2 :Choose a unique company name

Once you have decided on the type of company, the next step is to choose a unique name that represents your business and adheres to the naming guidelines provided by the Ministry of Corporate Affairs (MCA). The name should not be identical or closely resemble an existing company name to avoid rejection during the approval process. You can use the MCA’s RUN (Reserve Unique Name) service to check the availability of your desired name and reserve it for your company. The chosen name should comply with the Companies Act, 2013, reflecting your business activity while maintaining distinctiveness, ensuring a smooth registration process.

Step 3: Obtain Digital Signature Certificate (DSC)

The first step in company registration in India is obtaining a Digital Signature Certificate (DSC) for all proposed directors. DSC is mandatory for all the proposed directors and the subscribers of the Memorandum of Association (MoA) and Articles of Association (AoA). A DSC is an electronic form of signature recognized under the Information Technology Act, 2000. To obtain a DSC, directors must submit proof of identity and address to a government-recognized certifying authority. The list of such certifying authorities can be accessed on the official MCA website, and the process can also be completed online in just 2-3 working days. It's important to note that the DSC is typically valid for 1-2 years, so plan for renewal accordingly.

Step 4: Apply for Director Identification Number (DIN)

Next, each proposed director must obtain a Director Identification Number (DIN). This unique 8-digit number is mandatory for anyone intending to serve as a director of a company. The application for DIN is made through Form DIR-3, which is submitted online on the MCA portal along with proof of identity, address, and a photograph. The MCA usually processes DIN applications within 1-2 working days. It's important to note that a person can hold only one DIN, regardless of the number of directorships.

Step: 5 Name Reservation and Approval

Choosing and reserving a unique company name is a critical step. The proposed name must not be identical or deceptively similar to any existing company names. The application for name reservation is made through the RUN (Reserve Unique Name) web service on the MCA portal. Up to two name options can be submitted, and the MCA typically responds within 1-2 working days. The approved name is reserved for 20 days for private companies and 60 days for public companies, during which the incorporation application must be filed.

Step: 6 Filing of SPICe+ Form

The Simplified Proforma for Incorporating Company Electronically Plus (SPICe+) form is the heart of the incorporation process. This comprehensive form combines various aspects of company incorporation, including the application for company name, incorporation, DIN, PAN, TAN, and EPFO registration. Along with SPICe+, applicants must file the linked forms: eMOA (electronic Memorandum of Association) and eAOA (electronic Articles of Association). The form requires details about the company's structure, directors, shareholders, registered office, and share capital.

Step 7: Preparation and Submission of MOA and AOA

The Memorandum of Association (MOA) and Articles of Association (AOA) are fundamental documents defining the company's constitution. The MOA outlines the company's name, registered office, objects, liability, and capital structure. The AOA contains the rules for internal management. These documents are prepared based on the company type and filed electronically along with the SPICe+ form. For most companies, standard templates provided by the MCA can be used, but they can be customized as needed.

Step 8: Paying fees and obtaining Certificate of Incorporation

This step involves paying the registration fees and obtaining the Certificate of Incorporation (COI). The registration fees are determined based on the company’s authorized capital and can be calculated and paid online through the MCA portal. Once the payment is made and the application is verified by the Ministry of Corporate Affairs (MCA), the Certificate of Incorporation (COI) will be issued via email. The COI includes important details such as the Company Identification Number (CIN), the date of incorporation, and the company’s PAN and TAN. With the COI in hand, your company is officially registered and ready to operate in India.

What are the types of business structures in India?[toc=Types of Business Structures]

When establishing a business in India, it's crucial to choose the right structure that aligns with your objectives and operational needs. Here's an overview of the main business structures available in India:

Each structure has its own set of regulations, tax implications, and compliance requirements. Factors to consider when choosing include liability protection, tax efficiency, ease of operation, and future growth plans. It's advisable to consult with legal and financial experts to determine the most suitable structure for your specific business needs.

What are the essential post-registration compliances for a company in India?[toc=Post-Registration Compliance]

In our extensive experience guiding numerous global companies through the intricacies of establishing a presence in India, we've found that post-registration compliances are crucial for legal operation and avoiding penalties. These compliance steps include obtaining crucial registrations and setting up operational necessities like tax-related documentation and bank accounts. Here's a detailed explanation of the key post-registration compliances:

Permanent Account Number (PAN) Registration:

One of the first steps after incorporation is obtaining a Permanent Account Number (PAN) for the company. This is automatically issued along with the Certificate of Incorporation. The PAN is a fundamental requirement for all tax-related matters, including filing income tax returns and conducting high-value transactions. It plays a vital role in maintaining financial and legal transparency and is mandatory for the seamless execution of your company’s financial operations.

Tax Deduction and Collection Account Number (TAN):

Similarly, a Tax Deduction and Collection Account Number (TAN) is also automatically issued during incorporation. TAN is crucial for companies that are required to deduct or collect tax at source under the Income Tax Act. This number must be used when filing TDS (Tax Deducted at Source) returns, ensuring compliance with tax regulations and avoiding penalties for non-deduction or non-payment of TDS.

Opening a Bank Account

A current account is essential for conducting your company’s financial transactions. To open a bank account, you will need to provide documents such as the Certificate of Incorporation, the company’s PAN card, the Memorandum of Association (MOA) and Articles of Association (AOA), a board resolution authorizing the account opening, KYC documents of the directors, and proof of the registered office address. Once these documents are submitted and verified, the bank will provide your account details and internet banking credentials, allowing you to manage your business finances efficiently.

Process:

• Choose a bank and apply for a current account
• Submit all required documents
• Complete in-person verification (if required)
• Receive account details and internet banking credentials

GST Registration

Another significant compliance is GST Registration, which is mandatory for companies meeting specific criteria. Businesses with an annual turnover exceeding ₹20 lakhs (₹10 lakhs for special category states) must register under the Goods and Services Tax regime. Additionally, inter-state suppliers and e-commerce operators, irrespective of turnover, are required to obtain GST registration.

Process:

• Apply online through the GST portal
• Submit necessary documents including PAN, address proof, and bank account details
• Obtain GSTIN (GST Identification Number) within 3-7 working days

Reporting to RBI for Companies with Foreign Investment:

If your company has received Foreign Direct Investment (FDI), it is crucial to comply with regulations set by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA). This includes submitting required information about the inflow of funds and adhering to reporting guidelines. Companies must file form FC-GPR with the RBI after receiving FDI.

Furthermore, all companies with foreign direct investment (FDI) are required to file the annual Foreign Liabilities and Assets (FLA) return with the Reserve Bank of India (RBI) by July 31st each year. This return provides details of the company's foreign liabilities and assets as of the end of the financial year (March 31st). Compliance with these requirements is essential to avoid penalties.

How long does it take to register a company in India?[toc=Timeline]

The following table provides estimated timelines for each stage of company registration in India. Please note that these are approximate durations and may vary depending on specific circumstances and regulatory processing times.

What other statutory registrations are required for businesses in India?[toc=Statutory Registration]

In addition to the essential post-registration compliances, certain statutory registrations may also be necessary depending on your business’s size, nature, and activities. These registrations ensure compliance with labor laws, tax regulations, and other legal requirements. Below is a detailed explanation of each statutory registration:

• Provident Fund (EPF) Registration: The Provident Fund (EPF) Registration is mandatory for businesses employing 20 or more people. This registration allows employers and employees to contribute toward a provident fund, which acts as a social security benefit for employees. Companies can register for EPF through the Employees’ Provident Fund Organization (EPFO) portal.
• Employee State Insurance (ESI) Registration: The Employee State Insurance (ESI) Registration is required for establishments employing 10 or more people who earn salaries up to ₹21,000 per month. This scheme provides medical and cash benefits to employees in case of sickness, maternity, or workplace injuries. The registration can be completed online via the Employee State Insurance Corporation (ESIC) portal.
• Professional Tax Registration: Professional Tax Registration applies to businesses operating in states where professional tax is levied, such as Maharashtra, Karnataka, and West Bengal. This tax is imposed by state governments on individuals earning income through employment or professions. Employers must register with the local municipal corporation or state tax department and deduct professional tax from employee salaries.
• Shops and Establishments Act Registration: The Shops and Establishments Act Registration is mandatory for all commercial establishments, including shops, offices, and retail stores, to regulate employment conditions such as working hours, wages, and holidays. The registration is done with the local municipal corporation or labor department, depending on the state. This registration helps businesses comply with labor laws and ensure employee welfare.
• Import Export Code (IEC): For businesses engaged in international trade, obtaining an Import Export Code (IEC) is mandatory. The IEC is required for importing or exporting goods and services and can be obtained by applying online through the Directorate General of Foreign Trade (DGFT) portal. This registration is a prerequisite for carrying out import-export activities legally in India.
• MSME Registration: While not mandatory, MSME (Micro, Small, and Medium Enterprises) Registration is highly beneficial for small and medium enterprises. Businesses registered as MSMEs through the Udyam Registration portal can avail themselves of several benefits, including easier access to loans, subsidies, and government schemes. This registration supports smaller businesses by providing them with financial and operational incentives to grow and thrive.

What are the challenges faced by global businesses to register a company in India?[toc=Challenges]

Having guided numerous global businesses through the complexities of the Indian regulatory landscape, we can confidently say that setting up a company in India presents unique challenges. Based on our expertise, here’s a breakdown of the common obstacles faced by foreign companies:

• Complex Regulatory Environment: India’s regulatory framework can be daunting due to the involvement of multiple authorities such as the Ministry of Corporate Affairs, Reserve Bank of India, and tax departments. In our experience of helping global businesses navigate this environment, the frequent updates to compliance requirements and the complexities of overlapping regulations can overwhelm companies unfamiliar with the system.
• Lengthy Documentation Process: The documentation required for company registration is extensive and detailed. Registering a company in India requires extensive documentation, including notarized and apostilled foreign documents, which can be tedious and time-consuming. Based on our extensive research and hands-on experience, we can confirm that even minor missteps in documentation or deviations from prescribed formats can lead to prolonged delays.
• ‍Opening a Bank Account: While opening a corporate bank account in India is said to take only a few days, the reality is often different. In practice, it can take over a month due to stringent KYC requirements, documentation reviews, and procedural inefficiencies. We’ve had clients who struggled for months to open an account, but with our expertise, we successfully expedited their processes.
• Regional Variations in Procedures: Procedures and timelines can vary across states due to differing interpretations of regulations by local authorities. In our work with businesses across multiple regions, we’ve noticed that local governance often causes inconsistencies and confusion, particularly for first-time entrants.
• Name Approval Hurdles: Selecting and getting approval for a company name can be unexpectedly challenging. The Ministry of Corporate Affairs has strict guidelines regarding company names, prohibiting names that are too similar to existing companies or contain certain restricted words. Many applicants face rejections in this stage, leading to delays and the need to brainstorm alternative names. Drawing on our experience of successfully guiding clients through this process, we emphasize the importance of brainstorming multiple name options and conducting preliminary checks before submission.
• Compliance with Foreign Direct Investment (FDI) Norms: For foreign investors, understanding and complying with India's FDI regulations presents a significant challenge. Different sectors have varying FDI caps and entry routes (automatic or government approval), and these norms are subject to periodic changes. Ensuring compliance with these regulations while structuring the company can be complex and may require expert guidance. Understanding whether the business falls under the automatic route or requires government approval is critical, as missteps can delay the registration process.

Navigating these challenges requires not only an understanding of Indian regulations but also practical experience in managing them effectively. With the right guidance, businesses can streamline their entry into the Indian market.

Why choose Wisemonk for company registration in India?[toc=Partner with Wisemonk]

‍Wisemonk stands as a leading Employer of Record (EOR) provider in India, offering a suite of services designed to simplify market entry and business operations for global companies in India. With its deep understanding of the Indian business landscape, Wisemonk provides tailored solutions to meet the unique needs of each client.

For businesses opting for full company registration, Wisemonk offers comprehensive support:

• Choose the Right Business Structure: We help you identify the most suitable entity type, whether it’s a Private Limited Company, LLP, or OPC, based on your business goals.
• Documentation and Filings: Our team prepares and files all required documents, including the Memorandum of Association (MoA) and Articles of Association (AoA), ensuring full compliance with Indian laws.
• Regulatory Approvals: We handle the entire process of obtaining Digital Signature Certificates (DSCs), Director Identification Numbers (DINs), PAN, and GST registrations.
• Name Reservation: Wisemonk assists in securing your company’s name through the MCA’s Reserve Unique Name (RUN) service.
• Post-Incorporation Setup: We help you with opening corporate bank accounts, tax registrations, and acquiring any additional licenses needed for your operations.
• End-to-End Compliance: From filing initial forms to ensuring you meet post-registration obligations, we manage the entire lifecycle of setting up your company.

Wisemonk can also be your simplified Employer of Record (EOR) solution, helping you quickly and legally hire, pay, and manage employees in India without the need to establish a legal entity. We offer payroll management, talent acquisition, contractor payments, and assistance in setting up teams in India or Global Capability Centers (GCCs) in India. What makes us unique is our added services: conducting thorough background and reference checks, providing flexible insurance plans, and managing the equipment lifecycle for your workforce.

Whether you want to simplify market entry with an EOR solution or fully establish a legal presence, Wisemonk provides reliable, end-to-end support to help you achieve your goals and scale your operations in India with ease.

For more information on how Wisemonk can simplify your journey into the Indian market or to discuss your specific business needs, please Contact us.

FAQs

What is a private limited company in India?

A private limited company in India is a business entity with limited liability, restricted transferability of shares, and a minimum of two directors and two shareholders. It offers personal asset protection and is suitable for small to medium-sized businesses.

What are the main types of company registration in India?

The main types of company registration in India include Private Limited Company, Public Limited Company, One Person Company (OPC), Limited Liability Partnership (LLP), and Sole Proprietorship. Each type has its own set of regulations and benefits.

How long does it take to register a company in India?

While official estimates suggest a few weeks, in reality, the process can take significantly longer. Factors such as document preparation, name approval, and regulatory scrutiny can extend the timeline to several months in some cases.

What is the process for reserving a company name?

The process involves searching for name availability on the MCA portal, selecting the appropriate form (RUN or SPICe+ Part A), filling out the name reservation form, and submitting it for approval. The approval process typically takes 2-3 working days.

What are the post-registration compliances for a new company in India?

Post-registration compliances include obtaining a company seal, PAN card, opening a bank account, appointing auditors, filing annual returns, and maintaining statutory registers. Regular board meetings and AGMs are also required.

Can foreign nationals register companies in India?

Yes, foreign nationals can register companies in India. However, they must comply with Foreign Direct Investment (FDI) regulations and may need to partner with Indian residents depending on the business sector.

How much does it cost to register a company in India?

The cost of registering a company in India varies depending on factors such as the type of company, authorized capital, and professional fees. It's best to consult with a professional service provider for an accurate estimate based on your specific requirements.

What is a foreign entity for tax purposes?

For tax purposes, a foreign entity is a company incorporated outside India but may be considered resident in India if its Place of Effective Management (PoEM) is in India during that year. This affects the entity's tax liability in India.

What are the tax advantages of registering a company in India?

Registering a company in India can provide various tax benefits, including lower corporate tax rates for certain sectors, tax deductions for startups, and access to double taxation avoidance agreements with many countries.

Can a One Person Company (OPC) be converted to a Private Limited Company?

Yes, an OPC can be converted to a Private Limited Company. This can be done voluntarily after two years of incorporation or mandatorily if the paid-up capital exceeds Rs. 50 lakhs or the average turnover exceeds Rs. 2 crores.

Can Wisemonk assist with post-registration compliance requirements?

Yes, Wisemonk can assist with post-registration compliance requirements, including filing annual returns, maintaining statutory registers, and ensuring adherence to regulatory guidelines.

Can Wisemonk help with recruitment and HR management for newly registered companies?

Yes, Wisemonk offers comprehensive HR solutions, including recruitment assistance and HR management services, to help newly registered companies build and manage their workforce effectively.

How does Wisemonk's EOR service reduce costs compared to traditional registration?

Wisemonk's EOR service reduces costs by eliminating the need for entity setup, lowering initial investment, and providing built-in compliance management. This allows businesses to enter the market quickly without the overhead of establishing a legal entity.

How can Wisemonk help simplify the company registration process in India?

Wisemonk simplifies the company registration process by handling all paperwork, liaising with authorities, and guiding clients through each step. Their expertise helps navigate complex regulations and expedite the registration timeline.

Is GST registration mandatory during company registration?

GST registration is not mandatory during company registration but is required if the business's turnover exceeds the prescribed threshold or if it engages in interstate supply of goods or services. Wisemonk can assist with GST registration when needed.

‍