The government of India has taken some major steps to keep in pace, the growth rate of India and to overcome the situation of recession. For increasing employment and manufacturing activities in India 2 New Income Tax section has been introduced Sec-115BAA and Sec-115BAB in which corporate tax rate has been reduced to 22% & 15% respectively. This is a better situation for those entrepreneurs who want to start their business as a Limited Company. To help new startups, we are providing an overview of “How to register a Private Limited Company in India” Along with its compliances. Focusing on the Compliance part after incorporation is very important because new entrepreneurs incorporate a limited company without getting knowledge of its compliance part and after some time, they become defaulters due to noncompliance.

First of all, we have to check the availability of a company name that we want to incorporate, which can easily be search from the MCA Website.

http://mca.gov.in/mcafoportal/viewCompanyMasterData.do

For incorporation of Private Limited Company minimum 2 Members are required. While searching the name of your name, you have to take into consideration Section 4 (2), 4(3) of Companies Act 2013, read with Rule 8 of The Companies (Incorporation) Rules, 2014.

After searching the name of your company, you have to apply for its name Approval from MCA. For this, you have 2 options. You can apply online through RUN Form after login into your MCA Portal Account.

In this form, you have to give details of your 2 Proposed name of your company and have to make payment of Rs.1000/- online. In this case, either your name will be approved or rejected/objected. If your name is rejected then you have to resubmit the form within 15 days.

2nd Method is, you can apply in SPICe Form (Simplified Proforma for Incorporating Company Electronically), in which you can directly apply for Name approval or if you have already applied for name approval through RUN Form and your name is approved then you have to mention SRN Number of that approved RUN Approve. Please note that the name approved through RUN Form is valid for 20 days.

While applying through SPICe Form (INC-32), e-MOA (INC-33) and e-AOA (INC-34) are to be filed simultaneously, the declaration by First Subscriber and Director along with Address proof of the premises and copy of Utility bill (not older than 2 months). Please note that Stamp duty has to be paid online according to the paid-up capital of the company.

In SPICe form, you can apply for 1 Proposed name, so it is suggested that firstly apply for Name approval in RUN Form which costs Rs.1000/- and then further applies in Form SPICe.

Through SPICe form you can directly apply for PAN Number, Import Export Code, ESI & EPF Registration and DIN Approval of Maximum 3 Directors is allowed through SPICe Form.

When digitally signed SPICe form is submitted to Concerned ROC, the officer will scrutinize the attachments and filed detail, if he is satisfied then he will approve the form and issue incorporation certificate in Form INC-11.

If he needs some more information, then they give intimation to the applicant to remove the defects and re-submit the e-form within 15 days from the date of such intimation given by the registrar.

Precautions:

As per Sec- 10A, every newly incorporated company having share capital shall not commence any business or exercise any borrowing powers unless –

  • A declaration is filed by a director within 180 days of the date of incorporation of the company in the prescribed form with the registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him.
  • The company has to file a prescribed form with the registrar relating to verification of its registered office.
  • In case of Defaults in compliances, the company shall be liable to a penalty of Rs.50,000/- and every officer who is in default shall be liable to a penalty of Rs.100/- for each day till defaults continue subject to a maximum limit of Rs.1,00,000/-
  • When no declaration is filled with the registrar within 180 days and the registrar has reasonable cause to believe that the company is not carrying business or operations, he may initiate action for the removal of the name of the company.

In the above description, I have tried to let u know-how company is incorporated in India. There are so many annual compliances after incorporation of the company, out of that I am explaining some compliances which are mandatory in nature and in case of defaults its penalties start from thousands which may increase to Lakhs.

1. Annual Audit – After incorporation, its company obligation to get its books of accounts audited from CA and files its ROC Return within 30 days from the date of AGM. Please note that it’s mandatory to get books of accounts audited whether you have done any activity or not during the year.

2. Change on Registered Office: If a company shifts its registered office, then they have to intimate a new address to ROC Within 30 days.

3. Director KYC – Every director has to do its KYC on MCA Portal on annual Basis.

4. DPT-3 – If a company receives any deposits or retains advance from customers after a specified period of time, then they are required to give its details in DPT-3 on an annual basis.

5. Charge Creation- If any company receives any loans from Banks or NBFC then they are required to create the charge on MCA Portal at the time of receiving of loan.

6. Charge Satisfaction – When the company repaid all bank/NBFC Dues, then it is mandatory to file charge satisfaction form with ROC within Prescribed time, in case of default it cost very high to the company.

7. MSME Form – If a company receives any material from MSME Registered enterprises then they are bound to clear their dues in the prescribed time period. In case of defaults, they have to file MSME Form on a Half-yearly basis in which they have to provide details of all outstanding dues along with the reason for non-payment.

Companies Act is a very vast topic, which requires very detail analysis of each provision. So, it is suggested to all new entrepreneurs that, kindly make due-diligence before the incorporation of a new company and its compliances, just do not go with lower tax rate temptations.

This article is for the purpose of information and shall not be treated as a solicitation in any manner and for any other purpose whatsoever. It shall not be used as a legal opinion and not be used for rendering any professional advice. This article is written on the basis of the author’s personal experience and provision applicable as on the date of writing of this article. Adequate attention has been given to avoid any clerical/arithmetical error, however; if it still persists kindly intimate us to avoid such error for the benefits of other readers.

The Author can be reached at mail –shivsharma786@gmail.com and Mobile/Whatsapp – 9911303737

Author Bio

Qualification: CA in Practice
Company: Shiv Kumar Sharma & Associates
Location: Delhi, New Delhi, IN
Member Since: 03 Dec 2018 | Total Posts: 14
My Self CA. Shiv Kumar Sharma. I am a member of "The Institute of Chartered Accountants of India" since 2012. I have Qualified my B.Com (H) in 2010 And Cleared CS- Executive Exam in June 2013. Currently, I am in Practice and dealing in Direct and Indirect taxation along with ROC Compliances. View Full Profile

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