India is a growing economy with potential for new businesses. It is important for the government to maintain the ease of doing business. Hence, the government relaxed the company registration process. In this article, we will discuss the major changes and a step-wise guide on how to register a company in India.
Major Changes in the Company Registration Process
You can find the key changes in the company registration process below:
|1.||Reservation of names done through INC-1 Form. You could have applied for six names at once.||Reservation of names now done through the RUN web services. You can only apply for one name at a time.|
|2.||One had to give DIN and digital signature to sign INC-1.||You do not have to give DIN or digital signature.|
|3.||The approved name was valid for a period of 60 days||The approved name is valid for a period of 20 days for new companies and 60 days for existing companies.|
|4.||One would file Form INC-1 or INC-32 depending on number of subscribers.||Now, you have to file only one combined form-SPICe.|
|5.||Separate application for DIN.||No separate application for DIN. SPICe is a consolidated form used for incorporation, name reservation, DIN etc.|
|6.||All companies had to pay incorporation fee.||No incorporation fee, if you are a company with share capital less than or equal to INR 10 lakh or less than 20 members.|
Step-by-step guide for company registration process in India
Company registration process involves two broad steps. First is the name approval and reservation and second is the incorporation.
The following steps provide a clear picture of how to go about registering your company.
Step 1: Open an account with Ministry of Corporate Affairs (MCA)
The first step towards company registration is to open an account with the MCA. This opening of an account is free of cost.
Step 2: If the company name is not unique, use the RUN web service
RUN web service is available on the MCA website. You can use it for a fee of INR 1000. It checks if your proposed company name is available for use. It reserves the company name if approved. You can use the given guidelines to use the RUN service:
- Create a login account and click on the RUN icon
- Enter the type of entity you want to reserve the name for. This can be a new company, a private company, producer company etc.
- Take care that the proposed name is not similar or identical to existing company names.
- You have to pay a fee of INR 1000 per application.
- Submission of application generates a challan.
- You cannot resubmit.
- You can check only one name per application.
- You have to pay INR 1000 every time you make a fresh application. For e.g; to check 6 names you will have to spend INR 6,000.
- Ensure compliance with Companies (Incorporation) Rules, 2014 to avoid rejection.
- An email will inform you of approval/rejection of your name.
Step 2: If the company name is unique
If the proposed company name is unique, you can directly file a SPICe Form for incorporation. SPICe form is a consolidated form and you can use it for applying for DIN/reserving company name. No incorporation fee if you are a company with less than or equal to INR 10 lakhs paid-up capital or less than 20 members.
You can follow the below guidelines while filing a SPICe form:
- Apply only one name through SPICe Form.
- File E-forms of Articles of association (INC-34) and memorandum of association (INC-33). You have to do this when the company has up to 7 subscribers.
- Give a copy of PAN and TAN.
- Do not incorporate LLP using SPICe
- You can resubmit twice.
Things to remember while registering a company
- SPICe form allows only one choice of name for name reservation. If your company name is similar/identical to another existing name, it will be rejected. You will then have to repeat the entire process.
- RUN web service is optional. You can use it to check the availability of your name. You have to pay a fee of INR 1000 for its use.
- Skip the RUN service, only if you are sure about the uniqueness of your company name. You should use the RUN web service before you proceed for incorporation.
- Remember, if you are a company with a paid-up capital of less than equal to INR 10 lakhs or with less than 20 members you do not have to pay the incorporation fee.
Pros and Cons of the New Company Registration Process
Like every change, the new registration process also has its pros and cons.
- Simple and easy: The new process is simple and easy to use and understand. It does not need a large amount of paperwork.
- Convenient and time-saving: The process is now completely online. This saves a lot of time.
- Single consolidated form for incorporation: SPICe form is a one-stop shop. A large number of forms and filings are not required. This has made doing business easy.
- No incorporation of fee for small companies will encourage startups and entrepreneurship.
- RUN web service gives the choice of only one name.
- You will have to pay INR 1000 for every fresh application.
- If a name is not approved in the SPICe Form, the entire process has to start afresh.
Every new change comes with its share of problems. The new company registration process too has various concerns. But, this process has simplified our earlier complex system. It is easy, cheap and time-saving. It ensures convenient registration of small businesses and startups. The process, in theory, appears easy and usable. But, in reality, it may take more time for the entire process to get completed. Hopefully, the steps taken would put India higher on the ease of business index and would attract more investment.
Did You Like This Article?
If you have any legal queries or need legal assistance, please visit PocketLawyer.com