Company Formation In India

Starting a company in India can be a lucrative venture, but navigating the regulatory landscape and ensuring compliance with legal requirements is crucial. At KKKD & Co., we specialize in guiding entrepreneurs and investors through the company formation process, ensuring a seamless and efficient setup. This guide provides an in-depth overview, answers common questions, details the step-by-step procedure, and offers a practical checklist to help you establish your business in India.

Company formation in India is regulated by the Companies Act 2013, which outlines the legal framework for incorporating and managing companies. The Act encompasses various aspects such as company types, governance, financial reporting, and compliance. Whether you’re a domestic entrepreneur or a foreign investor, adhering to the Companies Act is essential for legal and operational compliance.

In India, you can choose from several types of companies:

• Expert Guidance:Private Limited Company: Limited to a maximum of 200 members and does not offer shares to the public.
• Public Limited Company: Can offer shares to the public and has a minimum of seven members.
• Limited Liability Partnership (LLP): Combines the benefits of a partnership with the limited liability of a company.
• One Person Company (OPC): A single-member company that provides limited liability to its owner.

Foreign nationals can own up to 100% of a company in India, subject to sector-specific regulations and approvals from the Reserve Bank of India (RBI) or the Foreign Investment Promotion Board (FIPB). Foreign nationals can also serve as directors, but a local director must be appointed to comply with Indian regulations.

The Memorandum of Association (MOA) outlines the company’s objectives and scope, while the Articles of Association (AOA) details the internal rules and procedures. Both documents must be stamped, with the stamp duty varying based on the company’s authorized share capital.

Shares must be expressed in fixed amounts and denominated in Indian Rupees. “No par value” or “bearer” shares are not permitted. The authorized share capital should be specified in the MOA.

Each company must appoint an auditor annually at its Annual General Meeting (AGM). The auditor must be a qualified professional under the Institute of Chartered Accountants of India Act 1949. Audited accounts are essential for transparency and are used by stakeholders, including creditors, investors, and revenue authorities.

Companies are required to file details such as directors’ names, share capital, and registered office address with the Companies Registry. These details must be updated whenever there are changes.

An Annual General Meeting (AGM) must be held once every financial year, within six months of the end of the financial year. The first AGM can be held within nine months of the end of the first financial year.