FAQ on Company Formation in India

A: A Public Limited Company can have an unlimited number of shareholders and can offer shares to the public and accept public deposits. Each shareholder’s liability is limited to the unpaid amount on their shares. At least seven shareholders are required to set up a Public Limited Company.

A: Choosing between a Private and Public Limited Company depends on your needs. A Private Limited Company is often better if you don’t need to raise funds from the public and want to keep ownership within a small group of people. It also has fewer compliance requirements.

A: The minimum paid-up capital for a Private Limited Company was once INR 1,00,000, but this requirement has been removed by the Companies Act 2013. There is no maximum limit on the authorized or paid-up capital, and it can be increased anytime with additional stamp duty and registration fees.

A:Authorized Capital is the maximum amount of capital a company can issue to shareholders, as approved by the Registrar of Companies. Paid-Up Capital is the portion of the authorized capital that has been actually paid by shareholders.

A:To get your company name approved, you need to:

Submit Form No. INC-1 online using a Digital Signature.
Provide alternative names, details of promoters, authorized capital, and main business objectives.
The Registrar of Companies (ROC) reviews the application and sends approval or objections via email within 3-4 days.

• MOA: This document outlines the company’s objectives and scope.
• AOA: This document includes the rules for managing the company.

Both documents need to be drafted, signed, and stamped. Stamp duty varies based on the company’s authorized capital

For incorporation, you need:

• MOA and AOA: Signed by promoters with personal details and the number of shares they will subscribe to.
• Form INC-7: For incorporating a new company (excluding OPC).
• Form INC-8: A declaration on non-judicial stamp paper confirming compliance with incorporation requirements.
• Form INC-22: Information about the company’s registered office.
• Form DIR-12: Consent from proposed directors (not required for private companies).
• Form DIR-2: Appointment of directors.
• INC-9: Declaration by first directors.
• Power of Attorney: Authorized person to act on behalf of the subscribers.
• Filing Fees: Applicable fees for registration.

Once the documents are submitted, the ROC reviews and makes necessary corrections. After compliance, the Certificate of Incorporation is issued

• Public Companies: Must complete legal formalities, including a statutory meeting and report, before starting business operations.
• Private Companies: Can start business immediately after incorporation.

You can appoint someone in India with a Power of Attorney to handle formalities. The Power of Attorney and other documents need to be notarized and attested by the Indian Embassy or Consulate in your country

After incorporation, foreign investors must either:

• Inform the Reserve Bank of India (RBI) about foreign equity or
• Obtain approval from the Foreign Investment Promotion Board (FIPB).

Approval or intimation depends on the business sector.

After incorporation, foreign investors must either:

• Automatic Approval: For most activities, foreign investment can be reported to RBI within 30 days without prior approval.
• FIPB Approval: Required for activities not eligible for Automatic Approval

This simplified guide helps you understand the essential aspects of forming a company in India. For personalized assistance, contact KKKD & Co. to navigate the process smoothly.

The auditor must be appointed at the AGM. The auditor should be qualified under the Institute of Chartered Accountants of India Act 1949 and must be independent of the company.