Navigating Company Registration & Post-Registration Compliances in India: Your Comprehensive Guide

 

 

Today, India is gaining prominence as the global investor hotspot and promising MNCs’ location. Nearly 30% of India’s population is made up of youth and combined with the government's proactive measures to enhance the ease of doing business, the country is projected to attract USD 475 billion in FDI over the next five years. While the country offers numerous opportunities for businesses, entering the market involves several stages.

The first and most important step is getting your company registered. Be it entrepreneurs, startups or established players in the market, understanding the registration process is significant to formal acknowledgment and lawful conformity of the business, which in turn, safeguards your investment and enhances the brand credibility.

Company registration provides limited liability protection, establishes business credibility, creates an everlasting brand image, obtains tax advantage, and avails funding from banks as well as government. It also ensures compliance with Indian laws that eventually help in avoiding legal hassles down the lane.

In this blog, you will find out the procedures, documents and legal formalities you need to fulfil before you incorporate your business, and the formalities which you must follow after the registration process.

 

Secure Your Investment – Contact Us for Expert Guidance on Company Registration!

Steps to Register a Company in India

While the process of registering a business in India may seem daunting, it becomes much more manageable with the right guidance. Here’s a simplified step-by-step guide:

 

 1. Choose the Type of Company:

The first step is to determine the type of company that aligns with your business goals. The most common options are:

• Private Limited Company (most popular for startups)
• Limited Liability Partnership (LLP)
• One Person Company (ideal for solo entrepreneurs)
• Public Limited Company

Each has its unique legal and compliance requirements, making it crucial to select the appropriate structure.

 

2. Obtain a Digital Signature Certificate (DSC):

With the registration of companies in India now required to be completed online through the MCA portal (www.mca.gov.in), which provides all the services such as document submission, payments and status tracking of the registration process etc., the company directors and authorized signatories have to obtain Digital Signature Certificate (DSC) for the submission of necessary documents through online mode.

 

3. Reserve Your Company Name:

The name of the company needs to unique and adhere to the guidelines issued by the Ministry of Corporate Affairs (MCA). You can check the availability and reserve your company name through the RUN (Reserve Unique Name) facility.

 

4. File the Incorporation Documents:

After name approval, next step is to file the documents required for company registration in India, such as:

• Memorandum of Association (MoA)
• Articles of Association (AoA)
• Proof of office address
• Identity and address proofs of directors and shareholders

All the documents are electronically submitted to the Registrar of Companies (RoC) via the MCA portal.

 

5. Obtain the Certificate of Incorporation with Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN):

After the authority evaluates the application submitted, the Certificate of Incorporation is made available, together with PAN and TAN of the Company, which is sufficient evidence of the company’s legal existence.

 

Post Registration Regulatory Compliances in India

1. Registering for Goods and Services Tax (GST):

By registering with the GST Act, 2017 as per the threshold limit (compulsory if the annual turnover of the respective company is over INR 20 lakhs), companies can collect taxes on behalf of the government and can take input credit of purchased products.

 

2. Opening a bank account in the company’s name:

This is crucial for commencement of business, overseeing funds, disbursing payments, and receiving revenue. A dedicated bank account helps in maintaining clear financial records and facilitates smooth financial operations.

 

3. Filing the Commencement of Business:

Every newly incorporated company needs to file Form INC- 20A with the Registrar of Companies within 180 days of incorporation before starting its operations in India. The filing requires proof of share capital deposit by the shareholders, photographs of registered office and verification by the professional. This filing prevents the formation of shell companies.

 

4. Issuing share certificates:

According to the Companies Act, 2013, the Share Certificates are required to be issued within two months of incorporation.

 

5. Organizing the first Board meeting and maintaining statutory records:

Every company should hold their first Board meeting within the first 30 days of incorporation. This meeting is important to set the procedural framework for the Board as well as electing its chair and other officials. Also, the Companies are bound to register several registers on a frequent basis including the Register of Members, Register of Directors, Register of Charges etc.

 

6. Appointing Statutory Auditors:

The newly formed company must select their Statutory Auditors within the first 30 days of incorporation, and it is this statutory auditor’s duty to check the company’s financial statements to pull out any irregularities or non-conformity to set standards.

 

7. Filing annual and income tax returns:

Every company is required to lodge documents and returns like balance sheet and profit and loss account, directors and shareholders report, etc. with the Registrar of Companies (ROC) annually. It also must pay its income taxes every year to meet its tax reports and have a good standing with tax departments.

 

8. Ensuring compliance with labour laws:

Management of manpower is a significant challenge for any progressive business, and this makes it crucial to seek guidance in understanding the labour law complexities, especially those related to the Minimum Wages Act, Securing Shops and Establishment Registration, the Factories Act, employee provident fund (EPF), employee state insurance (ESI), etc.

 

Get Started with GST Registration Today! Contact us now

Subsidiary-Specific Compliances

Any company counts as a foreign subsidiary when 50% or more of its share capital is in the ownership of a company incorporated abroad. The referred foreign company goes by either the holding company name or the parent company name. After being registered in India, subsidiary companies follow the laws of India, just like any Indian business.

A bank account in India can be opened by the subsidiary as soon as the incorporation is approved. As a result, the foreign shareholders must transfer the minimum share capital mentioned at the time of establishment. The Reserve Bank of India (RBI) acts on some reporting demands relative to remittance of foreign investment into India. It includes the registration of the Company and the Director(s) with the RBI and the below Form filings that pertain to details about foreign remittance:

• A one-time reporting is required in Form Foreign Currency Gross Provisional Return (FC GPR) within 30 days of allotment of shares.
• FLA - Form FLA requires the preparation of an Annual Report that will delineate Foreign Assets and Liabilities as they appear in the books of the Indian Company.

Besides these, the subsidiary would also be subject to the regular business compliances mentioned above.

Consequences of Non-Compliance Post Company Registration

In corporate governance, failure to meet the legal requirements of post-incorporation obligation bears severe repercussions such as loss of legal protection, business disruption and damage to the company’s image. Some of the key consequences include:

1. Fines & Penalties:

Non-compliance results in fines, penalties and interest charges as provided by the regulatory authorities in India and poses a new set back to the company’s financial policy.

2. Hindrance in Business Operations:

Non-compliance may lead to inability to obtain the necessary licenses, permits or approval that is a big blow to the business entity. This may result in project interruptions or even permanent closures.

3. Closure of Company:

Severe violation of pertinent regulatory rules and regulations might result in the closure or dissolution of the business by regulatory authorities. This would ultimately lead to loss of investment, employment opportunities and valuable resources.

4. Damage to Brand Reputation:

Non-compliance tarnishes the company’s image and its functioning relationship with the customers, investors and any other stakeholders. While negative publicity causes certain business indices to work against the business acumen of the firms, it also takes a toll on the brand image and market reputation, generating outcomes that lead to long-term losses.

 

These post-incorporation compliances assist a company to cultivate credibility with the assistance of its stakeholders and minimizes legal and financial consequences which are imperative for a company’s success. Meeting these requirements demands a high level of precision – be it compliance with document submission deadlines or with relevant laws and regulations, thereby making it a very important exercise for any newly incorporated company.

 

Subscribe us for our news letter