Frequently Asked Questions -Company Incorporation in India

Have you been surrounded by some of the common issues that arise while setting up a company /business in India? Then check out below our top 10 frequently asked questions (FAQs) in relation to company incorporation in India.

• What are the types of Business Structures in India?

Types of Business Structures in India are

• Private Limited Company: Formed with a minimum of 2 members and 2 Directors (not necessarily members) and is not allowed to invite the public to subscribe for its shares.

• Public Limited Company: It is owned by the public at large with a minimum of 3 Directors and 7 members.

• Limited Liability Company: Limited Liability Partnership or LLP is a recently introduced corporate structure that combines the advantages of a limited liability company along with the flexibility of a partnership.

• One Person Company: It is classified as a Private Company that has only one person (individual) as a member. This business structure is recently introduced in India through the Companies Act, 2013 to administer the proprietorship businesses and promote them in an organized way. This structure provides the benefits of corporate to those who want no partition to business ownership.

• Sole Proprietorship Firm: This type of Business structure is owned and controlled by a single individual but does not gets the status of a recognizable corporate body.

• Partnership Firm: A Partnership firm is formed by an agreement between two or more partners with the common goal of earning profits.

• Non-Profit Organization: This type of Business structure is formed under Section 8 of the Indian Companies Act with the aim to promote a cause (social, cultural, etc.) and is not for profit.

• 2. How to choose a business structure while applying for Registration of a Company in India?

While it totally depends on the specific factors of the owner of the organization, here is a list of some common factors to be kept in mind while choosing the right business structure:

• Capacity to induce funds

• Level of Liability and Risk involved

• Ownership

• Control over Business decisions

• Taxation Structure

• 3. What happens if my company name is already taken?

In case, if a proposed name of the Company to be incorporated is similar to/or reserved by some other existing company, then a No-Objection Certificate (NOC) may be obtained from the owner of the already existing company and thereafter, the application can be made to Ministry for Name Approval with the NOC as an attachment.

• 4. Can I incorporate a company by myself?

If a person is well versed with the Company Law provisions and various other applicable laws, for the time being, in force, then he/she may apply for the registration process, however, the application form would still be required to be certified by a Practicing Professional.

• 5. What are the advantages of registration of a Private Limited Company in India?

The main advantages of incorporating a Private Limited Company are:

• Limited Liability: Liability of members of a private limited company is limited to their percentage shareholding i.e. personal assets of the shareholders remain separate from the company.

• Separate Legal Entity: The entity is a separate body than its members in the eyes of the law i.e. the entity is considered to have a separate legal existence.

• Ease in the transfer of shares.

• Capacity to sue and be sued.

• Increased Borrowing Capacity.

• 6. What is the minimum capital required?

Pursuant to the Companies Amendment Act, 2013, there is no requirement of minimum Paid Up Capital to be invested to start a Company in India.

• 7. Who can become the Director of Private Limited Company?

Any individual (only natural person) having a valid Director Identification Number (DIN) can become the Director of a Private Limited Company.

• 8. Can I register the company at a Residential Property?

There is no restriction on the place to be treated as Registered Office of a Company. Sufficient and valid proofs such as Rent/Lease Agreement, Utility Bills of the property in name of the owner, and NOC from Landlord (in case the property is rented) are required.

• 9. What is the time schedule for company incorporation in India?

With the introduction of the integrated Web form SPICe+ (INC-32) as a part of the Ease of Doing Business (EODB) initiative, getting a Company Incorporated can be done in just a few days now. In case the documentation is proper and complete in all sense, the Company gets incorporated within a week’s time

• 10. Can a Company’s Director receive a salary like an employee?

Remuneration means any money or its equivalent given or passed to any person for services rendered by him and includes perquisites as defined under the Income-tax Act, 1961 (43 of 1961).

If you have any other queries in relation to doing business in New Delhi, India then contact our New Delhi business specialist Janmejay Singh Rajput at delhi@d-b-in.com

New Delhi Business Specialist Janmejay Singh Rajput