The FAQs cover the process involved in incorporating a private limited company in India

  1. What is a private limited company?There are several different types of legal structures in India such as a private limited company, public limited company, limited liability partnership, sole proprietorship etc.A private limited company refers to an entity which limits the liability of the owner to their respective shareholdings and restricts shareholders from publicly trading shares.
  2. How many directors are required to incorporate a private limited company in India?A private limited company must have a minimum of two(2) directors and can have a maximum of fifteen (15) directors. One of the Directors of a private limited company is mandatorily required to be an Indian citizen and an Indian resident. The other director(s) can be a foreign national.
  3. How many shareholders are required to incorporate a private limited company in India?To incorporate a private limited company, a minimum of two (2) shareholders are required. These shareholders could be natural persons or companies, including foreign companies. The maximum number of shareholders is two hundred(200.).
  4. Can an individual person incorporate a company in India?Yes, like several other countries such as China, Singapore, UK, Australia, and the USA, the Companies Act, 2013 has also introduced the concept of a One Person Company.
  5. What is a One Person Company (“OPC”)?The Companies Act, 2013 defines a One Person Company as a company that has only one (1) person as its member, i.e. a company that has only one (1) shareholder.The sole member of the OPC is required to, while registering the OPC,select a nominee who in the event of the subscriber’s death or his incapacity to contract becomes the member of the company.Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.
  6. How many directors does an OPC require?OPCs need to have a minimum of one(1)person (the member) as a director. They can have a maximum of fifteen (15) directors.
  7. What is the typical process to be followed to register a private limited company in India?
    • Step 1: Reserve a name for the company;
    • Step 2: Apply for digital signature (DSC) for each of the director;
    • Step 3: Acquire an identification number (DIN) number for each director; and
    • Step 4: File the SPICe Form.
  8. How does one reserve a name? Are there any considerations to be kept in mind while providing a name to the company?An applicant can pick up any suitable name for the company, provided that (i) the company cannot be registered with a name which is undesirable as per the Central Government; (ii) the name of the company has to end with ‘Private Limited’; (iii) the name which is chosen for the company should not resemble or be identical to the name of another registered company.One can reserve the name of its company via Reserve Unique Name form (“RUN”).
  9. What is the procedure of availing services of RUN?One is required to create an account for oneself at the Ministry of Corporate Affairs (“MCA”) portal.After creating an account, the applicant can avail the RUN services. The applicant can propose two names under this service. It is important to note that the name applied for will either be approved or rejected and that no re submissions are allowed. A fee of Rupees One Thousand (Rs.1,000) will be levied for the submission of each form.
  10. How long is the approved name valid for?An approved name is valid for a period of twenty (20) days from the date of approval of such name.
  11. Is it mandatory to reserve a name in advance?No, it is not compulsory to reserve a name through the RUN service. The approval of a name can also be sought while filing the SPICe (INC-32) form.One can apply for the proposed name through SPICe (INC-32) form on the MCA portal. Only one name can be applied for under this form. However, in case of rejection due to non-approval of the name, the applicant in this case gets a second chance of refilling the same SPICe (INC-32) form without any further charges.
  12. What is DSC? Is it required to file the SPICe (INC-32) and RUN?DSC refers to a Digital Signature Certificate. It must be obtained from a certifying agency which has been recognized by the government. Since the registration process is now online, all the forms require a valid DSC. The cost of obtaining DSC varies from each certifying agency.DSC is required to file the SPICe (INC-32) form whereas the same is not required for filing RUN.
  13. What is DIN?DIN is a unique Identification Number allotted to an individual who is appointed as a director of a company. Any new company is required to make an application for allotment of DIN through SPICe form at the time of its incorporation.
  14. What is SPICe form?SPICe refers to a Simplified Proforma for Incorporating Company Electronically. SPICe helps incorporate a company with a single application for:
    • reservation of name;