Know The Procedure to Set-Up Your Business in India

Registering a startup or a new business in India first and foremost one has to go by, there are some official procedures a startup or a company has to follow in order to register them in Indian official records.

Set Up Process

Liaison office: Setting up of a liaison office requires prior approval from Reserve Bank of India (RBI). Approval is usually granted for a period of three years and can be renewed thereafter.

Branch office: A prior approval from RBI is required. RBI closely examines the proposed activities to be carried out in India. Subsequently, a certificate of establishing a place of business in India is required to be obtained from Registrar of Companies.

Project office: In specified cases, a project office is allowed to be set up under automatic route otherwise a prior approval is required from RBI. As in case of branch office, a certificate of establishing place of business in India is required to be obtained from Registrar of Companies.

Incorporation of a Company

For registration and incorporation, an application has to be filed with Registrar of Companies. Once a company has been registered and incorporated in India, it is subject to laws and regulations as applicable to other domestic companies in India.

There two types of companies which can be incorporated:

Private company: A private company is a company which has minimum of two members and a minimum paid up capital of Rs. 100,000 or a higher paid up capital as may be prescribed.
By its articles, a private company has to:

  • Restrict rights to transfer its shares, if any
  • Limit its shareholders to a number of fifty
  • Prohibit any invitation to public to subscribe any of its shares or debentures of the company
  • Prohibit any invitation to acceptance of deposits from any person other than its members, directors or their relatives

Public company: A public company is defined as a company which is not a private company. A subsidiary of a public company is also treated as a public company. A public company is required to have a minimum paid up capital of Rs. 500,000 with a minimum seven members and three directors. Maximum number of directors is 12 but can be increased subject to government approval.

Incorporation Procedure

Following steps are required to incorporate a company:

  • Obtaining DIN (Director Identification Number)
  • Applying for name availability
  • Drafting Memorandum of Understanding (MOU) and Articles of Association (AOA)
  • Court stamping of MOU and AOA
  • Signing of MOU and AOA by first subscribers
  • Filing with Registrar of Companies (ROC)
  • Vetting of MOU and AOA by ROC
  • Obtaining certificate of incorporation
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