Starting a Business in India
Essay title: Starting a Business in India
Procedure 1.
Obtain director identification number (DIN)
Time to complete:
1 day
Cost to complete:
no charge
Comment:
The process to obtain the Director Identification Number (DIN) is as follows: – Obtain the provisional DIN by filing application Form DIN-1 online. This form is on the Ministry of Corporate Affairs 21st Century (MCA 21) portal (www.mca.gov.in). The provisional DIN is immediately issued. The application form must then be printed and signed and sent for approval to the ministry by courier along with proof of identity and address. – The concerned authority verifies all the documents and, upon approval, issues a permanent DIN. The process takes about 4 weeks. – Within 30 days of receipt of the approved DIN, directors submit Form DIN-2 to the MCA with the approved number of all companies of which they hold a director position. – The above companies submit Form DIN-3 attested by the Company Secretary to the concerned Registrar of Companies (ROC).
Procedure 2.
Obtain digital signature certificate
Time to complete:
4 days
Cost to complete:
INR 400 to INR 2,650
Comment:
The digital signature certificate can be obtained from six private agencies authorized by MCA 21. To use the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate. Company directors submit the prescribed application form along with proof of identity and address. Each agency has its own fee structure, ranging from INR 400 to INR 2650.
Procedure 3.
Present name of company for approval to the Registrar of Companies (ROC); Get the memorandum and articles of association vetted by the Registrar and printed
Time to complete:
2-3 days
Cost to complete:
INR 50
Comment:
Company name approval must be done electronically. Under e-filing for name approval, the applicant can check the availability of the desired company name on the MCA 21 Web site. The Registrar of Companies electronically informs the applicant whether the name is available within 7 days of the date of application submission. If approved, the memorandum and articles of association and miscellaneous documents must be filed within 6 months of the approval. In practice, if the proposed name is available, the approval is granted within 2 or 3 days.
Procedure 4.
Make an application to the Superintendent of Stamps or an authorized bank requesting for stamping of the memorandum and articles of association.
Time to complete:
1 day
Cost to complete:
INR 200 (for MOA) + INR 1000 (for AOA) for every INR 500,000 or part thereof + INR 100 (stamp paper for declaration Form 1)
Comment:
The request for stamping the incorporation documents should be accompanied by unsigned copies of the memorandum and articles of association and the payment receipt. The company must ensure that the copies submitted to the Superintendent of Stamps or to the authorized bank for stamping are unsigned and that no promoter or subscriber has written anything on it by hand. The Superintendent returns the copies, one of which is duly stamped, signed, and embossed, showing payment of the requisite stamp duty. The rate of stamp duty varies from state to state. According to Article 10 and Article 39 of the Indian Stamp Act (1899), the stamp duty payable on the memorandum and articles of association for company incorporation in Mumbai, Maharashtra, is as follows: – Articles of association: INR 1000/- for every INR 500,000/- of share capital (or part thereof), subject to a maximum of INR 50,000,000. – Memorandum of association: INR 200. – Form-1 (declaration of compliance): INR 100. Once the memorandum and articles of association have been stamped, they must be signed and dated by the company promoters, including the company name and the description of its activities and purpose, father’s name, address, occupation, and the number of shares subscribed. This information must be in their own handwriting, duly witnessed.
Procedure