Company Formation in India

Procedures for Company Formation

An entrepreneur needs to get his business registered and incorporated under the Companies Act 1956.The Companies Act requires the new companies to register themselves with the Registrar of Companies (ROC)


A person has to file an application with the ROC for registration and incorporation of a company. It must be accompanied by the name of the company, Memorandum of association (MOA), Articles of association (AOA) and other documents required. These documents are to be submitted online through website of Ministry of Company Affairs.

As per the Companies Act 1956, a company can either be registered as a Private Limited Company or a Public Limited Company.

According to Section 3(1)(iii) a Private Company is one which :

• Has a minimum paid-up capital of one lakh rupees.
• Restricts the right to transfer its shares (any restriction that enables the directors to maintain minimum limit of two members and the maximum limit of 50 members, shall serve the purpose).
• Limits the number of its members to 50. This number does not include employees of the company and the ex-employees of the company who are still members of the company.
• Prohibits the subscription of shares or debentures from general public.
• V. Prohibits any invitation or acceptance of deposits from any person except its members, directors or their relatives.

According to Section 3(1)(iv), a Public Limited Company is a one which:

• Is not a private company.
• Has a minimum paid-up capital of Rs five lakhs.
• Is a private company which is a subsidiary of a public company.

A public company cannot have less than seven members. There is no restriction with regard to the maximum number of persons who can acquire the shares or debentures of a public company. The shares and debentures may be quoted in stock exchange and are freely transferable.