Private limited company is an entity, in which the shares are closely held by group of persons or by group entities. Private limited company requires minimum of 2 (two) members and 2 (two) directors, one of whom should be a resident director¹. It restricts/prohibits 3 (three) key aspects in its articles and they are:

1. Restriction on number of members to 200 (two hundred) (excluding the present and former employees of the company who hold shares);
2. Restriction on transfer of shares; and
3. Prohibition on offering securities to public.

Yes, a private limited company, enjoys certain privileges and exemptions when compared to a public limited company with regard to compliances of certain provisions of the CA 2013. Some of the privileges enjoyed by a private limited company are:

1. Certain exemptions are granted with respect to borrowing monies from members up to aggregate limit of paid-up share capital & free-reserves²
2. The articles of association of the private limited company may override certain provisions of CA 2013 with respect to conducting shareholders meeting³
3. Directors can vote on a contract in which they are interested upon disclosing their interest
4. It is exempted from filing of certain board resolutions with RoC⁴
5. Certain provision related to remuneration of managing director and whole time-director and the terms and conditions of appointment are not applicable to private limited companies⁵
6. The transactions entered with Holding, Subsidiary, Associate Company of a private limited company does not fall within the purview of the related party transactions⁶
7. Private limited company can grant loans/guarantee/security to a director and person in whom he is interested subject to the fulfilment of the certain conditions⁷
8. The restrictions on the powers of the board with respect to borrowings exceeding paid up capital & free reserves and the sell/lease/dispose off undertaking does not apply to private limited companies and the same can be approved only by way of the board’s approval⁸
9. For rights issue, certain provisions of the section which deals with the time limits has been relaxed. Thus, reducing the overall time to complete the rights issue process.⁹
10. The candidature is not required for the appointment of director in a general meeting¹⁰.

A public limited company is a company, which is not a private limited company. Public limited company requires minimum 7 (seven) members and 3 (three) directors. Further, its securities are freely transferable subject to certain contractual restrictions between the members, if any. A public limited company can issue and allot shares to any number of persons. However, if the offering exceeds certain number of persons at a time, then it should offer it by way of public offering.

1. Identify the initial subscribers (minimum two) to the proposed entity;

Note: Press Note 3 under the Exchange Control Regulations in India (PN3): As per PN3 dated April 17, 2020, the FDI (Foreign Direct Investment) policy in India has been amended to restrict any FDI being made from Bangladesh, China (including Hongkong/Macao/Taiwan), Pakistan, Nepal, Myanmar, Bhutan and Afghanistan (“Neighboring Countries”) or where the beneficial owner of an investment into India is situated in or is a citizen of any Neighboring Countries (“Neighboring Country Investments”). If proposed Private limited company is likely to receive FDI from any such Neighboring Country Investments at the time of incorporation, it shall require a prior approval of the Indian Government regardless of the sector/activities the investment is being proposed. Hence, from the perspective of initial shareholding structure of a Private limited company proposed to be set up, please confirm whether any of the proposed shareholders of Private limited company trigger any of the above directly or indirectly as it would need a prior approval of the Indian Government.

1. Identify individuals who give consent and act as first directors of the company (minimum two);
2. Identify one director who should be a resident of India;
3. Obtain Digital Signature Certificate (“DSC”) for proposed directors of the company;
4. Obtain DSC for identified subscribers of the company (to be obtained wherever the subscribers are Indian residents.)
5. Conduct name and trademark search for the proposed names and ensure the proposed names are not identical or undesirable with existing names available for incorporation#. Post availability finalize two 2 names for the proposed Indian company;
6. Provide the objects and the proposed business actions;
7. Finalize the Authorized Share Capital (“ASC”) and the Paid-up Share Capital (“PSC”) requirement of the company;
8. Identify the place of the registered office of the company. (Please note that the registered office of the company should be a physical office space where the employees shall be stationed for carrying out the business operations. There is no concept of virtual office with post box facility in India);
9. Finalize Memorandum and Articles of association (By-laws), along with other necessary documents and pay stamp duty on all the documents as may be required;
10. Create a Director Business User Login ID on MCA V3 portal and Associating the DSC of the directors from the Individual login before filing incorporation application Web form SPICE+;
11. Filing of integrated web form SPICE+ for reservation of name (PART A) and incorporation of company (PART B) along with applicable fee, which may either be approved or rejected subject to two re-submission opportunity as the case may be by the Registrar, Central Registration Centre (“CRC”).
12. Once the form is approved, following additional facility / registrations will be existing in the name of Company which shall be applied with incorporation application under PART B –
    • Director Identification Number (“DIN”) for applicant directors (subject to maximum of three);
    • Permanent Account Number (“PAN”);
    • Tax Deduction Account Number (“TAN”);
    • Goods and service tax (“GST”) (if required) (Optional);
    • Employees Provident Fund Organization Registration (“EPFO”) (Mandatory);
    • Employee State Insurance Corporation Registration (“ESIC”) (Mandatory);
    • Profession Tax Registrations (Mandatory for the State of Maharashtra, Karnataka and West Bengal);
    • Shops and Establishment Registration (Optional) (Currently available for the State of Delhi only); and
    • Opening of bank account of the company.
    • Identify the bank with which the company intends to open its bank account

Note - Key features of SPICE+ are as below:

The proposed entity under incorporation may submit Part A for reserving a name first and thereafter submit Part B for incorporation & other services or file Part A and B together at one go for incorporating a new company and availing the bouquet of services as above.

Registration for EPFO and ESIC shall be mandatory for all new companies incorporated and no EPFO & ESIC registration numbers shall be separately issued by the respective agencies.

Registration for Profession Tax shall also be mandatory for all new companies incorporated in the State of Maharashtra, Karnataka and West Bengal.

Registration for Shops and Establishments is optional and can be availed only in the State of Delhi.

All new companies incorporated through SPICe+ would also be mandatorily required to apply for opening the company’s Bank account through the said web form.

Memorandum of Association (MoA) and Articles of Association (AoA) are the two charter documents of private limited company.

MoA contains the objectives to be pursued by the company to operate and is considered as the supreme document of the company which is submitted to the RoC at the time of incorporation of the company. The purpose of this is to enable shareholders, creditors and others who deal with company to know its permitted range of activities and the business that they intend to carry out.

AoA is a document containing all the rules and regulations defining the framework that governs a company. It defines the responsibilities of the directors, and the means by which the shareholders exert control over the Board of Directors. For a private limited company, its AoA must have following three restrictions which are as follows.

1. Restricts number of members to 200 (two hundred) (excluding the present and former employees of the company who holds shares);
2. Restricts transfer of shares; and
3. Prohibits offering securities to public.

Currently, there is no requirement of having minimum ASC and PSC for incorporation of Private Limited Company in India. However, while determining the ASC and PSC, it is suggested to keep in mind the immediate working capital requirements which the company would need for conducting its initial operations and before it starts generating the revenue in India and the requirement of minimum net owned fund for certain categories of companies as raising of capital by way of issuance of shares is subject to valuation (in case of entity with FDI) and allied compliances.

ASC is the maximum share capital allowed to be issued by the company. ASC can be further enhanced after incorporation of the company, considering future fund requirements.

PSC is the amount which the shareholders will invest in the capital of the company.

Except that there is a requirement of minimum 7 (seven) shareholders and minimum 3 (three) directors, one of whom should be a resident director, all the requirements for the incorporation of a private limited company are also applicable to a public limited company.

In general, the charter documents of public limited company are same as of private limited company. Except that the AoA of a public limited company shall not contain the restriction applicable to a private limited company. Charter documents which are explained in 6 and 7 above are the charter documents for the public companies.

Yes, except for citizens of certain countries, any person, being a citizen of any other country can become a director subject to obtaining DIN as mentioned below. However, where in cases the person seeking appointment is a national of a country which shares a land border with India, necessary security clearance from Ministry of Home Affairs, Government of India would be a pre-requisite.

No. Except a natural person, CA 2013 does not allow any body corporate or a company to be a director.

Digital Signature is a digital code (in form of USB token) created for affixing it on the digital documents electronically. The Information Technology Act, 2000 in India has made provisions for use of digital signatures on the documents submitted in electronic form to ensure security and authenticity of the documents filed electronically. DSC is a hardware in the form of USB token and is password protected which can be changed by the DSC holder at any point of time. Password of DSC is accessible to only those who have applied for DSC.

DSC is used for filing documents and e-forms with the Ministry of Corporate Affairs (“MCA”) under the CA 2013, tax returns and e-forms under different regulations as applicable to the entity.  The filings with many other Government authorities may also be carried out by electronic filings using DSC.

The office of Controller of Certifying Authorities (“CCA”), issues certificate to the certification agencies which are the trusted entities and are responsible to issue DSC to the end user. Upon submission of application and identity and address proofs, it takes around 2-3 days for obtaining the DSC.

• Apply to a registered authority in India;
• Submit following documents & information –
• In case of Indian Nationals:
  • Proof of Identity- PAN is Mandatory for Indian National,
  • Proof of Residence - driving license, passport (if it has address) or Aadhaar or utility bill (not older than 2 (two) months) like gas or electricity or bank statement;
  • Passport size color photograph (in JPEG format);
  • In case of Indian national, all the documents are required to be self-certified by the applicant.
  • Mobile number and email ID of an Individual for whom DSC needs to be obtained.

• In case of Foreign Nationals:
  • Proof of Identity – Self-attested copy of Passport, Self-attested copy of VISA (If the proposed individual is out of native country) and Self-attested copy of Resident Permit certificate (If applicant is in India)
  • Proof of Residence - Attested copy of any other Government issued Address Proof, or driving license or utility bill (not older than 2 (two) months) like gas or electricity or bank statement
  • Mobile Number and email ID of an Individual for whom DSC needs to be obtained.

• Submit the scan copies of above documents to the authorities via email and Authority verifies the information and process the same.
• Upon successful process, the applicant should do tele-verification / email verification and video-verification.
• Only upon completion of the above verifications, the authority issues DSC to the end user.

The above process is indicative in nature and requirement may change based on the nationality/citizenship of the applicant and subject to change in process as may be amended from time to time under applicable laws.

Yes. In case number of subscribers and/or directors to e-MoA and e-AoA is up to twenty and all such subscribers and/or directors have DIN/PAN, it shall be mandatory for each one of them to obtain a DSC

DIN is a unique identification number allotted to an individual, who is proposed to be appointed as director of a company and it is compulsory for every individual intending to be a director to obtain this number. Upon submission of necessary documents in e-form DIR 3, DIN would be allotted instantly subject to submission of sufficient and legible documents.

Yes, DIN can be used for being appointed as Designated Partner in any LLP. One individual can have only one DIN and it is valid for lifetime.

• Obtain DIN for a director in case of incorporation of new company

Any person proposed to become a first director in a new company shall have to make an application through e-form No. INC-32 (SPICe +).An application for allotment of DIN up to three (3) Directors, shall be filed in e-form No. INC-32 (SPICe +), with RoC, in case of proposed directors not having approved DIN¹.

• Obtain DIN for director in an existing Company

Any person intending to become a director in an existing company and who does not have a valid DIN shall make an application in e-form DIR-3 along with copies of identity and address proof , copy of Board resolution proposing the appointment of such person as a director from the company in which such person is intending to become a director and copy of security clearance certificate from Ministry of Home affairs (if applicable)

DIN can be obtained by filing the supporting documents as follows:

1. In case of Indian Nationals:

1. ID Proof of the Applicant: PAN.
2. Address Proof of the Applicant: Any one of the following documents would suffice as proof:
   1. Utility Bill in the name of the applicant
   2. Driver’s License of the applicant
   3. Bank Statement in the name of the applicant.

2. In case of Indian Nationals (at the time of Incorporation)

1. ID Proof of the Applicant: PAN
2. Address Proof of the Applicant: Any one of the following documents would suffice as proof:
   1. Electricity Bill in the name of the applicant (not older than two months)
   2. Telephone bill in the name of the applicant. (not older than two months).
   3. Bank Statement in the name of the applicant. (not older than two months)

All the above documents are required to be self-attested in case of an Indian resident.

3. In case of Foreign Nationals: In addition to the documents mentioned above for Indian Nationals, following documents will be required in case of Foreign National:

1. Certified copy of passport as an identity proof.
2. All supporting documents including photograph should be certified by the Indian Embassy or a notary in the home country of the applicant. If a foreign director has a valid multiple-entry Indian visa or Person of Indian Origin card or Overseas Citizen of India card, then the attestation could also be done by Public Notary/Gazetted Officer in India or practicing CA/CS /CWA.

In case any documents are not in English language then the same needs to be translated in English from certified translator and such translated documents are also required to be notarized and apostilled /legalized from home country.

Yes, as per the amended rules, every individual who has been allotted a DIN as on 31^st March of a financial year shall submit e-form DIR 3 KYC to the Central Government on or before 30^th September of immediate next financial year. Hence, each individual possessing DIN needs to update his KYC details annually within prescribed timelines for retaining his DIN in ‘Active’ status.

1. In case of Indian Nationals:

1. ID Proof of the Applicant: any one of, Passport, PAN, Driving license, Election (voter identity) card, Ration card or Aadhaar Card. (If the applicant holds Aadhaar and Passport both, in that case both the documents are mandatory);
2. Address Proof of the Applicant: Any one of the following documents would suffice as proof:
   1. Electricity or Telephone Bill in the name of the applicant
   2. Driver’s License of the applicant
   3. Bank Statement in the name of the applicant.

All the above documents are required to be self-attested in case of an Indian resident.

2. In case of Foreign Nationals:

In addition to the documents mentioned above for Indian Nationals, for Foreign National certified copy of passport is required.

All supporting documents including photograph should be certified by the Indian Embassy or a notary in the home country of the applicant. If a foreign director has a valid multiple-entry Indian visa or Person of Indian Origin card or Overseas Citizen of India card, then the attestation could also be done by Public Notary/Gazetted Officer in India or practicing CA/CS / CWA.

In case any documents are not in English language then the same needs to be translated in English from certified translator and such translated documents are also required to be notarized and apostilled /legalized from home country.

In case the individual fails to file KYC with the MCA within prescribed timelines, then the DIN of the said individual shall be de-activated. The de-activated DIN shall be re-activated only after e-form DIR-3-KYC is filed with ROC along with the fee as prescribed under law.

No. DIN is a unique number allotted to each individual who has applied for it. A person can be a director / designated partner in any number of companies or LLPs (subject to maximum number permissible in CA 2013 or LLP Act) with same DIN. The CA 2013 does not allow a person to have more than one DIN and if any person obtains more than one DIN, it is a punishable offence under the CA 2013 and shall need to surrender his DIN.

There should be at least 2 (two) directors and maximum up to 15 (fifteen) in a private limited company. To appoint more than 15 (fifteen) directors, approval of shareholders would be necessary.

There should be at least 3 (three) directors and maximum up to 15 (fifteen) in a public limited company. To appoint more than 15 (fifteen) directors, approval of shareholders would be necessary. 

Yes, there should be at least 1 (one) director who stays in India for a period of not less than 182 (one hundred and eighty-two) days during each financial year. In case of a newly incorporated company, the requirement shall apply proportionately at the end of the financial year in which it is incorporated.¹⁶

A person is not² eligible for appointment as a director if

1. he is of unsound mind;
2. he is an undischarged insolvent;
3. he has applied to be adjudicated as an insolvent;
4. he has been convicted by a court of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than 6 (six) months and a period of 5 (five) years has not elapsed from the date of expiry of the sentence;
5. an order passed by the court or tribunal for disqualifying him for appointment as a director and the same is in force till date;
6. he has not paid any calls in respect of any shares of the company held by him, either individually or jointly, and 6 (six) months have elapsed from the last day fixed for the payment of the call;
7. he has been convicted of the offence dealing with related party transactions³ at any time during the last preceding 5 (five) years;
8. if he does not hold valid DIN;
9. he has not complied with the provisions of number of directorships.

In furtherance to the above, no person who is or has been already a director of a company shall be eligible for appointment if-

1. such company in which he is a director has not filed financial statements or annual returns for any continuous period of 3 (three) financial years;
2. has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for 1 (one) year or more.

There should be at least 2 (two) shareholders¹ with a maximum of 200 (two hundred) shareholders (excluding the present and former employees of the company who hold shares) for forming a private limited company.

A person can become shareholder of a private limited company / public limited company by –

1. Subscribing to memorandum of association;
2. By acquiring shares subsequently either, by direct purchase from company or transfer from existing shareholders; and
3. By holding shares and whose name is entered as a beneficial owner in the records of a depository.

Yes, a body corporate can hold 100% shareholding of a company. This concept is popularly known as Wholly owned subsidiary (“WoS”). However, for a Private Limited Company there should be at least 2 (two) (and for public limited company, at least 7 (seven) shareholders). Therefore, one person can hold all the shares in his name except nominal amount of share(s). The nominal share(s) can be held by a nominee shareholder. The holding of such shares as a nominee i.e. a registered holder requires proper disclosure at the time of formation of a company and required to complete certain filings with the RoC, post the incorporation of the company and the beneficial interest in such nominal share(s) shall be retained with the parent/majority shareholder.

There should be at least 7 (seven) shareholders² and there is no limit for a maximum number of a shareholder(s) for a Public Limited Company.

There are two kinds of shares as follows:

1. Equity shares; and
2. Preference shares

No, the company cannot be incorporated with only preference share capital, as preference shares are redeemable in nature which may tantamount to diminution of the share capital of the company in the event of redemption of this share capital. Also, the feature of the company being an artificial person and having perpetual succession; equity share capital should always form part of the share capital of the company.

1. ASC³: It means such capital as is authorized by the memorandum of a company to be the maximum amount of share capital of the company. The payment of the registration fees and the stamp duty fees on the incorporation of the company depends upon the amount of the authorized share capital.
2. PSC⁴: It means such aggregate amount of money credited as paid-up as is equivalent to the amount received as paid-up in respect of shares issued and includes any amount credited as paid-up in respect of shares of the company, but does not include any other amount received in respect of such shares, by whatever name called.

Two-step process is followed for incorporating a company in India - 

1. File an application for reservation of name; and
2. Once the name is reserved, file a separate application under single form for obtaining DIN and filing incorporation documents.

Name(s) of a company can be reserved through Web Form Part A of SPICe+. In case the applicant wants to apply name, incorporation and other integrated services together, he can do so together by filing necessary information in Part A and Part B.

Through this e-form the applicant can propose two names for private limited company and upon approval of the name from the RoC, the incorporation application is required to be applied for within 20 (twenty) days from the date of approval of the name reservation application. The approval of name is sole discretion of the CRC.

As such no documents are required to file name reservation application. However, it is mandatory to attach relevant documents and No Objection Certificates (“NOCs”) only when a name requires the approval of a sectoral regulator or NoC, etc. in terms of Companies (Incorporation) Rules, 2014.

In case the name of the proposed company in similar to name of the parent company, then following documents are required.

1. In case of body corporates, certified true copy of board resolution approved by the body corporate shareholders along with the charter documents of such body corporates;
2. NoC from the foreign body corporate, if the name is similar to that of the parent company;
3. If the proposed name is linked to a registered trademark, NoC from the trademark owner;
4. List of main objects.

Note: In case all the aforesaid documents are being executed outside India including identity and address proofs of foreign nationals, the same needs to be notarized, apostilled/ consularized, in the home country, as may be applicable.

Further, basis the main objects listed in the name application, one business code list has to be selected as provided in the help kit.

In case the proposed name includes a reference of a registered trademark name, the consent of the owner or applicant for registration of the trade mark along with KYC details (bearing signatures) of Trademark owner should be attached the application in Part A of SPICE+. In case the TM owner is a body corporate, the NOC should be provided in the form of a Board Resolution along with KYC documents.

Once, the name has been approved, execute various Incorporation documents like MoA, AoA etc., and file along with the e-form titled “SPICe+” for incorporating a company.

SPICe+ stands for “Simplified Proforma for Incorporating Company Electronically+”. This is another initiative by the MCA with specific objective of providing speedy incorporation related services within stipulated time frames, which are in line with international best practices.

SPICe+ is an integrated web form offering 10 (ten) services by 3 (three) Central Government Ministries & Departments. (Ministry of Corporate Affairs, Ministry of Labor & Department of Revenue in the Ministry of Finance) and One State Government (Maharashtra), thereby saving as many procedures, time and cost for starting a business in India. SPICe+ is part of various initiatives and commitment of GoI towards ease of doing business.

SPICe+ will be the sole, simplified and versatile form available for incorporation of companies in India. It is a single application for-

1. Application for allotment of DIN for first directors (not exceeding 3);
2. Incorporation application;
3. Obtaining PAN and TAN for the proposed entity;
4. Obtaining registration for EPFO and ESIC; Registration of Professional Tax (for the State of Maharashtra);
5. Opening of bank account; and
6. Allotment of GSTIN (if so applied for).

If the applicant provides the details pertaining to its registered office in the incorporation form, then it is not required to file e-Form INC-22 separately for intimating the RoC about its registered office.

Yes, the registered office of the company should be a physical office space where the employees shall be stationed for carrying out the business operations and is available for physical inspection, verification and for obtaining registrations under the laws applicable to the company. There is no concept of virtual office in India. In the event if the authorities have reasonable cause to believe that the company is not carrying on any business or operations, the authorities may cause a physical verification of the registered office of the company in such manner as may be prescribed. Further, pursuant to the amended rules, if any default is found to be made in complying with the requirements as mentioned above RoC may initiate action for the removal of the name of the company from the register of companies and has power to strike-off a company if the address of registered office address is found to be bogus or incomplete/improper address.

Following documents are to be filed on the MCA online portal along with the following documents:

1. Copy of MoA and AoA;
2. Resolution passed by promoter body corporates approving incorporation of subsidiary company;
3. In case the proposed name is similar to any existing/parent company, NoC in form of resolution passed by such existing/parent company;
4. Declarations by first directors & subscribers;
5. Proof of identity and residential address of the subscribers;
6. Disclosure of interest in other entities by the first directors in prescribed form;
7. Declaration by representative of corporate promoters; 
8. Undertaking on non-holding of PAN¹
9. If the subscriber does not have a DIN, identity and address proof of subscribers including those of the witness;
10. Where the directors [including subscriber cum director, not exceeding 3 (three) in no’s] do not have a DIN, identity and address proof of such director [including VISA copy (if any)];
11. Proof of office address and utility bill of the registered office of the company (not older than 2 months), including NoC from owner of the premises as required. Also in case of leased premises or the rented premises the authorization from the owner and authorized occupant of the premises along with proof of ownership or occupancy authorization is required to be submitted;
12. If the proposed name requires approval of the central government or is based on the registered trademark the copy of approval received from the central government or from the owner of the trademark (including certificate of trademark) respectively; and
13. Copy of any specific/in-principle approval obtained from any sectoral regulator.

Yes, as a part of scheme of ease of doing business in India, the company can simultaneously obtain registration of PAN, TAN and GST (if so applied for) at the time of the filing of the application for incorporation of the company under e-form SPICe+. This reduces the time limit for starting business post incorporation of the company by 15-20 days.

SPICe+----> eMOA [if applicable] ----> eAOA [if applicable] ----> URC-1[if applicable] ----> AGILE-PRO [mandatory in all the cases] ----> INC-9 [if applicable]

Once e-form SPICe+ is processed and found complete and in order, RoC at CRC will register the incorporation application and issue following approvals:

1. Approve and allot the proposed name of the company;
2. Allot DIN for the proposed first directors (not exceeding 3) not having DIN;
3. Corporate Identification Number (“CIN”) will be generated and a Certificate of Incorporation (“CoI”) in form INC-11 is issued electronically which will also include the PAN and TAN of the company
4. Takes on record, appointment of first directors;
5. Takes on record, registered office address of the company
6. PAN & TAN is issued with COI. It also communicated to the applicant electronically.
7. GSTIN (if so applied for) is generated on approval;
8. ESIC, EPFO, Profession tax registration are generated on approval; and
9. Bank account as selected in the form will be opened in the name of company with the respective bank.

Once COI is issued by the RoC, it serves as an evidence of incorporation of the company.

Excluding the time required in the documentation, ideally, it takes 3-4 working days’ to complete the incorporation process and obtain CoI from the RoC. This also includes obtaining tax registration, ESIC, EPFO, GSTIN (if applied), PAN and TAN, thereby reducing the time limit by 15-20 days’ post obtaining CoI.

The registration is permanent and is valid until the time, the company winds up its affairs on its own or is being struck-off by the RoC.

While the incorporation application of company or LLP is not available in the public domain, the certain basic details in form of Master data including details of directors details, registered office address email id for correspondence etc., shall be made available on the public domain of MCA.

The immediate post-incorporation compliances are as follows:

1. To hold first Board meeting for initial corporate actions as required under the CA, 2013;
2. On receipt of FDI to undertake FEMA reporting actions and compliances with the RBI;
3. Issue duly stamped and executed share certificates to the initial subscribers within 60 (sixty) days from the date of incorporation;
4. Appointment of Auditor within 30 (thirty) days of Incorporation.
5. Director to file a declaration of commencement of Business within a period of 180 (one hundred and eighty) days from the date of incorporation of the company in e-form INC 20A with a proof that every subscriber to the memorandum has paid the value of the shares as agreed for and the photograph of registered office address of the Company. (i.e external and internal premises of registered office of the Company)

LLP is defined as partnership formed and registered under the LLP Act. It is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. LLP can continue its existence irrespective of changes in the partners. It can enter contracts and hold property in its own name. LLP is a separate legal entity. The liability of the LLP shall be met out of the property of the LLP but liability of the partners is limited to their agreed contribution in the LLP.

No partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.

LLP is primarily governed by the LLP Act, 2008 and the rules framed thereunder, the FEMA, the Income Tax Act and other legislation as may be applicable based on the business of the LLP.

Any individual or a body corporate can be a partner in a LLP

Designated Partner (“DP”) mean any partner designated as such pursuant to Section 7 of the LLP Act. DP is a term used in the LLP who have been designated as such for doing the duties and discharging the liabilities of such partners under the LLP Act.

The DP’s are responsible for the management and the execution of all the acts and things required to be carried out by the LLP including compliance of the provisions such as filing of documents/returns/statements as required by the LLP Act.

A person, who is proposed to be appointed as DP, needs to obtain a valid DSC and DIN. A partner who is not a DP need not have any identification number.

There must be minimum of 2 (two) partners for formation of an LLP. There is no limit to the maximum number of partners, however there must be 2 (two) DP’s.

• Any individual or body corporate may be a partner in a LLP. However, an individual shall not be capable of becoming a partner of a LLP, if
  • has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;
  • is an undischarged insolvent; or
  • he has applied to be adjudicated as an insolvent and his application is pending.
• Only an individual can be appointed as a DP and at least one of the DP shall be a resident of India. In case of a LLP in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such LLP or nominees of such bodies corporate shall act as DP’s. A person, who is proposed to be appointed as DP, needs to obtain a valid DSC and DIN. A partner who is not a DP need not have any identification number.

Yes, an existing partnership firm or a Private limited company can be converted into an LLP by complying with the applicable provisions of LLP Act, CA 2013 and any other rules made thereunder and by filing requisite e-forms with the RoC.

A partner’s contribution may consist of both tangible and/or intangible property and any other benefit to the LLP. The monetary value of contribution of each partner is accounted for and disclosed in the books of accounts of the LLP in the manner as may be prescribed in the rules. However, contribution by foreign nationals should be in the form of tangible only.

Every partner of an LLP, for the purpose of the business of the LLP, is an agent of the LLP but not of the other partners.

Liability of partners is limited except in case of unauthorized acts, fraud and negligence. But a partner is not personally liable for the wrongful acts or omission of any other partner. An obligation of LLP whether arising in contract or otherwise, is solely the obligation of the LLP. The liabilities of LLP are met out of the property of the LLP.

Procure DSC and DIN: Procure DSC and DIN for the individuals acting as DP’s of LLP. A person, who already has a DIN, is not required to obtain any new DIN. Existing DIN can be used for DP (However, DIN should have all latest details such as resident of India, name, address etc.). Any person proposed to become the DP in a new LLP shall have to make an application through e-form FiLLiP. An application for allotment of DIN up to two DP’s, shall be filed in e-form FiLLiP with the RoC, in case of proposed DP’s not having approved DIN.

Creation of Business User Account on MCA V3 portal: Every director/ Designated Partner shall have their individual Business user account on the MCA V3 poral through which the DSC of the Directors/Designated partner will be associated in order to file all the LLP forms including Form FiLLiP. The Creation of Business User account is mandatory only for the Designated Partners of the LLP

Name reservation: The first step in incorporation of an LLP is reservation of name of the proposed LLP. There are two ways of reserving name of the proposed LLP.

1. File an application under LLP-RUN for ascertaining availability and reservation of the name of an LLP; and
2. Name can be proposed in e-form FiLLiP, an application for incorporation of LLP.

Incorporate LLP: After reserving a name under LLP-RUN, applicant should file e-form FiLLiP for incorporating a new LLP. E-form FiLLiP contains the details of LLP proposed to be incorporated, Partners’/ DP’s details and consent of the Partner/ DP’s to act as Partners/ DP’s. On approval of the form, the RoC will issue the CoI. 

LLP Agreement: After incorporation of LLP, the Partners should execute LLP Agreement and a copy of executed agreement is required to be filed with the RoC in e-form 3 within 30 (thirty) days from the date of incorporation of LLP.

1. Consent of Partners;
2. In case of Partners are body corporates, certified true copy of board resolution passed by such body corporate Partners;
3. Proof of address of registered office of LLP;
4. Subscribers’ sheet including consent;
5. Detail of LLP(s) and/ or company(s) in which Partner/ DP is a director/ partner;
6. Copy of approval obtained from any sectoral regulator/in-principle approval;
7. Identity and address proof of individuals acting as Partner and/or DP;
8. List of main objects of an LLP;
9. If the name proposed is liked to registered trademark, NoC from the trademark owner;
10. NoC of foreign body corporate for usage of name (In case of foreign entities intending to incorporate LLPs in India).

Note: All the aforesaid documents executed outside India including identity and address proofs of foreign nationals should be duly executed and are required to be notarized, apostilled /consularized.

FiLLiP+ is the form for Incorporation of LLP and it is sole, simplified and versatile form available for incorporation of LLP. It is a single application for-

1. Application for allotment of DIN for first designated partners (not exceeding 3);
2. Incorporation application; and
3. Obtaining PAN and TAN for the proposed LLP.

There are two ways of reserving name of the proposed LLP:

1. Two names can be reserved in an application under LLP-RUN;
2. One name can be proposed in e-form FiLLiP in application for incorporation of LLP.

Yes, an LLP requires a registered office and the same is required to be specified in the incorporation document of an LLP. The registered office of an LLP should be a physical office space where the employees shall be stationed for carrying out the business operations and is available for physical inspection, verification and for obtaining registrations under the laws applicable to an LLP. There is no concept of virtual office in India.

The LLP Agreement should contain following details in addition to other information:

1. Name of LLP and names of Partners and DP’s;
2. Details of agreed profit and loss sharing ratio of the Partners’ contribution;
3. Rights & duties of the Partners and DP’s;
4. Procedures to be followed by the Partners and DP’s in decision making and convening of meetings;
5. Specific provisions governing day to day management of affairs of LLP;
6. Terms related to admission and cessation of Partners and DP’s;
7. Terms related to keeping of books of accounts and audit norms;
8. Terms related to liability of Partners and DP’s and consequences of breach of agreement etc.

An executed copy of the LLP Agreement will be filed with the registrar through filing LLP e-form 3 within 30 (thirty) days from the date of incorporation.

Formation of an LLP has two parts. In first part, it has to apply for name reservation followed by formal incorporation of an LLP. Once LLP is incorporated, , it should file the LLP Agreement within the timelines as mentioned above.

Yes, the LLP Act allows foreign nationals including foreign companies & LLPs to incorporate an LLP in India provided at least 1 (one) DP is resident of India. However, the LLP/artners have to comply with all relevant foreign exchange laws/rules/ regulations and guidelines.

Yes, FDI is permitted in LLP. The LLP with FDI can undertake or operate only in those sectors/ activities where 100% FDI is allowed under automatic route of FDI scheme.

The compliances to be undertaken post incorporation of an LLP are –

1. Open Bank account;
2. Other statutory registrations such as Goods and Service Tax, Shops & Establishments, Professional Tax, EPF, ESI, GST, etc.;
3. On receipt of FDI, to undertake reporting actions with the RBI within 30 days from the date of receipt of funds.