How to Open a Company in India: Legal Requirements and Procedures

How to Open a Company in India: Legal Requirements and Procedures

To open a company in India in 2026, you need to: (1) choose the right legal structure for your funding and liability goals, (2) prepare digital-signature-ready documents for every director, (3) file the integrated SPICe+ form on MCA V3 (mca.gov.in), and (4) layer on GST, DPIIT, and sectoral registrations before you issue your first invoice. End-to-end, a Private Limited Company can be incorporated in 10–15 working days. The structure decision you make on day one will shape your tax position, funding options, and exit path for years.

Why Your Structure Choice Is the Most Consequential Decision You Will Make

Do not open the MCA portal before you have settled this. The entity type determines whether investors can take an equity stake, whether you can issue ESOPs to your team, what your personal liability exposure looks like, and how heavy your annual compliance burden will be.

Private Limited Company (Pvt Ltd)

Governed by the Companies Act 2013, a Pvt Ltd is a separate legal entity. Shareholders have limited liability capped at their share subscription. You need a minimum of two directors and two shareholders (the same two people can hold both roles). There is no minimum paid-up capital requirement — the earlier Rs. 1 lakh floor was abolished. If you plan to raise angel or VC money, issue ESOPs, or eventually list, a Pvt Ltd is your only realistic option.

Limited Liability Partnership (LLP)

Governed by the LLP Act 2008, an LLP is appropriate for service firms — consulting, architecture, professional practices — with two or more partners. Partners enjoy limited liability up to their agreed contribution. Statutory audit is not mandatory below an annual turnover of Rs. 40 lakh or partner contribution of Rs. 25 lakh, which lowers Year 1 costs materially. The hard constraint: you cannot issue equity shares or ESOPs, and most institutional investors will not write a cheque into an LLP structure. If there is even a 20% chance you will raise equity capital, incorporate a Pvt Ltd instead.

One Person Company (OPC)

An OPC is effectively a Pvt Ltd with one shareholder-director, supported by a nominee director. Ideal for solo founders who want corporate identity, a PAN in the company's name, and limited liability. Mandatory conversion to Pvt Ltd is triggered when paid-up capital exceeds Rs. 50 lakh or average annual turnover exceeds Rs. 2 crore over three consecutive financial years.

Section 8 Company

For not-for-profit and social-impact missions only. Profits must be applied exclusively to the stated charitable objects — no dividend distribution. Requires a Central Government licence before registration and comes with enhanced regulatory scrutiny. Not a vehicle for commercial ventures.

Sole Proprietorship and Partnership

Neither is a separate legal entity. Both expose you to unlimited personal liability. They carry no mandatory registration, but they also offer no credibility shield and make it almost impossible to raise institutional money or win large corporate contracts. Viable only for micro-businesses with no significant liability or funding ambitions.

Documents You Need — and Where Applications Stall

Assemble every document before you touch the MCA V3 portal. Incomplete submissions result in resubmission requests (called re-filing) from the ROC, each adding 3–7 working days.

Every director and shareholder must provide:

• PAN card (mandatory for Indian nationals; foreign nationals provide a notarised passport)
• Aadhaar card (Indian nationals — required for DSC verification and DIN KYC)
• Recent passport-size photograph
• Specimen signature on plain white paper
• Address proof not older than two months: bank statement, utility bill, or Aadhaar

For the registered office:

• Rent agreement or ownership title documents
• No-Objection Certificate (NOC) from the property owner, even if a director personally owns the premises
• Utility bill (electricity, telephone, gas, or piped water) for the premises, not older than two months

For the company itself:

• Digital Signature Certificate (DSC): Class 3 DSC is mandatory for all proposed directors. Obtain from an MCA-empanelled Certifying Authority — eMudhra, Sify, or NSDL e-Gov are the most widely used. Cost: approximately Rs. 1,200–2,000 per DSC. Turnaround: 1–2 working days with in-person or video-based verification.
• Director Identification Number (DIN): A separate DIR-3 filing is no longer required. DIN is allotted inline through SPICe+ for directors who do not already hold one.
• Memorandum of Association (MOA) and Articles of Association (AOA): Filed in e-MOA (Form INC-33) and e-AOA (Form INC-34) format directly on MCA V3.

The single most common reason for resubmission: utility bills older than two months, or NOCs that are undated, typed without a wet signature, or missing the property owner's name. Double-check both before uploading.

Step-by-Step: Filing SPICe+ on MCA V3

SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) is a web-based integrated form on MCA V3. It replaced the earlier PDF-upload system and combines name reservation, incorporation, tax registration, and labour registrations into a single workflow.

Step 1 — Reserve the Company Name (SPICe+ Part A)

Propose up to two names in order of preference. Names must not be identical or confusingly similar to existing company names, LLPs, or registered trademarks. Before filing, run a search on the MCA company name search (mca.gov.in) and the IP India trademark database (ipindia.gov.in). Approval comes within 1–3 working days. The reservation is valid for 20 days — you must submit Part B within that window or the name lapses.

Step 2 — Obtain DSCs (in Parallel with Step 1)

Begin DSC procurement the day you decide to incorporate. You cannot digitally sign any MCA V3 form without a valid Class 3 DSC. Running this in parallel with name reservation saves a full 2-day lag.

Step 3 — Fill and Submit SPICe+ Part B

Part B captures director details, DIN allotment requests, subscriber and share capital details, the registered office address, and stamp duty declarations. Attach the signed e-MOA and e-AOA here. Every signatory executes the form using their DSC.

Step 4 — Submit AGILE-PRO-S (Linked Form)

AGILE-PRO-S is a mandatory linked form submitted alongside Part B. It simultaneously applies for:

• GSTIN — optional at incorporation stage; you can register for GST after crossing the turnover threshold, or voluntarily earlier
• EPFO registration (Employees' Provident Fund Organisation)
• ESIC registration (Employees' State Insurance Corporation)
• Professional Tax registration (applicable states: Maharashtra, Karnataka, West Bengal, Andhra Pradesh, Telangana, Gujarat, and others)
• Bank account opening with a participating bank

Do not leave AGILE-PRO-S blank. Completing it now avoids separate, time-consuming visits to each government portal later.

Step 5 — Pay Stamp Duty and ROC Fees

Stamp duty on the MOA and AOA is state-specific and paid online through the MCA V3 payment gateway at the time of filing. ROC filing fees are governed by the Companies (Registration of Offices and Fees) Rules, 2014 and scale with authorised share capital. For a company with authorised capital of Rs. 1 lakh, total government fees (ROC + stamp) typically fall in the range of Rs. 500–2,000. For Rs. 10 lakh authorised capital, the combined outlay is generally Rs. 2,000–5,000, depending on the state. Verify current fee slabs on the MCA website immediately before filing — they are updated periodically by notification.

Step 6 — Receive the Certificate of Incorporation

The ROC, once satisfied, issues the Certificate of Incorporation (COI) through MCA V3. The COI carries your Corporate Identity Number (CIN), PAN, and TAN — no separate applications required. Standard turnaround for error-free filings: 7–12 working days.

Step 7 — File Form INC-20A Within 180 Days

INC-20A is the Declaration for Commencement of Business. Every company having share capital must file it within 180 days of the COI date. The declaration confirms that subscribers have deposited their share subscription money into the company's designated bank account. Penalty for non-filing: Rs. 50,000 on the company, plus Rs. 1,000 per day on every officer in default, capped at Rs. 1,00,000 per officer (Section 10A, Companies Act 2013). Sustained non-filing can trigger ROC-initiated strike-off under Section 248.

Worked Example — Incorporating a Two-Founder SaaS Startup in Bengaluru (FY 2026-27)

Scenario: Arjun and Priya incorporate a Pvt Ltd for a B2B SaaS product. Authorised share capital: Rs. 10 lakh (10,000 equity shares of Rs. 10 each). Both are directors and equal shareholders. Registered office: a co-working space in Bengaluru with a valid NOC and service agreement from the operator.

Incorporation costs and timeline:

GST position: Year 1 projected revenue is Rs. 28 lakh, with one client in Dubai. Because they are exporting services, they register for GST voluntarily on day 30 to file a Letter of Undertaking (LUT) and supply at zero-rated status, while claiming input tax credit on AWS hosting, software subscriptions, and co-working rent. Without registration, that ITC is permanently lost.

DPIIT Recognition: Applied at startupindia.gov.in in week 6. Recognition granted in 2–3 working days (fully digital, self-declaration). This unlocks:

• Angel tax exemption: Note that Section 56(2)(viib) — the angel tax provision — was abolished by the Finance Act 2024, effective 1 April 2025. As of AY 2026-27, no company faces angel tax regardless of DPIIT status. DPIIT recognition remains valuable for the tax holiday pathway.
• Section 80-IAC deduction: 100% of profits deducted for 3 consecutive assessment years (out of the first 10 from incorporation), subject to a separate certificate from the Inter-Ministerial Board of Certification (IMBC). DPIIT recognition is the prerequisite, not the final step — Arjun and Priya still need IMBC approval before claiming this deduction.
• Self-certification under 9 labour laws and 3 environment laws, reducing inspection risk in early years.
• Government procurement without prior turnover or experience requirements under the Public Procurement Policy for MSEs/Startups.

Year 1 ongoing compliance budget:

• Statutory audit (CA): Rs. 15,000–25,000
• ROC filings, AOC-4 + MGT-7 (professional fees): Rs. 3,000–5,000
• GST return filing (GSTR-1 + GSTR-3B monthly, outsourced): Rs. 5,000–8,000 per year
• ITR-6 filing: included in audit engagement
• Realistic Year 1 compliance total: Rs. 25,000–40,000

This is the real cost floor for a lean two-person SaaS company. Plan for it from month one.

Post-Incorporation Registrations You Cannot Ignore

The COI is the starting gun, not the finish line. Depending on your business, you need some or all of the following.

GST Registration (CGST Act 2017)

Mandatory once aggregate turnover crosses:

• Rs. 40 lakh — goods suppliers (Rs. 20 lakh for special category states)
• Rs. 20 lakh — service providers (Rs. 10 lakh for Manipur, Mizoram, Nagaland, and Tripura)

Register from day one — regardless of turnover — if you: supply goods or services to any destination outside your home state, sell through an e-commerce operator (Swiggy, Amazon, Flipkart; no threshold exemption applies), or want to claim ITC on business purchases.

Shops and Establishments Registration

A state-level registration with the labour department. Usually required within 30 days of commencing business. Many banks will not open a current account for a new company without it.

Professional Tax

Applicable in Maharashtra, Karnataka, West Bengal, Andhra Pradesh, Telangana, Gujarat, and several other states. The company must register as an employer, deduct professional tax from applicable employees' salaries, and remit it monthly or annually depending on the state's rules. In Karnataka, for example, employees earning Rs. 15,000 or more per month attract PT of Rs. 200 per month (Rs. 2,400 per year), which the employer deducts and deposits.

Import Export Code (IEC)

Mandatory before importing or exporting any goods. Issued by the Directorate General of Foreign Trade (DGFT) online at dgft.gov.in. Government fee: Rs. 500. No turnover threshold.

Sectoral Licences

• FSSAI registration or licence for any food-related business — manufacturing, trading, catering, restaurant
• Drug licence from the State Drug Controller for pharmaceutical products or medical devices
• RBI NBFC registration if your fintech product involves lending, deposit-taking, or investment activities
• SEBI registration for investment advisers, stockbrokers, or portfolio managers
• PESO/explosive licences for certain manufacturing activities

Commencing operations without a mandatory sectoral licence is not a civil oversight — it is a criminal offence under the respective sector legislation.

Common Mistakes That Delay or Derail Incorporation

Choosing a Name That Will Be Rejected on First Review

Overly generic names ("India Digital Solutions Private Limited"), names phonetically similar to listed companies, and names containing words like "National," "Bank," "Insurance," or "Exchange" without regulatory approval are rejected outright. Run the MCA name search and IP India trademark search before spending time on drafts.

Writing an Overly Narrow Objects Clause

Your MOA's Main Objects clause defines the legal perimeter of what the company can do. Restricting it to "development of mobile applications for iOS" prevents you from later offering SaaS licensing, consulting, or data services without a formal MOA amendment (Form INC-27 — a board resolution, special resolution, ROC filing, and 30-day wait). Draft objects that cover your realistic 5-year business surface area.

Submitting Stale or Incomplete Registered Office Documents

Utility bills must be dated within two months of filing. An undated NOC, or an NOC that does not match the name on the ownership documents, triggers a resubmission. Use a fresh NOC signed and dated within the same month you file SPICe+.

Forgetting INC-20A After the COI Arrives

Founders who receive the COI and immediately pivot to product development routinely miss this filing. Put the deadline — 180 days from the COI date — in your calendar on the day you receive the COI. The penalty of Rs. 50,000 on the company plus Rs. 1,000 per day per officer accumulates silently while you build.

Letting DIR-3 KYC Lapse

Every director must complete DIR-3 KYC annually by 30 September for the preceding financial year. A missed deadline deactivates the DIN. With a deactivated DIN, the director cannot sign any board resolution, authorise any bank mandate, or execute any MCA filing until the DIN is reactivated — which costs Rs. 5,000 as a late fee. One forgotten KYC can freeze your ability to file ROC forms for weeks.

Operating Through a Personal Bank Account Post-Incorporation

Until share subscription money is deposited into a company current account, your company has not technically commenced business. Beyond the INC-20A issue, commingling personal and company funds exposes you to piercing of the corporate veil — a court can hold you personally liable for company debts if financial boundaries were not maintained.

Assuming AGILE-PRO-S Covers Everything

AGILE-PRO-S handles GSTIN, EPFO, ESIC, and Professional Tax. It does not cover Shops and Establishments registration, IEC, FSSAI, drug licences, or state-specific trade licences. Independently track every registration your specific business requires before commencing operations.

Ongoing Compliance Calendar for FY 2026-27

Set up these reminders on the day your COI arrives:

Note: Small companies and OPCs file the simplified MGT-7A instead of MGT-7. Verify your category after incorporating — the compliance obligations differ and the penalties for incorrect filings under the Companies Act 2013 apply regardless of the form you thought you were required to use.

Key Takeaways

• Decide structure before documents. A Pvt Ltd enables ESOPs and equity funding; an LLP does not. This choice is costly to reverse once clients, invoices, and contracts exist in the entity's name.
• SPICe+ on MCA V3 is one integrated filing that issues your CIN, PAN, and TAN simultaneously, and optionally applies for GSTIN, EPFO, and ESIC through AGILE-PRO-S — use every module.
• INC-20A has a hard 180-day deadline. Non-filing attracts Rs. 50,000 on the company plus Rs. 1,000 per day per officer (capped at Rs. 1,00,000), and prolonged default invites ROC strike-off proceedings.
• GST registration is not always turnover-triggered. Inter-state supply, e-commerce operator sales, and export of services (for LUT/ITC purposes) require registration from day one regardless of revenue.
• DPIIT recognition is a 10-minute online application that unlocks the Section 80-IAC tax holiday pathway (pending IMBC certification) and self-certification benefits under labour and environment laws — apply within your first 30 days.
• DIR-3 KYC by 30 September every year is non-negotiable. A deactivated DIN stalls all MCA filings until the Rs. 5,000 late fee reactivation is processed.
• Budget realistically: incorporation costs Rs. 15,000–22,000 in government fees and professional charges for a typical Pvt Ltd; annual compliance for a lean startup runs Rs. 25,000–40,000 at minimum. Build both into your financial model before you launch.