PROCEDURE TO SETUP BUSINESS IN INDIA

Submitted to: - Compiled by:-

Mr. Pranav Ranjan Yogesh Sharma

LOVELY SCHOOL OF BUSINESS

Reg. No. – 10901333

Roll. No. - R1901B26

ACKNOWLEGEMENT
It was a golden opportunity for me to associate myself with this highly
professional organization.

I am indebted to Mr.Ashok Mittal Vice chancellor and my Class Incharge Mr

Pranav Ranjan. I wish to acknowledge my deep sense of gratitude to Dr.Ravinder
Nagpal who provided me full co-operation and knowledge whenever I needed.

I am also very happy to include the names of my friends, well wishers for their
valuable help and friendly advice during my term paper.

While writing this report, I have kept in mind the entire requirements needed.
Although every care has been taken to check the entire mistake & misprint. Yet it
is difficult to claim perfection.

Yogesh Sharma
PROCEDURE TO SETUP A BUSINES IN
INDIA
First Question comes to our mind that what type of company
we are going to setup in India?

Types of business entities in India:

In India, the following types of business entities are available

• Private limited company

• Public limited company

• Unlimited company

• Limited liability partnership

• Partnership

• Sole proprietorship

• Liaison office

• Project office

• Branch office

• Joint venture company

• Subsidiary company

Both the Indian promoters and the foreign promoters can form
the above mentioned business entity.

We here are talking in the formation of public limited company.

A company in India can have foreign directors provided some
conditions are fulfilled the directors of an Indian company both
Indian and foreign directors are required to obtain Director
Identification Number and Digital Signature Certificate.
There are some restrictions regarding issuing sweat equity for a
company in India.

Also see Annual corporate fillings in India for corporate

maintainance requirements in India.

PUBLIC LIMITED COMPANY

A public company is defined as a company which is not a

private company. The following conditions apply only to a
public company:

• It must have at least seven share holders.

• A public co. is not authorised to start business upon the

grant of the certificate of incorporation. In order to be
eligible to commence business as a corporation it must
obtain another document called “trading certificate”.

• It must publish a prospectus or file statement in lieu of a

prospectus before it can start transacting business.

• A public company is required to have at least 3 directors.

• It must hold statutory meetings and obtain government

approval for the appointment of the management.
There are several other provisions contained in the companies
ACT,1956 which are applicable only to public companies and
should be consulted.

Liaison office/representative office

A liaison office could be established with the approval of the
government of India. The role of liaison office is limited to
collection of information, promotion of exports/imports and
facilitates technical/financial collaborations. Liaison office can
not undertake any commercial activity directly or indirectly.

TYPICAL PROCEDURE TO ESTABLISH

BUSINESS IN INDIA
In India establishing a business take some time. Besides
incorporation there are many other formalities in establishing
business in India. The following chart contains technical
formalities including incorporating a public/private limited
company in India:

• Obtain DIN for proposed directors of the new company

• Obtain DSC for proposed directors of the company

• Filling the proposed name of the company for approval to

the registrar of the companies; get the memorandum and
articles of association wetted by the ROC and Printed
along with the certificate of commencement.
 • Make an application to the supritendent of stamps or an
authorised bank requesting for stamping fo the
memorandum of association and articles of association.

• Present the required documents along with the

registration fee to the registrar of companies to get the
certificate of incorporation.

• Obtain company seal

• Apply for UTI investors services limited/national securities

depository limited to obtain a permanent account
number.

• Register with employees provident fund organisation

• Register for provision tax.

PROMOTER
Promoter is an
Entity that plans a project or formation of a
new firm, and then sells or promotes the plan or
idea to others
Promoters of company
(1) These promoters have power of defining the object of a
company and to decide on the various connected matters
regarding the incorporation of Public ltd company. The
company promoters are going to incorporate is a public
company and these promoters are to enter into preliminary
contracts with vendors and to make arrangements for
preparation, advertisement on the circulation of
prospectus.

(2) Company will pay the remuneration to the promoters

after promotion.

(3) If Company does not agree to enter into the contracts

before the incorporation of the company the promoters will
be liable for that.

REQUIREMENTS
DIN (director identification number)
As per provision new section 266A, inserted by company
Amendment Act 2006, every individuals that is directors of
a company will make an application for the allotment of
DIN to central government in DIN form.

DIN is the first requirement so firstly Directors of

company are going to formulate, will obtain DIN.

e-Form 1A
Company is going to suggest six names to the registrar of
company for the selection of one suitable name in e-Form.
Six names are as given below-

-XYZ company limited

- PQR company limited

-MYN health insurance limited

-ILK company limited

-MNP company limited

-JSM company limited

e-Form 1A is signed by the Mr. Yogesh who is one of

the promoter of company.

The registrar of companies intimated Mr. Yogesh within in

six month, the best suitable name is MYN health insurance
limited.

MEMORANDUM OF ASSOCIATION
MOA is the charter document of the company, the
promoter going to promote for the registration of company
under company Act 1956. The MOA was prepared
according to table B of schedule 1 for making company
limited by share.

CONTENTS OF MOA-

(1)Name clause- the promoter of company going to

suggest to the registrar of company MYN health insurance
company as a main name and other suggested name also
to show that our company “Public Company” is limited by
shares. We are using limited word at the end of the name
and the name accepted by the registrar will be engrave on
its seal and be published affix on the outside of every office
or place where business will be carried on.

Domicile clause
The registered office is the address given to the registrar of the
companies of the office. Notice in form no. 18 is the form
required to fill for the domicile of the company and this form
should be submitted to the registrar of the companies with in
30 days of the incorporation of the business. Also the name of
the company should be written outside the registered office in
two languages one in the local language and another English.

Object Clause
This clause very important as specifies which are the activities
to be carried out and which not to be carried out. The company
cannot do anything which is not written in the memorandum of
association

This clause must specify :-

i. The company will carry on business of insurance against

the health of people.
 ii. Insurance is done against various diseases

iii. The company may diverse the business.

In case of non trading company whose business is not confined

to one state must mention the objects which are extended to
the states in which they are going to operate.

Doctrine of ultra vires state that the company

cannot do anything beyond what is written in the MA
clause and are not reasonable incidentally or necessary to the
attainment of objects is ultra-vires the company and therefore
void. No liability of the company arouse on such transactions
which are beyond the power mentioned in the memorandum of
association.

Liability clause A declaration that the liability of the

members is limited as the company is limited by the shares.

The following are exceptions to the rule of limited liability of

members :-

1. If a member agrees in writing to be bound by the

alteration of MA / AA requiring him to take more shares or
increasing his liability, he shall be liable upto the amount
agreed to by him.

2. If every member agrees in writing to re-register the

company as an unlimited company and the company is re-
registered as such, such members will have unlimited
liability.

3. If to the knowledge of a member, the number of

shareholders has fallen below the legal minimum, (seven
in the case of a public limited company and two in case of
a private limited company ) and the company has carried
on business for more than 6 months, while the number is
so reduced, the
 4. members for the time being constituting the company
would be personally liable for the debts of the company
contracted during that time.

(5) Capital Clause- MYN company have authorized

capital of 10 crore and value of each share us Rs. 100.

(6) Association Clause- this clause was followed by

names, addresses and description of subscribers. The
persons who are desire for the motion of company and the
number of shares by these subscribers are 2000 in total.
ARTICLES OF ASSOCIATION
The AOA is subsidiary document of MYN health insurance
company, which specify all the rights and duties of all the
members and directors. Company is following the table A
of schedule 1, in which they made all the rules and
regulations of their own.

CONTENTS-

(1)Share capital- authorized capital of company is Rs. 10

crore and it is divided into Rs. 100 per share.

(2) Calls on share- MYN Company has divided the face

value of shares that Rs. 100 into five parts.

(a)Application money- Rs. 15 per share

(b)Allotment money- Rs. 35 per share

(c) First call- Rs. 20 per share

(d) Second call- Rs. 20 per share

(e) Third call- Rs. 10 per share

RULES AND REGULATIONS-

-Directors have right to receive and postpone a call of

share.

- If the shareholders will not pay the unpaid amount after

the due notice, share will be forfeited by the company.
-MYN lien on shares-

MYN health insurance company limited will have first lion

on the shares and debentures registered in the name of
members and upon the proceed of sales.

The Board of Director of MYN health insurance Company

limited may declare on share wholly or in part to be
exempt this procedure.

-Transfer of shares

The shareholders of the company can transfer the

share of company where they feel like.

-Alteration of capital

As provide in MOA of MYN health insurance of company

limited the capital of company can be increased or
decreased by passing a special regulation and making
alteration in AOA.
-Dividend and Reserves

The company will transfer 10% of its net profit to reserve

for its future and rest after making necessary deductions
will be divided as dividend to the shareholders.

-Borrowing powers

Subject to the provision of section 58 A, 202 and 243 of the

company act 1956, MYN health insurance company limited
may from time to time raised or borrow any sum or sums of
money.
-Conversation of share into stock

By passing a special resolution, the MYN health insurance

company limited can convert any paid up shares in to
stock.

-General Meeting

(1)First A.G.M. shall be held by the company within 18

months of its incorporation.

(2) Subsequent A.G.M. of company shall be held in each

subsequent calendar year and not more than 18 months
shall elapse b/w two A.G.M.

-Directors-

(a)Member of directors shall not be less than 3 or limit on

maximum.

(b) First directors of company are-

- Yogesh

- Shivam
- Manoj

(c) The first directors shall holds office until the close of
first A.G.M. of the company.

Powers of directors-

The board shall be enlist exercise will soul powers do will

such aid and things as company is authorized is exercise
and do.

-Power to make calls

-power of issue of debenture

-power to borrow money otherwise than by debentures

- Power to make loans

-The seal-

Company has a common seal and directors shall precicle

for the sale ……….

-Audit-

Every year the accounts of the company shall be balanced

and audited and correctness of the profit and loss account
and balance sheet ascertained by one or more auditors.

-Winding up-

If MYN health insurance limited company will be wound up

and the assets available for distributed among the
members as such …………………………… to repay the whole
of the assets will be distributed so that, as …….. as may be,
the losses shall be ………….by the members in proportion
and the capital paid up.
E-Form 32- this form mention the particulars of directors.
The personal details here and with the addresses are
provided are similar. E-Form 32 is signed by the promoter
of the company.
 CERTIFICATE OF INCORPORATION

COMPANY NAME: MYN HEALTH INSURANCE LTD

105899

I HERBY CERTIFY THAT MYN HEALTH INSURANCE LTD.

ON THIS DAY HAS BEEN INCORPORATED UNDER THE
COMPANIES ACT, 1956 AS A PUBLIC LIMITED COMPANY

Signed at Chandigarh

1 NOVEMBER 2009

Seal of Registrar
S.N.PANDEY

Registrar of companies

CERTIFICATE OF COMMENCEMENT OF BUSINESS

I hereby certify that MYN health insurance Ltd. of

Ludhiana. which was incorporated under the Companies
Act, 1956 on the 9-November, day of Monday 2009
prescribed form that the conditions of sections that has
been complied with this certificate is given under my
hand and is entitled to commence the business.

Seal of Registrar

Registrar of Companies
 FORM NO. 1

Registration No. Of Company.......... Nominal Capital :

Rs. ................

THE COMPANIES ACT, 1956

Declaration of compliance with the requirements of the Companies Act, 1956

on application for registration of a company

[Pursuant to section 33(2)]

Name of Company Limited/Private Limited

Presented by...

I, ., of do solemnly and
sincerely

Declare that I am [1] who is engaged in the formation of the

company, or a person
Named in the articles as a director/manager/secretary of the
Limited/Private

Limited.

And that all the requirements of the Companies Act, 1956, and the rules thereunder
in respect of matters precedent to the registration of the said company and incidental
thereto have been complied with.

And make this solemn declaration conscientiously believing the same to be

true.

Date

Place Signature

Witness

Designation

1. An advocate of the Supreme Court of the ...................... High Court, an attorney

or a pleader entitled to appear before the ........................... High Court or a
chartered accountant practising in India.

2. State whether director, manager / secretary /advocate/ chartered account.

 FORM NO. 18

Registration No. of the Company Nominal Capital: Rs

THE COMPANIES ACT, 1956

Notice of the situation/change of situation of registered office

[pursuant to section 146]

Name of the company MYN health insurance limited

Notice is hereby given that ----

(a) the registered office of the company is situated

Mumbai .
with effect from
[date]

(b) the situation of the registered office of the company of was changed
from to with effect form .
[date]

Situation of registered office falls under the jurisdiction of

(name of the police
station).*
Dated this Day of 19

Signature

Name

(In Block Capitals)

Designation

*State address of nearest police station with district and tehsil.

 FORM NO. 32

Registration No. of Company .......................... Nominal

Capital Rs. ...................................

THE COMPANIES ACT, 1956

Particulars of appointment of directors and manager

and changes among them

[Pursuant to section 303(2)]

Name of Company ......................................... Presented

by ...............................................

Note : --- If a company has no particulars to be included in

one or two of the headings ‘A’ ‘B’ and ‘C’ the parts containing
those headings (in respect of which the company has no
particulars to be included) need not be filed.

A. Appointment of and changes among directors.

Name or Father’s/ Usual Nationali Date of Brief
names husband residenti ty appoint particula
and ’s name al ment or rs of
surname address change changes
in full
1 2 3 4 5 6

Notes: (1) A note of changes should be made in column 6 e.g.

by inserting against the name of new
director, etc. the words “in place of ........................
and by indicating against the name of the
former director, the cause for the change, e.g. by
death, resignation, retirement by rotation,
disqualification etc.
(2) In case of managing director, his designation should
be stated with his name in columan1.

B. [***]

C. Appointment of and changes in managership and

secretaryship.
Name or Father’s/ Usual Nationali Date of Brief
names husband residenti ty appoint particula
and ’s name al ment or rs of
surname address change changes
in full
1 2 3 4 5 6

Dated the .......................................... day of ..............19

Signature ............................................

Designation............................................

Notes: (1) For the purposes of this form, particulars of a person

appointed as manager within the
meaning of section 2(24) of the Companies Act,
1956 need be given.

(2) A note of change as also the cause of change e,g,

by death, resignation, removal,
disqualification, etc. should be stated in column 6.
 FORM NO 29

Registration No. of Company........................ Nominal

Capital Rs....................................

THE COMPANIES ACT, 1956

Consent to act as director of a company and/or

undertaking to take and pay for qualification shares

[pursuant to section 264(2)/266(I)(a) and 266(1)(b)(iii)]

Name of company ..............................................

Limited ..........................................

Presented
by ................................................................................................
..................

To the Registrar of
Companies .......................................................................

I, the undersigned, hereby testify my consent to act as

director of the .......................... limited, ................................
pursuant to section 264(2)/266(1)(a) of the Companies Act,
1956 and certify that I have not been disqualified to act as a
director under sections 267 and/or 274 of the Companies Act,
1956.

I, the undersigned having consented to act as director of

the .............................. Limited, also hereby undertake to take
from the said company and pay for .................... shares of
Rs. ................. each, being the number/value of the shares
prescribed as the qualification shares for the office of director
of the said company.

Name and Address Occupat Date of National Signatur

surname in ion birth ity e
full and
father’s
names
1 2 3 4 5 6

Signature ..............................

Designation ...........................

Dated
the ........................... day of .................... 19

Notes: (1) Delete the portion not applicable.

(2) If a director signs through his agent authorised in

writing, the authority must be produced
before the Registrar.
 (3) In case of undertaking to take and pay for
qualification shares, the from should be
accompanied by the necessary stamp duty.

Advantages of incorporating in
India
• Many tax exemptions available to the company set up in
Speciel Economic Zone;

• Many tax incentives available to IT companies;

• India has got double taxation treaties with many

countries.

• Minimum authorised capital of only INR 100,000 and INR

500,000 for private and public company respectively is
required to form an establishment in India.

• Skilled and intelligent employees are available at nominal

rate.
 • With its large base of English speaking skilled human
resource, it is most sought after destination for business
process outsourcing, knowledge process outsourcing etc.

Applicable laws for forming a

company in India
The laws applicable for incorporating a company in India
include the Indian companies ACT,1956 read with companies
(central government) general rules and forms, 1956 the Indian
Income TAX Act, and other laws and regulation. The foreign
exchange management Act,1999 is applicable for foreign
investments and transactions.

SUMMARY
So this is the proper procedure to setup a business in India you
have to go through the proper process from the idea
generation to the commencement of the business. There are
certain laws which you have to adhere and disobeyance to it is
crime. You have to accumulate all the documents required to
be filed with the registrar. Along with the setup of business in
India their are certain advantages of incorporation of business
in India.

And To setup a business in India is not a difficult task there are

many government organisations which help you in it.
REFRENCES:
• kumaran.wordpress.com/.../procedure-involved-to-start-a-company-private-limited-
in-india/ -

• madaan.com/incorporateprocedure.html

• www.companyformationindia.com/steps-to-set-up-a-pvt-ltd-company.html

• www.taxguru.in/.../procedure-to-set-up-a-branch-office-in-india.html

• bhagatneeraj.trustpass.alibaba.com/.../Company_set_up_procedure_in_India.html

• www.indianembassy.org/...business_In_India/Incorporation_of_business.asp

• www.bmswiz.com/companyformation.asp

• www.rbi.org.in
• elagaan.com/income-tax-blogs/procedure-set-branch-office-india

• www.companyformationindia.com/set-up-a-public-limited-company.html