Final submission to register your company

By now, if you have followed all the process to register your company you will have finished with quite a few things. You decided you wanted a Private Limited company. You got your DIN (Director Identification Number) and your Digital Signature. You have already received your confirmation for the name you chose for your company. Also, you drafted your MoA and AoA, of course with the proper legal advice. You have shelled out some money for stamp duty and registration fees. Finally, you are ready to give the last step and soon afterwards get your Incorporation Certificate for your newly approved Private Limited Company.

The last step is to submit form 1, form 18 and form 32. Of course, this will go along with the MoA, AoA and all the colourful rubber stamps you got in your papers at the time of the stamp duty and paying the registration fees.

• Form 1: Application and declaration for incorporation of a company.
  
• Form 18: Notice of situation or change of situation of registered office.
  
• Form 32: Particulars of appointment of managing director, directors, manager and secretary and the changes among them or consent of candidate to act as a managing director or director or manager or secretary of a company and/or undertaking to take and pay for qualification shares.

There are just a few things to take care while doing this.

First, that they are quite important forms for the future. For instance, when you want to open a bank account or do a similar procedure, you will be asked for copy of these forms (at least 18 and 32).

The other issues, since by this time you will be doing it with legal advice you need not worry much about it. But they are such as making sure you have the latest form, etc.

As usual, I like to tell people that is important you get to know about those things before meeting your CS (Company Secretary) so that the meeting is much more efficient and you are somehow in the same "frequency". Thus, it is better if you try downloading those forms and read what all information they ask for there. You can get them from the MCA website.

Stamp duty and registration fees

I've always been amused by the amount of signatures and colorful stamps that the people in the government offices like. The process of registering a company is not an exception.

Once you have got drafted the MoA and AoA, and the forms 1, 18 and 32 are filled up (my next post will be about those forms) you will need to get them stamped, paying stamp duty and registration fees.

Unlike the other expenses which are fixed and relatively low (in the range of 500) this fees are slightly different.

The exact amount keeps varying. I don't know how often (may be every few months) and is directly proportional to the authorized capital which you request.

There are several sites which give you the ranges, some more updated than others. Sorry I don't give a link this time but I'm writing from my PDA where it is rather difficult to surf and the info I have is in my laptop. But to give you an idea, for a company with authorized capital of Rs. 5 lakh, the registration fees are about Rs. 17,000.

(For those who are not in India, Rs. 5 lakh is equal to Rs. 500,000)

By the way, I don't think it would be a good idea to try doing this without your Company Secretary's advice.

Legal: DIN. Director Identification Number

We always have heard or read about the “board of directors” and “directors’ meetings” of different companies… but who are the directors? How many directors a company can have?

Every Private Limited company must have at least two directors and one of them is the Managing Director (MD). Later on in the process, you will have to submit a series of forms (1A, 1, 18 and 32) in which the details of directors will be given. An essential detail for each Director is the Director Identification Number (DIN).

The DIN is a number provided by the MCA (Ministry of Company Affairs) to each director in India. This number identifies the director and once you have it, you can use the same DIN for as many companies as you wish.

The process is not very complicated, but being almost the first step and not knowing much about these issues I went about it rather cautiously. It involves to submit a series of forms sequentially, DIN1, DIN2, DIN3 and DIN4. However, only DIN1 is essential in the case of a new company and new director.

First, you will have to download the DIN1 form from the MCA web-site. Then, apply online to obtain a so-called “provisional” DIN for the director. In fact, eventually this DIN becomes the definitive one, but they want people first to apply online and then send their papers to the MCA.

Once you get the provisional DIN, you fill up DIN1 and get all the documents required there (identity proof, residence proof, etc) along with the form attested by a Notary (they will charge some Rs.200 for sticking all kind of colourful stamps and rubber stamps). All the documents must be in English or Hindi, otherwise, you must get them officially translated and certified by an embassy, this especially in the case of foreign directors.

When all this is ready you will send these documents to MCA DIN Cell. The address is given in the form. After a few days you will get to know online through the MCA site whether your application has been approved and you have been granted the DIN. Mine was rejected in the first attempt due to one paper which was not well certified according to them. In case of this rejection, you get a letter telling you about it and you also can call to ask the specific reason so that when you apply again, you don’t commit the same mistake. Hence, I again collected all my papers and sent the application which was finally approved.

Due to the embassy certificates which are rather expensive, the total cost of this process was high. Otherwise for an Indian citizen it will be just a few hundred Rupees to apply for the DIN.

A note about DIN for foreign nationals, added on 30 April 2009:

When I was getting my DIN (I'm Mexican) I tried just submitting my papers notarized in India, with the notaries outside Bandra High Court. However, my application was rejected. Later on, I got my documents attested by my embassy in New Delhi, sent them again to MCA, and got them approved. I thought this might be a rule, but it seems I was wrong.

Raju, a reader of the blog, sent me the following message:

[...] I also had a quick question for you with regards to applying for DIN as a foreign director. We are currently facing some issues with getting the documents for DIN attested by the right person/people. My business partner is from the US and it might be difficult for him to travel back to New York to get the documents notarized. On your post on DIN, you mentioned something about embassy charges. Did you get your documents notarized/attested at an embassy in India? If not, is there no other option but to get the documents attested from the US?

After telling him my story, and him trying it out, he came back with the good, but confusing (for me) news:

Just wanted to drop you a note to say we finally managed to get the DIN approved. It was our 4th attempt. :-) The notarisation from the US Consulate was rejected but we were told by the MCA DIN Cell that if the foreign director is in India, an Indian notary can do the attestation as long as a notarised copy of a valid Indian visa is also submitted.

Well... I guess it is matter of trying out different things until it works!

Thanks to Raju for telling me his experience and allowing me to post it here.

Legal: Digital Signature/Certificate

Going back on how to set up a Private Limited company... The first step is to get a digital signature or also called digital certificate.

Not knowing exactly what a digital signature was, before starting to research on it, I got a quite amusing reply from a friend. He told me is just to scan your written signature, save it as a jpeg or gif (an image format) edit it for clarity and finally paste it to whichever document or email you are about to submit. It would have been difficult to be much farther from reality!

The digital signature is a system by which the party receiving your document will be certain that you are the one signing. This is done through a third party who will certify you are the one doing so. Of course, the third party must be a certified company which is well known and reliable to everybody. Some companies offering this are, for instance, TATA or MTNL.

The full process is not too difficult to understand, and you can see it here. I'm sorry, but I can't find a great graphic display which MTNL had in their web-site which would make it easier. However, in few words, when you attach your digital signature to a document and submit it (for instance, the e-forms submitted to ROC), a file is sent to MTNL, which receives it, decodes it and sends another file to ROC telling them, hey, this guy is in deed whom he says to be or at least he has in his computer the key I have given him to tell is himself.

There are several types of Digital Signature (or certificates) and I remember I was rather confused to which I should get. If you are an individual and need to sign the e-forms as the Managing Director of your company (which is what you need for a Pvt. Ltd), then you want a Class 2 Individual Certificate. According to the MTNL site cost for this certificate is Rs.600 for 2 years. Sincerely, I don't know how difficult is to do it on your own because I was short of time at the moment I did it and gave it to the CS (Company Secretary) to do it for me. In that case, the bill came to Rs.1,600 or so.

MTNL seems to be the best option for Digital Certificate because is easier to get it and is less costly than other options, but you may always compare with other companies.