Harish Palaniappan's

If you are a small enterpreneur, as it happens always, and probably into Software solutions, whereby you have develop or provide your services or sell your software products within India or abroad, then registering your company as a Private firm with 2 directors would do. But this would allow you only to do business within the country. For legally allowing yourself to attract foreign currency through sales or service costs, all you need is an Import/Export number/code (costs somewhere less than 2000 rupees i heard...this number you will quote later while filing your filing your returns.. for foreign currency revenues)...but registering as a private company seems to be the first job to do.

To register a private company:

1. You can do everything online

(I have not done it.. not yet, but forms and processes are laid out in not-well-organized manner at mca.gov.in website.. but hopefully all online submissions are processed though it doesn't have bribes attached.) (update : a few people confirmed they were able to do atleast 60% of the entire registration process ONLINE after following steps here)

Doing the process online means, you download forms, fill them up digitally using adobe acrobat reader software, attach your digital signature and submit it in submission page on mca.gov.in The website says it will give you service request number for every such submission and you can track status of application online with that number. Also, if a form is rejected and if it is put in 'resubmit with proper information' or something like that, then without additional cost you can refill and resubmit under the same request number.

1. Get DSC (digital signature):

For all this you need a digital signature.. because there is no paper involved, you can only sign digitally.. and only legal and secure method is through digital signatures which are given unique to every person who buys one.

Note that the digital signature has nothing to do with your manual signature, it is some very very long and undetectable code provided to you as a file through email or in a thumb drive like storage media.

And yes, keep the file or media safe once you buy, because anybody can just steal this file and attach your digital signature to all documents that accept digital signatures (which is only company incorporation or name change or efiling forms.. but later many other processes in life also might start being computerized and accepting digital signatures)

you buy one from digital ceritifying Authorities in India like MTNL (delhi and mumbai), TCS(all over india), and others listed here.

Seems like there are different classes of digital signatures.. the one that is minimum required for our discussion is 'Class 2 individual' or higher classes but 'individual'. Class 1 certificate for individuals doesn't verify proof of identity or proof of address.. so the government may not accept that DSC.

2. Get DIN (Directory Identification number):

This is probably the only low cost process in incorporation. It costs 100 rupees to get yourself registered as a director (or going-to-be-director) of some company within india.

Seems like anybody can apply for a DIN, provided you have any of these driving license/passport/elector ID, which is a valid proof of identity, and proof of address.

The step-by-step process of getting a DIN is given here

Remember to get a DIN for your mom / wife / partner also if you plan to ask them be the second director of your small company.

MCA User Registration
To submit forms, on the MCA website, you need an identity on the website.

For now, since you may not have a DIN and DSC, you can register as an individual, using the 'New user registration' link on mca.gov.in . Then you can login with your password just like in yahoo mail or hotmail.

After you get a DIN and DSC, re-register as a Business professional, using the same link.. and then on you will use your DSC to login to the website.

3. Form 1A - Company name availability and blocking.

This application is for blocking the name of the company you want to register.
All forms that we are talking about in this or other steps are available here

Before you download and fillup form 1A, you should check whether your company name is available through this page

Fill up form 1A, with 2 DINs, affix your DSC, if you have to attach any documents scan them and attach them as files in the end of the form as applicable. Then submit the form. Note your request number and track the form until it is approved. We are almost half done.

The above 3 items are the main items and all or most processes below can be done simultaneously.

4. Role Check
This is a simple process where a DIN and DSC are matched and verified to be of the same person, and also that this person is a valid signatory of the company.

I am not sure, but this process might be neccessary only for efiling of tax or returns.. not for incorporation..

Details about this step is here. http://mca.gov.in/MinistryWebsite/dca/rolecheck/rolecheck.html

5. Form 1 - Incorporation Application:
Download Form 1, fillup, attach digital sign and submit.

6. Form 18 - Office address form
Download Form 18, fillup, attach digital sign and submit.

7. Form 32 - DIN appointment
Download Form 32, fillup, attach digital sign and submit.

Steps 5, 6, 7 constitute the main parts... and if the Forms 1, 18 and 32 are approved, you will get a CIN or company identification number which you should quote alongwith your Company's PAN number (apply for one, if you don't have), in all future forms like tax forms, name change or address change forms.

The overall cost of registering a private company with 2 DIN's through online mode, could cost as less as 2500 Rupees.. but this estimate can increase based on your capital investment which you will mention in Form 1A and others.. (I am exactly not sure what percentage of capital is considered as fee... i am in the process of finding this, will update soon.)

As mentioned earlier,
All forms are available here

All process applications should take only a few days to be processed.

All above processes might not have their old manual form filing methods sooner and everything will become digital because the ministry of company affairs is overwhelmed by its data, and is strongly being computerized. Already tax forms I think, are no more accepted in paper and government has recruited filing officers who help those who are not able to use a computer and do the process digitally.

All above processes are part of a system called MCA21 and is managed and authorized for use by the ministry of company affairs and all its registrar of companies (RoC) offices.

Update 14 sep 07
-----------------------------
As I do it, I will be trying to update this page on my learnings of the process.

Firstly, I hired a consultant for doing my incorporation. Though this consulting company does it through mca.gov.in website only, they put in their experience of dealing with government processes.

But, yes, you don't need to hire a consultant if you have the time to do it online, and if you know people who can attest your proof of identities (a gazetted officer), and if you know some lawyer who has authority to notarize with his signature anything that you produce on a stamp paper.

My consultant, was an authorized 'Company secretary'. They have this company secretary exams in the ministry of company affairs, which people take up and get authorized/certified to provide these services to people. Company secreataries are obviously people authorized to do more than just incorporation.. like handling disputes between directors of companies, handling buyouts of companies, and many other things like that.. which require legal and authorized people to do it.

For me, my consultant would take care of verifying all documents for me, getting them attested, getting any legal papers notarized, and submit them through mca.gov.in

Certain processes are easy.. and you can go to a consultant after these processes and save a few thousands in fee.

For example, if you are a techie, and understand browsing and related technologies, then you are actually better than the consultant for getting your digital signature.

Digital Signature:
Just apply for a digital signature as mentioned above.. in TCS or MTNL websites.
They will ask you to send some documents to a verification authority (actually this is how i got to know my consultant.)
The verification company will just verify your id proof and address proof and send you a digital signature kit with an eToken.

An eToken is a protected pen drive in which you cant do any data transfer but it will have your digital signature in it and when you insert it into any PC usb key, it install the signature on the machine...not everything.. just the general part of it. you have to keep the key on the machine until you sign documents and remove it after.

This kit and the digital signature costs 1,200 rupees for two years of validity.. (cost from TCS)
If you apply from your machine, yourself, you will pay 1200 to the verification authority. nothing else. But if you use a consultant, he will do the online part also for you (assuming you are not the tech friendly person) and charge you twice or even more than the actual cost.

Form 1A, and DIN application:

These two forms are the initial steps, and probably easy steps for incorporation.

Form 1A:
Ministry Approval of Form 1A that you submit, means your company name and location is approved and you can start incorporation process. The name is valid only for 6 months and you should incorporate within 6 months.. or you can renew the name for another 6 months. The cost is a flat price of 500 rupees payable on http://mca.gov.in through credit card.

If you are starting a software company, Form 1A will have no problems.. since the ministry won't question your address of manufacturing. Other businesses might have problems if the ministry feels your address is a residential area and you business is not proper to be there.. or things like that.

In Form 1A, you have to give 6 or 7 company name choices.

I typed only 3.
Floresense solutions Pvt., Ltd.,
Floresense software solutions Pvt., Ltd.,
Floresense. Pvt., Ltd.,

Floresense software solutions Pvt., Ltd., got approved.

Director Identification Number (DIN):
In India, to incorporate a company you need minimum two directors.. (yes, the law is outdated, and only recently government is considering recommedations that single person companies should be allowed to register)

If you don't have another director, pull some friend you like.. or easier, get your mother or father as another director. So, atleast two directors should apply for and get a DIN to register the company under them. Later you can always change your directors, company name, address, anything.. just by submitting that form or application alone...and ofcourse paying for that change alone.

If you are two or more people who will be directors, and if all of you have a valid passport, no other proof is required for submitting to government anywhere in the full process. A valid passport stands proof for name, address, and father's name most of the time... and the company affairs ministry seems to approve all applications with passport as proof for people, very smoothly.

You don't need a consultant for submitting DIN if you follow the instructions clearly on the DIN pages that the ministry has.

I think on Digital signature, and DIN .. ministry's website is clear.. and process itself is clear and easy to do by anybody who has used software like browsers, adobe acrobat, etc.,

.. I have so far completed only DIN.. will update more later.

Update 26 sept 2007
-----------------------------------
I have completed incorporation.

After I got my and mom's Director Identification Number applications approved, I had two DIN numbers to apply for incorporation.. or the actual, main, important form .. FORM 1. .. so this is why the first form we submitted was called FORM 1A (I was wondering why isn't called form 1 if its the first step in incorporation)

For Form 1, we need the following.
1. Form 1A approval (approving the name of the company)
2. DIN numbers of directors (minimum two directors for pvt. ltd. company)
3. Articles of Association (a stamped paper agreement signed by directors stating their claims of part ownership of company, has all about holding of shares, how they could be sold, how they could be bought back, blah blah..)
4. Memorandum of Association (again a stamped paper document signed by directors stating what all are the objectives of the business, what all they want to sell/buy/resell/import etc., through the operations in the business, what all rights they will exercise in doing the business like renting space/real estate, having employees, etc., blah blah.. important part will be statement of objectives of business.. its like asking for incorporation only to do business on these lines.. if the operations or objectives change, you have to change the memorandum and resubmit for approval until which you can't do the new business)
5. Form 18 stating the address of registered office of the company. (a simple form)
6. Form 32 stating the DIN numbers of directors of the company. (a simple form)

Sample word document templates for 3. and 4. can be downloaded from here (3) and here (4).
Before you download, check up whether the ministry website has latest template of these files downloadable there.. as of this writing the ministry website hasn't put a link since this is a legal document and obviously it is a very important step which needs complete understanding by the person before signing it. The links above are provided only for you to have access to samples so you can read in detail before you get into doing it. Also, if you get to read, the 'Memorandum document (4)' read the 'objects' part carefully, because it says what you want to do with your business and you know this better than your consultant.
Also, only sample templates are provided, I myself didn't understand properly whether you can submit these documents without a consultant, so you should search the ministry's website for information if they have updated or ask someone you know.

Submitting Form 1 means, submitting all the above.

In submitting Form1, you will need a consultant or help with the text from a Chartered Accountant, or company secretaries, or simply referrence documents from friends who have already done this.

That's if.. you submit Form 1 digitally scanned and signed with the digital signature of one of the directors, through mca.gov.in... originals also have to be submitted to the registrar of companies.

While submitting Form 1, you have to pay a registration fee which is based on a slab for the capital you are mentioning.. minimum capital is 1,00,000 rupees.. I mentioned just that, and the fee was 4,800 rupees for that.. (so that means it takes a minimum of 4800 rupees for registering a private limited company in India, not like I thought earlier that it could be done with around 2500 rupees).

They approved my Form 1 submission in 1 day after the originals were submitted.

Sometimes if the objectives of business stated in the memorandum is not clear / the AOA (3) or MOA (4) documents have mistakes / incomplete, then the registrar office raises a query or asks for deletion of objectionable points, or asks clarifications.. and the form has to be resubmitted if changes are made.. and I believe you don't have to pay again for corrections but I am not sure. For this part, probably being proactive, my consultant took a power of attorney from me and my mom for doing such changes himself, if they are raised, and to resubmit the memorandum himself without signatures from the directors (me or my mom).

Once, your Form 1 is approved, within a day or two you will receive an email with a one page pdf certificate of incorporation(unsigned) with a Company Identification Number (CIN).. probably they will send an original signed one later which I am yet to receive.

Actually, you should start business transactions, only after you receive this certificate.. though it happens usually that everybody does registration or incorporation a couple of years after starting business.

Now that my company Floresense is incorporated.. only thing next to do is to get an Import/Export code for being able to (buy/)sell services/products (from/)to people/companies outside India. Also, I can produce the incorporation and articles of association forms to a bank to open a current account in the name of the company.. which can then be used to do direct transactions in Indian rupees or foreign currencies, for example, asking clients to wire transfer payment to company account and stuff like that.