Incorporating a private limited company in India is now a largely online process through the MCA's SPICe+ form, and a company can be registered within a couple of weeks. Because it is quick, founders often treat it as a formality. The decisions made at incorporation — the name, the directors, the capital and the shareholding — are, however, expensive to change later. These are the points we discuss with every founder before we file.
The dos
Do check the name against trademarks, not just the MCA register
The MCA name check only tells you whether a similar company or LLP name exists. It does not tell you whether someone owns the trademark. A company name that infringes a registered trademark can be directed to change its name, and you may lose your domain and branding. Search the trademark register in the relevant classes before reserving the name, and consider filing a trademark application for your brand at the same time.
Do write a specific main objects clause
The objects clause in the Memorandum of Association defines what the company is formed to do. Banks, investors, GST officers and licensing authorities read it. Write it to cover your actual business and its natural extensions, in plain language, rather than copying a generic clause. Changing it later needs a special resolution and an ROC filing.
Do have at least one director who is resident in India
Every company must have at least one director who stayed in India for 182 days or more during the financial year. A private limited company needs at least two directors and two shareholders. If all the founders live abroad, plan for a resident director from the start.
Do decide the shareholding and sign a founders' agreement
Agree the shareholding between founders before incorporation, and record what happens if a founder leaves — vesting of shares, transfer restrictions, decision-making and roles. A short founders' or shareholders' agreement, with the key terms reflected in the Articles of Association, prevents most founder disputes.
Do choose authorised capital deliberately
There is no minimum paid-up capital requirement, but the authorised capital determines the stamp duty and MCA fees payable at incorporation and the headroom for issuing shares later. MCA fees are waived for companies with authorised capital up to ₹15 lakh. Choose an amount that covers your near-term plans; it can be increased when you raise funds.
Do decide the first financial year and accounting set-up early
A company's financial year ends on 31 March. A company incorporated on or after 1 January can choose to close its first financial year on 31 March of the following year, which avoids a very short first year with its own audit, ROC filings and tax return. Decide this before the first board meeting. Books of account must be kept from the date of incorporation and the board must appoint the first auditor within 30 days, so choose your accounting software and your auditor before you incorporate.
The don'ts
Don't use a registered office address without proper documents
The registered office must be backed by a recent utility bill and, where the premises are not owned by the company, a no-objection letter from the owner and a rent agreement where applicable. Using an address you cannot document — or a relative's address without consent — leads to rejection or to problems when the ROC or the GST officer verifies the premises.
Don't appoint nominee directors casually
Directors carry legal responsibility for the company's filings, tax dues and compliance, and can be disqualified if the company defaults. Do not appoint a friend or relative as a "dummy" director just to meet the two-director requirement. Check that every proposed director's DIN is active and not disqualified.
Don't start business before filing INC-20A
A company incorporated with share capital must file INC-20A, declaring that subscribers have paid for their shares, within 180 days of incorporation. Until it is filed, the company should not commence business or exercise borrowing powers. Missing it attracts a penalty of ₹50,000 on the company and on officers in default, and the ROC can initiate strike-off.
Don't take money as "share application" and leave it pending
Money received for shares must be allotted as shares within 60 days or refunded. Leaving share application money pending for months can make it a deposit under the Companies Act, with serious consequences.
Don't give loans to directors or withdraw cash informally
The company is a separate legal person. Lending money to directors, or to firms and companies in which they are interested, is restricted under section 185 of the Companies Act. Taking cash out "for personal use" creates tax and company law problems. Pay directors through salary or dividends, properly approved and documented.
Don't treat incorporation as the end of the work
Incorporation is followed by a first board meeting, appointment of the first auditor, issue of share certificates and tax registrations — most within the first 30 to 180 days. See our post-incorporation compliance checklist.
Private limited company or LLP?
A private limited company is the right structure if you plan to raise equity investment, issue ESOPs or eventually list. An LLP has lighter compliance and suits professional practices and closely held businesses that will not take outside equity. If you are unsure, discuss the choice before you reserve a name — converting later is possible, but costs time and money.
Frequently asked questions
Is there a minimum capital to register a private limited company?
No. There is no minimum paid-up capital. MCA fees are waived for authorised capital up to ₹15 lakh, though stamp duty on the MoA and AoA still applies.
Can NRIs or foreign nationals be directors of an Indian private company?
Yes. However, at least one director must be resident in India, meaning they stayed in India for 182 days or more during the financial year.
What happens if INC-20A is not filed within 180 days?
The company and its officers in default face penalties — ₹50,000 on the company — the company should not commence business or borrow until it is filed, and the ROC can initiate strike-off.
Can I register a company at my home address?
Yes. A residential address can be the registered office, with a recent utility bill and a no-objection letter from the owner.
How we help
ASKN & Co. LLP handles company registration and ROC compliance for founders in Hyderabad and across India — from choosing the structure and drafting the MoA and AoA to filing, bank account, tax registrations and the first year's compliance. Read our step-by-step guide to the private limited company registration process and documents.
This article is general information based on the law as at the date shown and is not professional advice. Please consult us before acting on it.