Legal Documents

Dr. Rupal Ramawat

• Important Documents Required To Start A Business In India
• When you are planning to start a business, there is a lot of legal
formalities that you need to fulfill. You cannot just start it straight
away. Besides an innovative business plan, you also need to make
sure you have the following documents ready with you.
• Certificate of Incorporation
• Licenses and MOUs
• Trademark registration and IP agreements
• Permanent Account Number (PAN), Tax Deduction Account Number (TAN), Digital Signature Certificate
(DSC), Director Identification Number (DIN), Tax Identification Number (TIN), Goods and Services Tax
Identification Number (GSTIN) and No Objection Certificate (NOC)
• Non-disclosure agreement
• Shareholder’s agreement
• Employment contracts and offer letters
• Startup’s Bylaws (set of working rules or principles to regulate its environment)
• Founders/Co-founders’ Agreement
• Terms of Use and Privacy Policy
• All the very best for your startup but don’t forget to have these legal documents to enjoy a smooth
entrepreneurial journey.
• Company Name Availability
• The very first thing that comes to your mind when you think of
starting a business is its name. The name which you want your
business to identify with. Especially, in this era of online marketing, it
is very crucial to check the availability of a name for your business.
Because the brand name is going to represent you. To avoid
trademark issues in the coming future or for the credibility of your
business, it is the wisest step to check whether a name that you are
thinking of is available or not. If a company already exists with the
same name and they have trademarked its business name, you might
face legal troubles along your journey.
• Business Entity Registration
• Then the next step is to decide on the type of business entity and its registration.
It is the business structure. When it comes to deciding on the type or nature of
your organization, these are the 6 major types of business entities you can opt for.
• Sole Proprietorship
• One Person Company
• Partnership Firm
• LLP
• Private limited company
• Public Limited company
• What Is Sole Proprietorship?
• As the name suggests, the business is owned by a single person in a sole proprietorship
which is also known as an individual proprietorship. In this, the business and the owner
are considered the same. Therefore, if the owner dies, the business also dies. It is the
easiest way to start a business where sole proprietors can hire employees to work for their
businesses.
• A sole proprietorship is the easiest way to start a business as there are no specific laws
that govern it. This business entity has no legal existence. Whether it is about profits or
losses, a sole proprietor will take care of both of them. Most significantly, people prefer to
register a business as a sole proprietorship when the market is limited, localized and
customers prefer personal attention. Individuals prefer to register their businesses as sole
proprietorship when both capital required as well as risk is lesser.
• It is not mandatory to register a sole proprietorship business. But it is mandatory to obtain
some licenses or permits to run it.
• Documents Required to Register a Sole Proprietorship Business
• PAN Card
• Aadhar Card
• Bank Account
• Registered Identity Proof
• Registrations And Licenses Required For Sole Proprietorship Business
• Registering as SME: Though it is not mandatory, sole proprietors can register their businesses as Small And
Medium Enterprise (SMEs) under MSME Act as there can be certain benefits of doing the same. You can
register your business through Udyog Aadhar under the Ministry of MSME.
• To register your sole proprietorship business, here is the link
(https://udyamregistration.gov.in/UdyamRegistration.aspx)
• The owner has to obtain a Registration Certificate under the Shops and Establishment Act from the state
where the business is located. You can register your business through GST here – https://www.gst.gov.in/.
• The sole proprietor should register for GST if the business turnover exceeds Rs.20 lakh.
• What Is One Person Company?
• One Person Company (OPC) is a new type of business entity that was
introduced under Section 2(62) of the Companies Act 2013. It is a type of
business entity which can feature as a separate legal entity. In One Person
Company, ownership can be transferred to the nominee in case of the death
of the owner.
• There is no scope for raising equity funding in an OPC. No foreign directors
and nominees are allowed in One Person Company. When the annual
revenue of the business is over 2 crores and paid up capital is over 50 lakhs,
then the company needs to be converted into a Private Limited Company.
Besides this, an OPC cannot perform Non-Banking Financial Investment
activities.
• Documents Required To Register A “One-Person Company” In India
• Passport or PAN card
• Voter ID
• Drivers License’
• Passport size photo
• Specimen signature
• No objection certificate
• Rental agreement
• Address proof of directors
• Identity proof of directors For NRIs and foreign nationals, a passport
• Updated gas or electricity bills
• Bank account statements, and phone bills for mobile or landlines
• A sample signature.
• Registration And Licenses
• Digital Signature Certificate (DSC)
• Director Identification Number (DIN)
• Approval Of Company Name
• Incorporation Of One Person Company
• Obtaining A Certificate Of Incorporation
• Their partnership deed specifies the invested interest of each partner and their profit-sharing ratios along with
other terms of business functioning and operations. A partnership deed in the form of a verbal contract enlists the
functions, duties, powers, and number of shares held by the partners. The details that will be included in the
partnership deed are
• Name and address of the firm and all the partners.
• Nature of business.
• Date of starting of business Capital to be contributed by each partner.
• Capital to be contributed by each partner.
• Profit/loss sharing ratio among the partners.
• Interest on capital invested, drawings by partners or any loans provided by partners to the firm.
• Salaries, commissions or any other amount to be payable to partners.
• Rights of each partner, including additional rights to be enjoyed by the active partners.
• Duties and obligations of all partners.
• Adjustments or processes to be followed on account of retirement or death of a partner or dissolution of the firm.
• Other clauses as partners may decide by mutual discussion.
• Documents Required To Register A Partnership Firm In India
• Application for registration of partnership (Form 1)
• Certified original copy of Partnership Deed.
• Specimen of an affidavit certifying all the details mentioned in the
partnership deed and documents are correct.
• PAN card of the partners.
• Address proof of the partners
• Proof of principal place of business of the firm (ownership documents
or rental/lease agreement).
• How To Register A Partnership Firm In India?
• Step 1- The partners have to file an application to the Registrar of Firms of the State which
should be signed and verified by all the partners. The application form will include the details
• The name of the firm.
• The principal place of business of the firm.
• The location of any other places where the firm carries on business.
• The date of joining of each partner.
• The names and permanent addresses of all the partners.
• The duration of the firm.
• Step 2- Name Selection For The Company
Step 3 – After Registrar is satisfied with all the provided information and documents, a
Registration Certificate will be issued.
• Limited Liability Partnership
• A Limited Liability Partnership has to be registered with the Ministry of Corporate Affairs
under the LLP Act 2008. It is a separate legal entity where promoters are not personally liable
towards the LLP. It can be started with a minimum of two persons and ownership can be
transferred. The profits gained by this business entity are taxed as per the slabs mentioned
under Income Tax Act, 1961 plus surcharge and cess as applicable. The partners may come and
go as an LLP has perpetual succession.
• This type of business entity is suitable for small and medium-sized businesses which have the
advantages of both a limited liability company and the flexibility of a partnership. The liability
of each partner depends on the number of share capital. Obligations related to the repayment
of debts or lawsuits incurred by LLP, lie on the firm and not on the owners. In addition to that,
the partners are not liable to be sued for dues against the firm. Therefore, there are very less
compliances in this type of business entity. LLPs are only obligated to submit only two
documents including Annual Return Statements and Statements of Accounts.
• Documents Required For LLP Registration In India
• Proof of identity (PAN card and passport in case of foreign national) of all partners;
• Residential address (AADHAAR card/Driver’s license/Passport/ Voter’s ID) of all partners;
• Proof of office address (Conveyance/Lease Deed/Rent Agreement etc. along with rent
receipts);
• No Objection Certificate from the owner of the property;
• Subscription sheet including consent;
• Copy of utility bills of the registered office (not older than 2 months);
• Detail of LLP(s) and/or Company(s) in which partner is a director/partner;
• Copy of approval in case the proposed name contains any word(s) or expression(s) which
requires approval from Central Government or if the proposed business required any
regulatory approval.
• Private Limited Company
• As per Section 2(68) of the Companies Act 2013. “private company means a company
having a minimum paid-up share capital as may be prescribed, and which by its articles,
• (i) restricts the right to transfer its shares;
(ii) except in the case of One Person Company, limits the number of its members to two
hundred:
(iii) prohibits any invitation to the public to subscribe to any securities of the company.
• It is a privately held small business entity and is considered an independent legal entity
on incorporation. It has to be registered with the Ministry of Corporate Affairs under the
Companies Act 2013. A PLC is prohibited to raise funds through the issue of a
prospectus. The declaration has to be filed before the commencement of business. It
has to file annual statements of accounts and annual returns with ROC. The company
also has to file tax returns and an audit is mandatory for such business entities.
• Minimum of two persons and a maximum number of 200 members can start a PLC.
• It can have a minimum of two and a maximum of 15 directors.
• As the company is a legal entity, it can sue and can be sued under the company name.
• An authorized capital fee amounting to at least ₹1 lakh
• Its borrowing capacity is higher in comparison to LLC. Besides enjoying the privilege of obtaining loans
easily, a Private Limited Company has also the option of issuing debentures and convertible debentures
are always available.
• It is easier to sell or transfer the company, either partially or in full, without any disruption to the current
business.
• Because of perpetual existence, the company will continue to exist even after the death of any member.
• Shareholders cannot claim to be owners of the company because the company itself is the owner.
• An individual can be a director, shareholder, and employee at the same time.
• A Private Limited Company has to maintain records of all transactions. It gets tax exemption for the first
three years of the business establishment which enhances the company’s growth.
• Documents Required to Register A Private Limited Company In India
• Scanned copy of PAN card or passport (foreign nationals & NRIs)
• Scanned copy of voter ID/passport/driving licence
• Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill
• Scanned passport-sized photograph specimen signature (blank document with signature
[directors only])
• Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill
• Scanned copy of the notarized rental agreement in English
• Scanned copy of the no-objection certificate from the property owner
• Scanned copy of sale deed/property deed in English (in case of owned property)
• How Can I Register A Private Limited Company In India?
• Choose a unique name that needs to be submitted to the Ministry of Corporate Affairs. You can submit 1-2
company names which usually get approved within 5 working days. In case the names are rejected, you can
resubmit your choices again.
• Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN).
• Submit a Memorandum of Association (MOA) & Articles of Association (AOA).
• After February 1, 2020, different forms including Simplified Proforma for Incorporating the Company
electronically (SPICe-INC-32) (2) Electronic Memorandum of Association (eMOA) under INC-33 (3) Electronic
Articles of Association (eAOA) under (INC-34) must be compulsorily filed for company registration.
• Through the SPICE+ form, a minimum of 3 company directors can apply for DIN (Director Identification Number).
In the case of registering a company with more than 3 directors and more than 3 persons don’t have DIN, the
application will be for the registration of the company with 3 directors only and can appoint the new directors
later after the incorporation of the company.
• The next step would be to apply for and obtain Permanent Account Number (PAN) and Tax Collection Account
Number (TAN).’
• You’ll get a Certificate of Incorporation along with PAN and TAN.
• Public Limited Company
• As per Section 2(71) of the Companies Act, a public company means “a company
which is not a private company”.
• This business entity offers its shares to the public or whose securities are traded in
the stock market. In order to incorporate a Public Limited Company, a minimum of
three Directors, seven shareholders and a registered office are required. A PLC enjoys
almost all the benefits of a Private Limited Company which include the ability to have
an unlimited number of members, ease in transfer of shareholding, and more
transparency.
• The company can list its securities on Regional Stock Exchanges for selling and buying
purposes. These companies have better access to capital and funds. The business
entity must comply with the requirements of the SEBI (LODR) Regulations, 2015. A
subsidiary of a PLC is also treated as a public limited company.
• Documents Required To Register A Public Limited Company In India
• Identity proofs of directors and shareholders, such as a PAN card, voter ID,
Aadhaar card, or driver’s licence.
• Address proof of all directors and shareholders.
• Water, telephone, gas, or power bill of the registered office which can’t be more
than two months old.
• It is necessary to have a “No Objection Certificate” (NOC) from the building’s
actual landlord to use a location as a Registered Office.
• All Directors’ Taxpayer Identification Numbers (DINs).
• Obtain the Directors’ Digital Signature Certificates.
• Articles of Association and Memorandum of Association.
• How To Register A Public Limited Company in India?
• Fill the form and submit it online on the Ministry of Corporate Affairs portal along with
all the documents.
• Apply for Digital Signature Certificate (DSC) and Director Identification Number (DIN).
• Then, the next step is to check and verify as per the MCA. The name of the company
must not breach any IPR provisions.
• After the approval of the company name, file SPICe form for securing the certificate of
Incorporation. As the applicant files the SPICe form, DIN number would also be
allocated to the company directors.
• After obtaining all the documents, the documents including MoA and AoA will be
submitted to the MCA. Besides this, the company also has to submit documents which
include the mission, goals, objectives and long-term aspirations of the company.