Choosing the Right Entity Structure
Before the Ministry of Corporate Affairs portal is opened, the most consequential decision a founder makes is the choice of entity. Each structure carries distinct implications for liability, governance, taxation, foreign investment eligibility, and the ease of raising institutional capital. The three principal structures relevant to most businesses incorporating in India in 2026 are the private limited company, the limited liability partnership, and the one person company.
Private Limited Company
A private limited company incorporated under the Companies Act 2013 (section 2(68)) remains the structure of choice for any business that contemplates institutional investment, employee stock options, or eventual listing. The liability of each shareholder is limited to the amount unpaid on their shares. A minimum of two directors and two shareholders is required, with a ceiling of 200 shareholders and a prohibition on public invitation to subscribe to securities. The statutory framework is extensive — annual board meetings, statutory audit, ROC filings, and compliance with secretarial standards — but this framework is precisely what makes the private limited company credible to investors, banks, and counterparties.
For businesses in Delhi NCR that may seek venture capital or private equity investment, or that intend to participate in government tenders or regulated sectors, the private limited company is almost invariably the appropriate choice. The ability to issue preference shares with distinct economic rights, to implement an ESOP under section 62(1)(b) of the Companies Act 2013, and to raise external commercial borrowings from foreign lenders are features that the private limited company uniquely offers.
Limited Liability Partnership
The limited liability partnership, governed by the Limited Liability Partnership Act 2008, combines the flexibility of a partnership with limited liability for its partners. It is particularly suited to professional service firms, real estate holding vehicles, and businesses where profits are to be distributed as partnership remuneration rather than dividends. An LLP does not pay dividend distribution tax, and partners may extract profits without the additional layer of tax that applies to dividends from a company. However, an LLP cannot issue equity shares, cannot have an ESOP, and is not eligible for FDI through the automatic route in most sectors. For businesses that are confident they will not require institutional equity investment, the LLP offers a lighter compliance burden and greater tax efficiency at the profit-extraction stage.
One Person Company
The one person company under section 2(62) of the Companies Act 2013 permits a single individual to incorporate a company with limited liability. It is subject to mandatory conversion to a private limited company once paid-up capital exceeds fifty lakh rupees or annual turnover exceeds two crore rupees. An OPC cannot carry out non-banking financial investment activities, issue public invitations for securities, or convert voluntarily into a company of any other kind before two years of incorporation, save in the circumstances prescribed. For solo founders or professionals who need a corporate vehicle without a co-promoter, the OPC provides an appropriate starting point, with a clear conversion pathway as the business scales.
The Incorporation Process: Step by Step
Incorporation in India is administered through the MCA21 portal. The process is substantially digital since the introduction of the simplified proforma for incorporating company electronically (SPICe+) form, which consolidates name reservation, incorporation, DIN allotment, PAN, TAN, GSTIN, EPFO, ESIC, and professional tax registration into a single integrated filing.
Name Reservation
The promoters must first secure approval for the proposed company name through Part A of the SPICe+ form. The Companies (Incorporation) Rules 2014 govern the principles of name availability. A name will be rejected if it is identical or too similar to an existing registered company or LLP, if it includes a word or expression that requires the prior approval of the Central Government (such as "Insurance", "Bank", "Stock Exchange", "Reserve Bank"), or if it is misleading or undesirable in the opinion of the Registrar of Companies.
Promoters based in Delhi NCR file with the Registrar of Companies, NCT of Delhi and Haryana, whose jurisdiction covers Delhi, Haryana, Himachal Pradesh, and Jammu and Kashmir. The approved name is reserved for twenty days, within which the full SPICe+ application must be filed.
Digital Signature Certificate and Director Identification Number
Every individual who intends to become a director must obtain a Digital Signature Certificate (DSC) from a Certifying Authority licensed under the Information Technology Act 2000. The DSC is used to electronically sign all MCA filings. A Director Identification Number (DIN) under section 154 of the Companies Act 2013 is allotted automatically upon the approval of SPICe+ to proposed directors who do not already hold a DIN. Individuals who already hold a DIN may not apply for a second DIN — possession of multiple DINs is a statutory violation.
Memorandum and Articles of Association
The Memorandum of Association (MOA) sets out the company's name, state of registered office, objects, liability clause, and share capital. It is the constitutional document that defines the outer boundary of the company's legal capacity. The Articles of Association (AOA) regulate the internal management of the company — board composition, shareholder meetings, transfer restrictions, and dividend rights. Table F of Schedule I to the Companies Act 2013 provides the model articles for a private limited company. In practice, promoters should draft bespoke articles that reflect their specific governance arrangements, including any investor rights, protective provisions, or share transfer restrictions agreed upon at the outset.
Filing and Certificate of Incorporation
Part B of the SPICe+ form, together with the linked AGILE-PRO-S form for GSTIN and other registrations, is filed electronically with the requisite government fee calculated on the authorised capital. The supporting documents — MOA, AOA, declarations by first directors and subscribers (INC-9), proof of registered office address (if not submitted through AGILE), and identity and address proofs of subscribers and directors — must all be attached in the prescribed format.
Upon processing, the Registrar issues a Certificate of Incorporation in Form INC-11, which bears the Corporate Identity Number (CIN). From the date stated in the Certificate of Incorporation, the company is a legal entity capable of suing and being sued, holding property, and entering into contracts in its own name.
Post-Incorporation Obligations
Incorporation is the beginning, not the end, of the compliance journey. Within the first thirty to ninety days of incorporation, a series of mandatory filings and actions must be completed.
Registered Office and Disclosure Requirements
Every company must have a registered office within thirty days of incorporation, to which all official communications and notices will be addressed. The registered office address must be intimated to the Registrar in Form INC-22. The Companies Act 2013 requires every company to display its name, CIN, registered office address, telephone number, fax number, email, and website on all business letters, billheads, notices, and other official publications. This obligation is non-negotiable — non-compliance is a default that attracts daily penalty.
First Board Meeting
Under section 173 of the Companies Act 2013, the first board meeting must be held within thirty days of the date of incorporation. The agenda for the first board meeting typically includes: disclosure of directors' interests under section 184, appointment of the first auditor under section 139(6) (which must occur within thirty days of incorporation), approval of the common seal (if adopted), opening of bank accounts, adoption of the company's accounting year, and any matters pertaining to the commencement of business.
Share Allotment and Subscription
The subscribers to the MOA are deemed to have taken the shares stated against their names from the date of incorporation. The company must complete the allotment of shares to subscribers and enter each subscriber in the register of members within sixty days. If the company has received any consideration for shares, the share allotment must be completed and the return of allotment filed with the Registrar in Form PAS-3 within thirty days of allotment under section 39(4) of the Companies Act 2013. For companies with foreign subscribers, additional FEMA compliance is triggered — see the FEMA Compliance Guide for Indian Corporates Receiving Foreign Investment for a detailed treatment.
Commencement of Business
A company may not commence any business or exercise borrowing powers unless the directors file a declaration in Form INC-20A with the Registrar, confirming that every subscriber to the MOA has paid the value of shares agreed to be taken by them. This declaration must be filed within 180 days of the date of incorporation. Failure to file INC-20A or to pay the subscription amount by the due date exposes the company and every officer in default to daily penalty under section 10A of the Companies Act 2013.
Statutory Registers
Every company must maintain a set of statutory registers at its registered office from the date of incorporation. The principal registers include: Register of Members (section 88), Register of Directors and Key Managerial Personnel (section 170), Register of Charges (section 85), Register of Contracts and Arrangements (section 189), Register of Beneficial Owners (SEBI requirement for listed companies), and Register of Significant Beneficial Owners (section 90). These registers must be available for inspection by any member during business hours and must be produced for any audit or regulatory inspection.
Ongoing Annual Compliance Framework
Once operational, a private limited company must maintain an annual compliance programme. The principal annual obligations are: conducting at least four board meetings per year (with not more than 120 days between successive meetings), holding an Annual General Meeting within six months of the end of each financial year, filing financial statements in Form AOC-4 within sixty days of the AGM, filing the Annual Return in Form MGT-7 or MGT-7A within sixty days of the AGM, and completing the annual secretarial audit if the company meets the prescribed thresholds. Companies with turnover exceeding one hundred crore rupees or paid-up capital exceeding fifty crore rupees must additionally have a full secretarial audit under section 204.
- Obtain DSCs for all proposed directors before filing SPICe+
- Draft bespoke MOA objects clauses that cover the full scope of intended business activities — overly narrow objects clauses create problems when the business pivots
- Draft bespoke AOA with share transfer restrictions appropriate to the company's stage and investor base
- File Form INC-22 (registered office) within thirty days of incorporation
- Hold the first board meeting and appoint the statutory auditor within thirty days
- File Form INC-20A (declaration of commencement of business) within 180 days
- Open a current account in the company's name and credit the subscription amount before filing INC-20A
- Maintain all statutory registers from Day 1
- Set up a compliance calendar covering board meeting notices, AGM, ROC filings, and statutory audits
- If foreign subscribers are involved, file Form FC-GPR with the RBI through the authorised dealer bank within thirty days of allotment