India has seen steady growth in the rise of software companies in the last decade. The startup ecosystem of India is the 3rd largest in the world and this has been made possible by globalization and various technological advancements. The Government of India has provided various funding schemes and other offers to encourage the establishment of new ventures in the IT sector. This conducive environment has seen accelerated growth in the number of startups in India. Software companies are an integral part of the economy of India, as can be seen by the fact that they contributed to 8% of the GDP of India and generated a revenue of 195 billion Dollars in the year 2021.
Owning and starting a software company in India is a lucrative venture, but one also needs to be aware that a company cannot run without obtaining a valid registration with the Registrar of Companies. The Ministry of Corporate Affairs (MCA) regulates the registration of companies, and it requires companies wishing to get registered to adhere to certain legal and regulatory compliance and follow certain set procedures. This article aims to shed light on the process of software company registration in India.
Types of Software Companies
The major types of software companies are as follows:
- Software companies like Wipro, Infosys which specialize in providing services like, inter alia, engineering services, outsourcing services, business consulting
- Software companies like, inter alia, Microsoft, Google, Meta which focus on product development and specialize in creating software products.
Steps Involved in Software Company Registration in India
To register a software company in India, one needs to adhere to many regulatory and legal compliances. The owner of a software company looking to register her company with the Registrar of Companies must do it through the official website of MCA or the Ministry of Corporate Affairs. The steps involved in software company Registration in India are laid down below:
- Apply for Digital Signature Certificates
All the shareholders and directors who have subscribed to the Memorandum of Association (MoA) & Articles of Association (AoA) must obtain Digital Signature Certificates or DSC. Digital Signature Certificate is imperative to legally sign documents digitally and ensure a safe way to electronically submit documents. It is also a necessary component while filling out any form on the Ministry of Corporate Affairs website. A Digital Signature Certificate is valid for a period of 2 years and can be obtained by approved agencies authorized by the Controller of Certification Agencies or CCA.
- Apply for Director Identification Number
Directors of the proposed software company must obtain a valid Director Identification Number or DIN by filling out an application as provided under Form DIR-3 on the Ministry of Corporate Affairs website. One needs to open a registered user account on the Ministry of Corporate Affairs portal for this step. It is imperative to have a Digital Signature Certificate before one can apply for a Director Identification Number. The proposed directors need to submit identity proof like Aadhar Card, Voter ID Card, Passport or Driver’s License and address proof like utility bills, Voter ID Card, Passport, Driver’s License.
- Submit the Relevant Documents for Software Company Registration
One needs to submit relevant documents for software company registration like the Articles of Association, Memorandum of Association, identity proof, address proof and residential proof of directors of the company, registered office proof like a sale deed or lease deed of the office premises along utility bills of the office premises and a NOC from the landlord if the office premises is rented space. All these documents shall be submitted to the Registrar of Companies through the Ministry of Corporate Affairs portal.
- Registration of a Distinct Company Name
The next involves reserving and registering the name of the company with ROCs or the Registrar of Companies. The company must reserve a distinctive name for itself by filling out Part A of the Spice + Form and proposing two distinctive names in the Form.
- Apply for the Corporate Identification Number
Corporate Identification Number or CIN, is a number which is unique to every company and can be used to check the activities of the company. Once the legal status of a company as a Private Limited Company/an LLP/a sole proprietorship has been decided, one can apply for the Corporate Identification Number to the Registrar of Companies. The Registrar of Companies shall provide the Corporate Identification Number only after assessing the necessary forms and applications filed and after being satisfied with the sufficiency of the same.
- Apply for a Certificate of Incorporation
After the Registrar of Companies has scrutinized, reviewed the applications and documents submitted and verified the same, the next is to apply for the Certificate of Incorporation. The PAN and TAN for the company are provided along with the Certificate of Incorporation. The incorporation certificate is proof of the registered status of the company.
The certificate of incorporation, once granted, remains valid perpetually and till the time the company winds up. Generally, the time expended in registering a company is anywhere between ten to fifteen days if one has all the required documents prepared and in place.
Software Company Registration involves following many legal procedures and regulatory and other compliances as provided by the Ministry of Corporate Affairs. One should be mindful and aware of all the legal processes involved in the registration process, and keep themselves prepared with all the requisite documents to obtain a valid registration in the least amount of time. Obtaining valid software company registration allows software companies to avail many benefits provided by the government.
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