Company Registration

What is the Role of MCA in Company Registration?

calendar29 Feb, 2024
timeReading Time: 5 Minutes
Role of MCA in company registration

All companies in India are subject to MCA regulation and are required to register under the Companies Act of 2013. A corporation that registers with the MCA becomes legally recognized and becomes an independent legal entity from its owners. Benefits of this recognition include the capacity to own property and engage in contracts, limited liability protection for the company’s owners, and access to a range of finance options.

Role of MCA in Company Registration

A common goal among entrepreneurs is to start a business that supports creative ideas. But the work doesn’t stop with starting a business. A corporation must be registered with the Ministry of Corporate Affairs (MCA) by a business person. One of the most important steps in starting a business in India is registering a corporation. This is when the role of MCA in company registration comes into play.

One of India’s government ministries is the Ministry of Corporate Affairs. Its main focus is on the administration of various laws, including the Companies Act of 2013, the Companies Act of 1956, the Limited Liability Partnership Act of 2008, the Insolvency and Bankruptcy Code of 2016, and other related Acts. These laws and regulations are primarily designed to control how the corporate sector operates in compliance with the law.

The primary role of MCA in company registration is to regulate Indian businesses operating in the industrial and services sectors. Facilitating company formation and keeping an accurate database of corporate organizations in the nation is another important role of MCA in company registration.

List of Role of MCA in Company Registration:

  • Administration of Corporate Laws:

Ensuring that businesses adhere to legal requirements is the main role of MCA in company registration and administering corporate laws, such as the Companies Act, 2013 and the Limited Liability Partnership Act, 2008.

  • Preserving Fair Competition:

The role of MCA in company registration also extends to overseeing the Competition Act of 2002, which is essential to preserving fair competition in marketplaces.

  • Supervision of Professional Bodies:

To ensure the orderly growth and adherence to regulations of professional bodies like ICAI, ICSI, and ICAI. The role of MCA in company registration is to supervise.

  • Managing Other Acts:

MCA administers other acts that add to the regulatory environment, such as the Partnership Act 1932, the Companies (Donations to National Funds) Act 1951, and the Societies Registration Act 1980. There are various other roles of MCA in company registration as well.

Why Register a Company Under MCA?

The role of MCA in company registration is very important, so a company should register with MCA in India for a number of reasons:

  • Legal Recognition:

A corporation that registers with the MCA becomes legally recognized and becomes an independent legal entity from its owners. Benefits of this recognition include the capacity to own property and engage in contracts, limited liability protection for the company’s owners, and access to a range of finance options.

  • Credibility:

A company’s credibility and reputation in the market are improved by registration with the MCA. It reassures clients, partners, and investors that the business is reputable, compliant with regulations, and dedicated to openness and responsibility.

  • Funding Accessibility:

Banks, financial institutions, and investors provide a range of funding options to registered businesses, including grants, loans, and equity investments. It might be challenging for a company to get capital and expand without registration.

  • Limited responsibility:

Stockholders who get their company registered with the MCA are protected from personal responsibility up to the amount of their ownership in the company. The assets of the shareholders are protected against the liabilities of the corporation by this safeguard.

  • Compliance:

A company’s registration with the MCA guarantees that it abides by all relevant laws and rules, including the Income Tax Act of 1961 and the Companies Act of 2013. Adherence to these regulations fosters sound business governance and helps prevent legal and financial ramifications.

Company Registration with MCA: Process

The Indian company registration procedure has been made more accessible and user-friendly by the MCA. The following are the crucial actions to take:

  • Obtain Digital Signature Certificate (DSC):

Getting a DSC for the company’s intended directors is the first step. An electronic signature, known as a DSC, is used to confirm the legality of digital documents. It is available from commercial organizations that the MCA has approved.

  • Make an application for a Director Identification Number (DIN):

Each proposed company director has to have a special DIN. This may be accomplished by submitting an online application to the MCA together with the required evidence of identity and address paperwork.

  • Apply for Name Approval:

Choose a distinctive name for your business and submit an application to the MCA for approval. The name must not be confusingly similar to any already-existing brand or corporation and must comply with MCA criteria.

  • Prepare and File Incorporation paperwork:

Following approval of the name, the required incorporation paperwork, including the Articles of Association (AOA) and Memorandum of Association (MOA), must be prepared. The company’s goals, financing structure, and internal policies are described in these documents. After signing, the paperwork is submitted to the MCA for review.

  • Obtain Certificate of Incorporation:

The MCA will grant a Certificate of Incorporation if it deems the submitted documentation satisfactory. This document establishes the company’s official legal existence and acts as definitive proof of its registration.

  • Apply for Tax Registration and Permanent Account Number (PAN):

Following the acquisition of the Certificate of Incorporation, the business has to submit an application to the Income Tax Department for a PAN. In addition, if the yearly turnover surpasses the designated threshold, registration for Goods and Services Tax (GST) becomes mandatory.

The role of MCA in company registration is very vital, so following the above steps with expert guidance and assistance, you can register your company.

Consequences of not Registering a Company with MCA

In India, the role of the MCA in company registration is crucial; failing to register a corporation with the MCA can have dire repercussions. Some possible outcomes are as follows:

Penalties:

All companies are required to register with the MCA in accordance with the Companies Act of 2013. Should a business neglect to comply, it may face fines or penalties. The fine for failing to register a corporation might reach Rs.10,000 for each day that the default continues.

No Legal Recognition:

A business is not regarded as a distinct legal entity from its owners if it is not registered with the MCA. As a result, any debts or legal problems the business may have might make its owners personally accountable. The business is also unable to enter into agreements, possess real estate, or make use of different funding sources.

Limited commercial possibilities:

A company must be registered with the MCA in order to take advantage of several commercial possibilities, including government contracts. The business might not be able to take advantage of these prospects without registering.

Difficulty Obtaining Funding:

Before making an investment or extending a loan to a company, banks and investors usually demand that the company be registered with the MCA. If the business isn’t registered, it can have trouble getting the money it needs to develop and flourish.

Company Registration with Corpbiz

With experts helping you at Corpbiz, our clients get expert guidance and assistance throughout the company registration, along with post-compliance assistance. With this blog, we are now aware of the role of MCA in company registration, and hence, it is essential to get your company registered with MCA.

Frequently Asked Questions

  1. What is the role of MCA in company registration?

    The administration of the Companies Act of 2013, the Companies Act of 1956, the Limited Liability Partnership Act of 2008, and other related Acts, rules, and regulations primarily aimed at regulating the corporate sector's operation in compliance with the law are the primary role of MCA in company registration.

  2. Is MCA registration of a company required?

    There are several kinds of businesses that one can establish. Your company must be registered with the MCA in order to be established. Every business has its own set of registration processes.

  3. How many businesses are MCA-registered?

    The states with the most registrations for FY 2021-2022 were Karnataka (13,403 businesses), Tamil Nadu (11,020 companies), Uttar Pradesh (16,969 companies), Delhi (16,323 companies), and Maharashtra (31,107 companies).

  4. What is the role of MCA in company registration for fair competition in the marketplace?

    In order to preserve fair competition in marketplaces, MCA is responsible for enforcing the Competition Act of 2002.

  5. What other activities outside corporate laws does MCA oversee?

    The MCA contributes to the regulatory environment by supervising laws such as the Societies Registration Act of 1980, the Partnership Act of 1932, and the Companies (Donations to National Funds) Act of 1951.

  6. Why is MCA registration so important to companies?

    In addition to guaranteeing legal conformity and providing legal protection and permanent succession, MCA registration also increases credibility and grants access to government perks and programs.

  7. What is the procedure for registering under MCA?

    The process entails getting a Digital Signature Certificate, requesting a Director Identification Number, deciding on a company name, filling out e-forms, submitting incorporation papers, and paying the registration cost.

Read Our Article: What Is Form DPT-3 MCA And How To File It?

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