Who Can Register a Company in India? Eligibility, Legal Requirements & Promoter Criteria 

India ranks among the most active business incorporation markets in Asia, with more than 1.57 lakhs new registrations in FY2024. For foreign investors and NRIs, the doors are wide open, and the legal framework under the Companies Act,2013 makes this path clear and accessible. The starting point is knowing who can register a company in India and what that means for your specific profile. 

That is exactly what this blog covers. From eligibility and structure-specific requirements to promoter criteria, documents, and compliance essentials, you will find everything laid out in a straightforward way below. 

Eligibility Criteria for Registering a Company in India 

Not many realise how accessible India’s incorporation framework is. Under Companies Act, 2013, any person or entity can register a company here, provided the business serves a lawful purpose and the necessary regulatory requirements are met. There is no discrimination on the basis of profession, financial standing, or past business experience.  

Registration for foreign investors majorly follows the same rules as Indian ones. However, it is mandatory for foreign investors to have at least one Indian director. The rest of the criteria remains same: 

• Every individual involved must have crossed the age of 18. Minors, persons of unsound mind, and those declared insolvent by a court are not eligible to participate. 

• Holding Indian residency as a director requires having stayed in India for no fewer than 182 days in the preceding financial year. This is a hard legal requirement, not an approximation. 

• NRIs, OCIs, and PIOs are permitted to incorporate and hold shares across all three structures: Private Limited, Public Limited, and LLP. 

Types of Business Structures and Their Requirements  

India offers several business structures that differ in terms of liability and compliance requirements. If you are a foreign founder or NRI, choosing the right structure is critical. The most preferred and common option for overseas investors is the Private Limited Company. Below iare the available structures: 

Limited Liability Partnership 

An LLP gives partners the best of both worlds, a structured business entity with the ease of a partnership. It stands as a separate legal body, owning its own assets and liabilities without dragging partners into personal exposure. 

Key Aspects: 

• The LLP survives changes in its partner lineup. One partner leaving or another joining does not put the business at risk. 

• What a partner contributes is the most they can lose. Personal finances stay out of the equation. 

• LLPs fall under the partnership firm tax category as defined by the Income Tax Act, 1961. 

Requirements: A minimum of two partners, at least one of whom must be a resident of India with 182 or more days of stay in the country during the previous financial year. 

Private Limited Company 

For anyone building a business with growth plans or investor interest in mind, a Private Limited Company is usually the first choice. It keeps personal and business liability separate, and its shares are not available for public sale. 

Key Aspects: 

• Shareholders are not on the hook for company debts. Their exposure is limited strictly to their shareholding. 

• Compliance requirements are substantial, covering audits, annual returns, and financial statement filings on a regular basis. 

• The company does not depend on who owns or manages it. It continues as a legal entity through any ownership transitions. 

Requirements: Two directors and two shareholders at minimum, with a registered office address in India. 

Sole proprietorship 

It is the simplest form of business structure in India. It is owned and managed by a single individual. This structure is generally not recommended to foreign founders and NRIs. 

Key aspects: 

• The proprietor holds unlimited liability, meaning personal assets can be used to settle business debts. 

• The income generated from the business is taxed as the personal income of the owner under the Income Tax Act, 1961. 

Requirements: There is no minimum number of directors or shareholders required. 

One Person Company (OPC) 

This business structure allows only a single entrepreneur to operate a corporate entity with limited liability. This structure is ideal for individuals who are looking for the benefits of the company structure without the need for partners. The individual should be a resident of India. 

Key aspects: 

• It has its own legal identity. 

• OPC must convert to a private limited company if its turnover is above 2 Crores or its paid up capital is above 50 Lakhs. 

• OPCs have less compliance burden, as they are exempted from calling any AGM and preparing any cash flow statement. 

Requirements:  it requires only one director and one shareholder, who must be the same person. 

Note: Foreign founders, NRIs and overseas entities are NOT eligible to form an OPC. 

Who Can Register a Company in India?  Legal Requirements 

To register a company in India, there are certain legal requirements that are governed by the Companies Act, 2013 and administered by the Ministry of Corporate Affairs (MCA). The law clearly lays down the legal requirements that every promoter and director must fulfil. For foreign founders and NRIs, these requirements are straightforward and can be completed remotely. Let’s look at the key legal requirements to register a company in India: 

• The company must be formed for a lawful purpose only. The main objectives of the company must not be illegal, immoral, or against public policy. MCA will reject any application if the proposed business activity is prohibited or restricted under Indian law. 

• Every company must meet the minimum requirements based on its type. For example, in Private Limited Companies at least one director of the company must be a resident of India (Section 149(3) of the Companies Act, 2013).  

• Every company must have a registered office address in India from the date of incorporation. This address will be used for all official communications from the government. 

• The appointed directors must be at least 18 years of age and should have a valid Director Identification Number (DIN). 

Certain business activities also carry sector-specific legal requirements. Here are some key examples: 

1. Information and Technology (IT)

If you are setting up a consulting or SaaS company, then you must stay compliant with data protection under the Digital Personal Data Protection Act, cybersecurity guidelines and GST registration.  

2. Pharmaceuticals 

While operating a pharmaceutical company, you must have a Drug Manufacturing License from CDSCO/State Drug Controller, the WHO-GMP certification and an import/export license. 

3. Defence and Aerospace  

In this sector you will be required to get an Industrial License from Ministry of Defence, security clearance, and strict technology transfer rules. 

4. Banking and Financing Services 

RBI approval and “fit and proper” criteria for directors and minimum capital norms are required for this sector. 

5. Food Sector and Beverages 

For food processing and manufacturing, you must have a FSSAI License and some other licenses depending upon the specific activity. 

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Who is a Promoter: Criteria to Become a Promoter  

A promoter is essentially the founding force behind a company. This is an individual or group that had the idea and then decides to formalise it into a business structure. The Companies Act, 2013 does not treat this role lightly. Promoters are legally recognised figures with specific obligations tied to their position. 

Legal Definition of a Promoter 

Under Section 2(69) of the Companies Act, 2013, a person is considered a promoter if: 

• Their name appears as a promoter in the company’s prospectus or annual return. 

• They exercise control over the company’s affairs, whether directly or through others. 

• The Board of Directors routinely acts on their advice or instructions. 

Promoter Criteria and Eligibility 

Becoming a promoter has its conditions. Here is what you need to satisfy under Indian company law: 

• The minimum age requirement is 18 years. 

• You should have no active disqualification under the Companies Act. Common disqualifiers include a conviction for fraud or moral turpitude within the past five years, being an undischarged insolvent, or having been debarred by the MCA or SEBI. 

• As a promoter, you are required to sign the Memorandum of Association in the capacity of a subscriber. 

• A declaration and affidavit affirming the truthfulness of all incorporation details must be filed as part of the process. 

Process of Company Registration in India 

Registering a company in India today is a largely online exercise. For NRIs and foreign nationals managing this from abroad, that makes a real practical difference. The process is sequential and straightforward: 

1. All directors and subscribers must first obtain a Class 3 Digital Signature Certificate.
2. Each director then needs to apply for a Director Identification Number (DIN). 
3. Move to Part A of the SPICe+ form and reserve a company name. It must be unique and clear of existing registrations. 
4. Once the name is approved, complete Part B of SPICe+ with all required details and upload the MoA and AoA. 
5. Pay the registration fee and receive the Certificate of Incorporation to conclude the process. 

Documents Required for Company Registration  

The documents required for company formation are listed below. Foreign documents must be notarised and apostilled.  

Company Level Documents: 

• Certificate of incorporation 

• Memorandum and Articles of Association (MoA & AoA) 

• Details of directors and shareholders (name, address, passport copy) 

• Board resolution authorising setup in India 

• Notarised and apostilled copies of all foreign documents 

The documents required from each director and shareholders: 

• Self-attested passport 

• Address proof  

• Passport-sized photograph 

• Director Identification Number (DIN) 

• Digital Signature Certificate (DSC) 

• Business visa and proof of legal stay in India (if applicable) 

• Notarised and apostilled documents (if issued outside India) 

• Shareholding details 

Restrictions and Disqualifications 

While company registration process in India is a simple and straightforward process, there are some restrictions and disqualifications to keep in mind. They ensure that only genuine and compliant individuals can form or run a company. The following persons or entities are disqualified from registering a company in India:  

• Minors and anyone a court has declared mentally unsound cannot take on the role of promoter, director, or shareholder. 

• If a court has declared you insolvent and you have not been discharged from that yet, you cannot be part of any incorporation. 

• A criminal conviction for fraud, moral turpitude, or a company law violation that resulted in six months or more in prison comes with a five-year bar. That five year starts only once the sentence has been fully served. 

• A debarment issued by the MCA, SEBI, RBI, or any court removes your eligibility to act as a promoter or director. 

• Ongoing criminal cases connected to economic offences also make a person ineligible. 

 Specific Disqualification for Directors: 

An Individual cannot qualify to be appointed as a director if he/she: 

• Has not filed the financial statements or annual returns for any company for three continuous years. 

• Has been convicted of any offence related to company management or promotion. 

• Is a director in more than 20 companies at the same time. 

• Has failed to repay deposits or interests. 

Conclusion 

The process of registering a business in India by a foreign entity or NRI is far easier than one might initially think.  The question of who can register a company in India is made distinctly clear under Indian law. Additionally, the government has made consistent efforts to ease the process over the last decade. However, knowing the process and successfully executing the process are two entirely different things, and mistakes can prove to be costly. 

That gap between knowing and doing is exactly where Stratrich comes in. We work with foreign founders and NRIs to make sure their incorporation is done right the first time, with the structure that fits their goals, the documents in order, and a compliance plan that does not fall apart six months later. India is a market worth entering. We make sure you enter it properly.