15 March 2021

How to Register a Company in Kerala: Everything You Need to Know

by Sneha
How to Register a Company in Kerala: Everything You Need to Know

Businesses and start-ups are being encouraged all over India as per new and enhanced government policies. Likewise, Kerala is also promoting newer companies. In fact, Kerala is one of the most favored startup hubs in India with Kochi being the top choice for setting up a business.

New companies and businesses are being highly promoted in and around Kerala, thanks to the Chief Minister's start-up friendly economic policies backed by Central Government aid.

Every new venture should be registered under the Companies Act of India before it can start its business operations in Kerala or anywhere in India. There are many legal formalities that one should keep in mind while starting and registering a business.

That’s why in this article, we are going to cover everything you need to know about registering a company in Kerala. Let’s dive in:

Types of Business Structures in Kerala

If you’re starting a new business or company in Kerala, you must first choose the entity of your business. There are various business structures. Let us look at the different business entities in the list below:

1. Sole Proprietorship:

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2. Partnership :

A partnership business is a contractual relationship that is established by an agreement between two or more companies or individuals. The business partners put in monetary investment in the business and each partner is entitled to profits and losses.

3. One Person Company (OPC):

One Person Company (OPC) is a new type of business entity introduced by the Indian government in 2013 where one person owns a company. Before that, a single person could not incorporate a company. You needed a minimum of two directors to do that.

So there arises a question - Since I want to start a business alone, why would I need to incorporate a company if I can opt for a sole proprietorship?

The simple answer to that is, Incorporating a company will help you limit your liabilities and avail extra tax benefits. Since you’re the sole director and have complete control over the company.

4. Limited Liability Partnership (LLP):

Limited liability partnership is the one where every partner is in the ownership of limited liabilities. Therefore, it can exhibit the elements of corporations as well as partnerships. In an LLP no other partner is responsible for the liabilities of the negligence or misconduct of the other partner. LLP is different than the traditional partnership system.

5. Private Limited:

A private limited company comes with limited liabilities. The private limited company limits the liability undertaken by the members. Private limited companies are one of the most common companies that are registered.

6. Public Limited:

A public limited company was registered under the Company Act of 2013. Such a company features limited liabilities and offers company shares to the public. The stocks of such companies can be obtained by anyone. The stocks can be obtained by either investing in IPO (initial public offering) or via stock market trading.

Why is it Important to Choose the Right Business Structure?

Selecting a correct business structure is quite an important decision that any company or business owner must make. The business structure widely impacts the economic success of a company as it affects taxation, security of your assets, and the continuation of the business at the time of ownership change.

If your initial investment is low then you should consider going for a partnership or sole proprietorship rather than a private limited company. Setting up a private company can turn out to be expensive as you would have to spend anywhere between 15-20K to get your company registered which includes Government fees and charges levied by a Chartered Accountant.

But if your business has two or more owners and is actively seeking new investment from other ventures, then a Private Limited Company or Limited Liability Partnership (LLP) is the best choice for you.

Basic Requirements to Register a Company in Kerala

Listed below are some of the basic requirements of registering a private company in Kerala:

1. There must be a minimum of two shareholders and directors to register a private company in Kerala.

2. A valid Digital Signature Certificate (DSC) of the directors is required to complete the online registration process.

3. Choose a relevant name for your business. Check the availability of the name and have your company name registered.

4. A registered office address is mandatory to register a private limited company in Kerala. This will be the official address used for all business communications.

5. The shareholders of the company should raise the share capital within 180 days of the incorporation of the company. Once done, the company can start the business operations after receiving the business commencement approval from the Registrar of Companies.

Basic Steps to Register a Private Company in Kerala

There are six key steps to be followed under the Companies Act 2013 to successfully register a company in Kerala.

Step 1. Obtain a Digital Signature Certificate (DSC)

Step 2. Obtain a Director Identification Number (DIN)

Step 3. Get Company Name approval from Registrar of Companies (ROC)

Step 4. Draft Memorandum of Association (MoA) and Articles of Association (AOA)

Step 5. File MOA and AOA with Registrar of Companies (ROC)

Step 6. Obtain Certificate of Incorporation from ROC.

Let’s check out the company registration process in detail:

Availability of Company Name

The chosen name of your company must be unique in India. In a couple of days, one can get a confirmation from the ROC (Registrar of Companies) about the availability of the name that you apply for.

Documentation

Once the name of the company is accepted, you need to draft and submit the Articles of Association (AOA) and the Memorandum of Association (MOA) to the ROC.

Filing & Registration

One needs to file AOA and MOA with ROC along with Declaration of compliance (Form 1), details of the registered office address of the company (Form 18) & Details of Directors (Form 32).

On submission of the documents mentioned above, your company will get registered and a digital Certificate of Incorporation (COI) will be issued by the ROC, which can be verified on the MCA website.

Documents Required for Company Registration in Kerala

The following are the documents required at the time of company registration in Kerala:

1. Address & ID proof of Shareholders and Directors of the Company

The directors and the shareholders of the company have to submit the address and identity proof at the time of company incorporation.

PAN Card (Permanent Account Number), Aadhar card, driving license, etc can be submitted as proof of identity, while the latest telephone bill, electricity bill, or bank statement can be presented as the address proof.

2. Address proof of the registered office address

The latest copy of an electricity bill or water bill should be submitted to confirm the address of the registered office. In addition to this, a NOC from the owner of the property is also accepted.

3. Director Identification Number (DIN) of all directors

4. Digital Signature Certificate (DSC)

5. Original copy of the formal letter by ROC about availability of company name

Benefits of Registering a Company

There are many benefits to registering your company. A registered company tends to have the most credibility in the market and helps attract more potential customers. With registration comes reliable investors, greater stability, and bigger commitments. All in all, great scope of progress and prosperity.

Thanks to digitalization, getting your company registered has become way easier now than a few decades ago. The Ministry of Corporate Affairs (MCA), under the Companies Act 2013, has made the new company registration process so seamless and straightforward. You can file all documents online through the MCA website, which means you can get your business registered online without waiting in long government office lines.

Though the process is all digital now, you need in-depth legal knowledge and practical experience to manage the whole process, which is why we would recommend you to go to a professional business consultant who is familiar with the entire process.

If you're looking to start a business in a prominent place in Kerala, we would recommend choosing Kochi since it's one of the country's best startup ecosystems. Due to its investor and startup-friendly policies, Kochi won the honor of being known as a SmartCity.

Recommended Reading: Why You Should Choose Kochi To Start Your Business?

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