Question 1

What is the statutory process for incorporating a private limited company?

Accepted Answer

Incorporation is governed by Companies Act 2013 Section 7. The SPICe+ Form (INC-32) bundles name reservation, DIN allotment, PAN, TAN, GSTIN, EPFO, ESIC, and Shops & Establishments registration in a single e-form filed with the RoC. The Certificate of Incorporation is issued under Section 7(2) and the company's legal existence begins from that date — not the date of SPICe+ submission.

Question 2

How is an LLP registered and how does it differ from a private limited company?

Accepted Answer

An LLP is registered under Section 11 of the Limited Liability Partnership Act 2008 using Form FiLLiP filed with the RoC. Unlike a company, an LLP has no minimum paid-up capital requirement and profits are not subject to Dividend Distribution Tax. However, an LLP cannot raise equity from investors or issue ESOPs, making it unsuitable for venture-backed businesses. The LLP Agreement must be filed within 30 days of incorporation in Form 3.

Question 3

What are the requirements for a Section 8 company (non-profit)?

Accepted Answer

A Section 8 company under Companies Act 2013 is incorporated to promote charitable objects including education, science, commerce, or social welfare. It requires a licence from the Central Government (Regional Director) before name approval. Income applied solely to the objects enjoys exemption under ITA 1961 Section 11 if the entity also registers under Section 12A/12AB. Profits cannot be distributed to members — violation triggers revocation of licence under Section 8(6) and conversion to a regular company.

Question 4

Is there any tax implication when shares are issued at a premium to resident investors after April 1 2025?

Accepted Answer

Angel tax under ITA 1961 Section 56(2)(viib) — which taxed share premium received from resident investors above fair market value as income in the hands of the company — was abolished with effect from April 1 2025 (Finance Act 2024). Closely-held companies can now issue shares to resident investors at any premium without triggering Section 56(2)(viib). FEMA Regulation 4 under FEMA 20(R) still applies pricing guidelines for non-resident investors.

Question 5

What annual compliance is mandatory immediately after incorporation?

Accepted Answer

Every company must file Form INC-20A (Declaration of Commencement of Business) within 180 days of incorporation under Section 10A — failure bars the company from borrowing or starting business. Ongoing annual filings include AOC-4 (financial statements, Section 137), MGT-7/MGT-7A (annual return, Section 92), and DIR-3 KYC for each director. An LLP must file Form 11 (annual return) and Form 8 (statement of accounts) under LLP Act 2008 Rules 24 and 25 respectively.

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