IN BRIEF

Before you incorporate a private limited company, you decide eight things that shape it for years: authorised capital, shareholding split, directors, registered-office city, breadth of objects, how paid-up money comes in, the name, and exit terms between co-founders. Decided in order before filing SPICe+, these choices prevent resubmissions, deadlocks and costly changes later.

Most founders decide these eight things in the wrong order. They pick a name first, fall in love with it, and only then think about capital, ownership and who will actually run the company. I see the result every month. A hurried filing comes back for resubmission. Or worse, it goes through cleanly and the real argument starts a year later, when money, roles and exits can no longer be settled over a friendly cup of tea. Slow down for one evening before you file. Work through this list in order. Each choice is cheap to make now and costly to remake later.

The short answer: decide your authorised capital, your shareholding split, your directors, your registered-office city, the breadth of your objects, how the paid-up money will come in, your name, and your exit terms with co-founders — in that order — before anyone opens the SPICe+ form. Get these eight right and incorporation becomes a filing exercise. Get them wrong and the form still goes through, but the company carries the flaw for years.

1. How much authorised capital should you set?

Authorised capital is a ceiling, not a deposit. It is the most share capital your company is allowed to issue, and you do not park that money in a bank on day one. The Ministry charges no SPICe+ filing fee for authorised capital up to ₹15 lakh, and the fee turns slab-based above that line. Stamp duty also rises with capital in most states. So think ahead, honestly. If a fundraise or a large allotment is likely within a year or two, set a ceiling that leaves room. If not, stay modest. Raising the ceiling later is doable, but it means a resolution, a filing and fresh duty.

2. How will you split the shareholding?

This is the conversation founders postpone. Please do not. A 50-50 split feels fair on day one and can deadlock the company on day four hundred, when one founder wants to raise money and the other wants to wait. Tie the split to what each person brings and will keep bringing — cash, full-time work, clients, product, risk. Put the reasoning in writing, even briefly. You also need at least two shareholders to start, and a private company can have up to 200 members, so there is room to bring in family or early backers later without restructuring the whole cap table.

3. Who should sit on the board as directors?

A private limited company needs at least two directors, and the same two people can be both directors and shareholders. At least one director must be resident in India, meaning they stayed here for 182 days or more in the relevant year. Pick for reliability, not sentiment. Directors sign, attend board meetings, carry duties under the Companies Act and face penalties when filings slip. A director who travels constantly, ignores messages or hates paperwork will cost you. Keep the board small at the start. You can appoint more directors later, up to fifteen without a special resolution, as the company grows.

4. Which city should hold the registered office?

Your registered office is not a mailing detail. Its state fixes which Registrar of Companies handles your company afterwards, and it fixes the stamp duty you pay on the memorandum and articles at incorporation. That duty differs sharply from state to state. Choose where the business will genuinely operate and where records can be kept and produced when an inspector or a bank asks. A rented office, your own premises or a co-working space can all work, with a no-objection certificate from the owner. Moving states later is possible. It is also slow, paper-heavy and best avoided by choosing well once.

5. How wide should your objects clause be?

The objects clause in your memorandum says what the company exists to do. Draft it too narrow and your first pivot, your second product line or that adjacent service a client begged for sits outside your own constitution. Draft it with care and breadth around your real plans. Think of it like a courtyard wall. Build it wide enough for the house you may actually grow into, not so wide that it stops meaning anything. Changing the objects later needs shareholder approval and a filing with the Registrar. That is a meeting, a resolution and a delay you can spare yourself today.

6. How will the paid-up money actually come in?

There is no minimum paid-up capital in law now. The old ₹1 lakh floor was removed years ago. But whatever amount you show as subscribed, the subscribers must actually pay for the shares they took, through banking channels, into the company account. Keep the trail clean. Cash that cannot be traced creates trouble you do not need. Within 180 days of incorporation you file Form INC-20A declaring that the subscribers have paid and the company may commence business. Plan the money movement before you incorporate, not after the bank account opens. Your future self will thank you quietly.

7. Have you tested the name properly?

Now the name. It must end with the words Private Limited, and it must not match or closely resemble an existing company, LLP or registered trademark. Close is enough to fail. Plurals and clever spacing do not save a similar name. Check the MCA database, search the trademark registry and do a plain web search for anyone already trading under it. An approved name is held for a short window, so keep your documents ready before you reserve it. I have set out the checks that work in my guide to how to select a company name that gets approved.

8. What are your exit and handshake terms?

Talk about leaving while everyone still likes each other. Who can sell shares, and to whom first? What happens if a founder stops working full-time, falls ill, or simply wants out in year three? How is the price set when no market exists for unlisted shares? A short founders' agreement covering transfer restrictions, a right of first refusal, valuation basics and what counts as a deadlock — and how you break one — protects the friendship as much as the company. Handshakes feel warm. Paper lasts longer. Get a professional to draft it before money and egos grow teeth.

Eight decisions. One evening of honest discussion, ideally two. Founders who do this work first file faster, argue less and raise money on cleaner paper, because investors read your early choices as a sign of how you run things. Keep your documents ready alongside — my checklist of documents required for private limited company registration shows exactly what the SPICe+ filing will ask for. Then file once, file clean, and get on with building the business you incorporated the company for in the first place.

Ready to put these eight decisions into a clean filing? Our team at ComplyKart will walk you through each one and handle your private limited company registration end to end, with a written fee breakup before you pay anything. Tell us where you are stuck — capital, split or name — and we will map the shortest safe route to your certificate of incorporation.