HOW TO REGISTER A COMPANY IN INDIA? | METASTARTUP #6

now that you decided on company name it's time to actually go out and register the company now because we might be raising capital in the future we are gonna be registering a private limited company for all means and purposes there are many types of companies but we are going to focus on private limited companies and limited liability companies a limited liability company is a simple company shell where each individual person in the company pays tax by themselves whereas a private limited company is a legal person it can be born it can die and it pays tax by itself and does not pass off its tax liability to its partners also if you ever want to raise capital in the future you will need to have a private limited company as it is very rare to see a VC invest in an LLC this is not because LLC's are bad but because VC's have their own regulatory requirements and private limited companies happen to fit those regulatory requirements another thing about private limited companies is that each private limited company requires two directors at minimum now while you've probably heard stories of companies with 5 10 even 15 co-founders my suggestion would be to just have two co-founders anything above 2 creates politics in the team and we're going to get into this a little later but your core team should ideally be just two co-founders who work together and who apply for the ROC together the fastest and most convenient way to do this is to either contact a local Chartered Accountant or to go to sites like Mikheil search or india filings and register a new company remember to check the private limited company option now there'll be a lot of documentation and going back and forth but in general each person in the company has to buy shares each co-founder in the company in our case because we have two co-founders each of the co-founders will need to buy shares in the company the typical number of shares in a newly registered Private Limited company is ten thousand the price of each of those shares is ten rupees if you multiply ten thousand by ten rupees you will get something called an authorised capital which is one lakh in the beginning the paid up capital of the authorised capital which will be same in the beginning will be one for a company now between you and your co-founder you have to decide who owns how much of the company a lot of newbie co-founders always decide on 50/50 now I always believe that the person who is the CEO of the company should have higher equity than the non CEO co-founder this is simply because the CEO absorbs more risk than any other co-founder unlike conventional advice the first investors in the company are always the promoters or the co-founders of the company the ROC considers the word promoter to be equivalent to the word co-founder for all means and purposes there are exceptions but for this video let's assume they're both the same thing promoters have to buy shares in the company they are the first investors so if you own say 40% of your company and your co-founder owns 60% of your company then your co-founder will actually have to buy shares at rupees 60000 while you 40,000 now your representative at mckeil search or india filings will tell you exactly how and where to transfer this money to buy your or purchase your shares the next thing they will be doing is to finish up your MOA which is a memorandum of association and an AOA which is an articles of association now these are two documents that kind of define what your company will do what the responsibilities of the directors or the promoters of the company are and how that works at this point you will also be given two small US wheat biscuits which you will use to generate something called the director identification number that is the company are people who are actually involved in the day-to-day activities of the company in this case the promoters will also be the directors co-founders now when I start my first company all of the signing kind of frustrated me right I'd have to sign one document and there was not the document I got confused because I felt like I didn't clearly understand all these documents in one go the good thing is that you don't have to these are generic documents that almost every company in the world in their respective jurisdictions will sign in the future you are gonna get a chartered accountant who helps you out especially you during auditing season and will run you through what's important and what's not