Doing Business in India - RSM Austria

Draft copies of the memorandum, articles and prospectus should be submitted to
the stock exchange for approval in case the company wishes to list its shares by
offering the same to the members of the public.
2.1.4 Registration Fees and Stamp Duty
The costs associated with incorporation of a company relate to drafting and printing
of the Memorandum and Articles of Association, stamp duty and company
registration fee which is linked to the quantum of authorised capital.
Registration fees are calculated on a specified scale based on the company’s
authorised share capital. The minimum fee of Rs. 4,800 (about US$ 107) applies to
companies with authorised share capital up to Rs. 100,000 (about US$ 2,223). The
maximum amount of registration fee payable is Rs. 20 million (about US$ 444,543).
Stamp duty is payable on the basis of authorised share capital which varies from
state to state. (1 US$ = Rs. 44.99)
2.1.5 Certificate of Incorporation
The Registrar of Companies on being satisfied that all the requirements pertaining
to incorporation have been met and the objectives of the company being
considered are lawful, issues the Certificate of Incorporation. The Company
thereafter comes into existence as a legal person distinct from its members. A
private limited company can commence business upon obtaining the Certificate of
Incorporation. A public limited company on the other hand has to further obtain a
Certificate of Commencement of Business from the Registrar after filing the
prospectus / statement in lieu of prospectus before commencing business or
exercise any borrowing powers.
Where a company has issued a prospectus inviting the public to subscribe to its
shares, the company cannot commence business until the amount of minimum
subscription stated therein has been received.
2.2 Initial Capital Requirements
The minimum paid-up capital required for a private limited company is Rs. 100,000
(about US$ 2,223) and for a public limited company is Rs. 500,000 (about US$
11,114).
The minimum paid up equity capital for a public limited company to get its shares
listed on the stock exchange is Rs. 100 million (about US$ 2.22 million), and at least
25% of the issued capital must be offered to the public for subscription. 10% of the
issued capital can be offered to the public for subscription in case the size of the
offer to the public is Rs. 1 billion (about US$ 22.23 million) or more and the offer is
through book building method. However, the minimum equity capital is much lesser
for listing on the Over the Counter Exchange of India. For listing on the Bombay
Stock Exchange and National Stock Exchange, the minimum paid up equity capital
should be Rs. 100 million and the market capitalization of the applicant’s equity shall
not be less than Rs. 250 million (about US$ 5.56 million) provided however that the
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