Top 8 Government Schemes For Startups In India

Features of SAMRIDH Scheme

• The SAMRIDH scheme provides your startup which already has brilliant solutions and proof of concept for their product, better facilities to enhance the product using innovative technologies for the market with a solid business plan.
• The scheme provides a platform to enhance your products and secure investment for scaling your business.
• Once your startup gains traction, there is a gap in accessing the growth stage funding to scale up the operations,and the scheme is filling up this gap for startups.
• The scheme supports existing and upcoming Accelerators to select and accelerate potential IT-based startups to scale to solve India's problems and create positive social impact.

Eligibility for SAMRIDH Scheme

For Startups

• Must be recognized by DPIIT.
• Must be in the Early-growth stage.
• The product of the startup must be software-based.

For Accelerators

• Must have operations in India.
• Must have been in the business of incubation for more than three years and supported more than 50 startups.
• Must have the required infrastructure and targeted acceleration programs.

Application procedure for Startups

The application procedure primarily comprises the following steps:

• Visit https://meitystartuphub.in.
• On the homepage, click on “Register” under the Startup section.
• The registration page will appear. Fill in all the requisite details and click on the “Submit” button.
• Following registration, one can "log in" to the page for further access by filling in the username and password.

Benefits of SAMRIDH

• This scheme provides a platform for product development and business scaling in terms of investment.
• To provide customer connect, investor connect, and international connect services.
• Up to Rs 40 lakh will be provided to the startups according to their current valuation and growth stage through accelerators..
• Customized acceleration programs for startups and provided product and capacity enhancement services.

Post-Selection Process for SAMRIDH Scheme

The ​​MeitY SAMRIDH Scheme will be implemented through the MeitY Startup Hub (MSH). The selected Accelerator will be responsible for developing personalized acceleration programmes, and the budget for each startup is Rs. 2 lakh.

The services include- Co-learning, networking, expert diagnosis, and negotiation of investment funding from Angel Investors. A maximum of 10 businesses and a minimum of 5 startups working in the sphere of software products can be helped by a shortlisted accelerator.

MSH will take equity in startups for the government's contribution via Promissory/SAFE Note, the same as Accelerator, which will be utilized to sustain the program.The startup's exit may be executed by MSH or its appointed entity holding the company's equity, subject to approval from SMC. Biannual assessments of startups within the portfolio will be conducted, and the resulting reports will inform decisions regarding exiting from the startup.

Frequently Asked Questions

Rules for Selecting Company Name Under the Companies Act

When you select a company name, it must comply with the Companies Act to ensure uniqueness and legal approval. Here are the key rules to follow:

Avoid Similar or Identical Names

Your company name must not closely resemble an already registered business. The ROC conducts a company name check, and if the proposed name is found to be too similar to an existing one, it will be rejected. For example, if "GreenTech Solutions Pvt Ltd" is already registered, "GreenTech Solution Pvt Ltd" may be rejected due to similarity.

Restriction on Certain Words

You cannot use words that suggest a connection with the Central or State Government, local authorities, or government bodies, unless prior approval is obtained. For instance, names like "India National Bank Ltd" or "Government Infrastructure Pvt Ltd" require special permissions.

Prohibited Expressions

Some words and expressions are restricted under Rule 8B of the Incorporation Rules. You must seek approval from the Central Government before using them in your LLP or company name.

Mandatory Suffix for Entity Type

The company name must clearly indicate its legal structure.

• A One Person Company (OPC) should have "(OPC) Private Limited" in its name.
  
• A Private Company must include "Private Limited" (Pvt Ltd).
  
• A Public Company must end with "Limited" (Ltd).

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A Brief About Acceptable Name for LLP

An acceptable LLP or company name in India consists of three key components. The Name Part that gives the business a unique identity, such as "Bright" in Bright Solutions LLP. The Object Part that reflects the company's activity, like "Solutions" indicating a service-based business. The Constitution Part that defines the legal structure, such as "LLP" in Bright Solutions LLP.

Name Part

The Name Part is the unique and distinguishable element of a company or LLP name. It must comply with the Companies Act 2013 or the LLP Act 2008 and should not be identical or deceptively similar to existing companies, LLPs, or registered trademarks within the same industry. The ROC verifies the name to ensure distinctiveness and prevent duplication.

For example, a name like Bluewave Technologies LLP is acceptable because it is unique and clearly identifiable. However, Bluewave Tech LLP may be rejected as it closely resembles an existing name. Similarly, GreenVista Textiles Private Limited is a valid name, but Green Vista Private Limited may be considered too similar to an existing business and could face rejection. Ensuring a distinct name that does not match or closely resemble an existing company improves the chances of approval.

Object Part

The Object Part in a company or LLP name defines its primary business activity. It must be clearly stated to indicate the company's purpose and ensure compliance with naming regulations.

If two companies have similar name parts but different object parts, both names may still be approved, as long as they belong to distinct industries. However, names without a clear object part or with generic words like "dash Private Limited" are too vague and may be rejected by the ROC because it does not specify what the company does.

Related Read: Difference Between LLP and Partnership

Examples of Common Object Parts in Company and LLP Names

Constitution Part

The Constitution Part indicates the legal structure of the business. It must match the type of entity being registered, ensuring clarity in compliance and business operations. Here are the specific terms which are used for different entities:

• Private Limited Company (Pvt Ltd) - For privately held businesses
  
• One Person Company (OPC) - For single-owner companies
  
• Limited Company (Ltd) - For publicly listed businesses
  
• Limited Liability Partnership (LLP) - For partnership-based entities with limited liability
  

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Minimum Authorised Capital For Certain Words

When registering a company, using specific words in its name requires meeting minimum authorised capital requirements as per the Companies Act 2013. Words like "Corporation," "International," and "Industries" have higher capital requirements to ensure that only financially strong businesses use them. This helps maintain credibility and prevents misuse of these terms by companies with limited resources.

Before you apply to register a company name, verifying the capital requirements is essential to ensure compliance and avoid rejection. The table below outlines the required minimum authorised capital for specific words:

When Will Companies House Refuse to Register a Company Name?

Companies House may reject a name if it does not comply with legal guidelines. Below are the key reasons why a company name may be refused:

• Identical or Too Similar to an Existing Name: If the proposed name is the same or closely resembles an already registered company, it will be rejected.
  
• Offensive or Illegal Names: Any name containing offensive, abusive, or illegal terms will not be approved.
  
• Implying Government Affiliation: Names suggesting an association with the government, public authorities, or international organisations require special approval.
  
• Use of Sensitive Words or Symbols: Certain words, such as "Royal," "Bank," or "Trust," require prior consent before use.
  
• Misleading Use of Business Terms: Using terms like "Limited" (Ltd.), "Public Limited Company" (PLC), or "LLP" incorrectly or misleadingly can lead to rejection.
  

Objections to Company Names

Even after registration, objections to a LLP or company name may arise if it does not comply with legal requirements. Ensuring that the name is unique and non-misleading is crucial to avoiding disputes. Common reasons for objections include:

• Too Similar to an Existing Business: If a company name closely resembles another registered entity, the affected business can file an objection.
  
• Misleading Information During Registration: If false or inaccurate details were provided while registering the name, objections may be raised.
  
• Failure to Meet Registration Conditions: A name that does not adhere to naming regulations or lacks necessary approvals may face challenges.
  
• Opportunistic Registration: If a name is registered to take advantage of another company’s goodwill, it can be legally disputed.
  

Related Read: How much does an LLP cost in India?

How to Check Company Name Availability Online?

Before registering a company, you must check whether the proposed name is available to avoid rejection. The Ministry of Corporate Affairs (MCA) portal provides an online tool to verify company name availability. Here’s a step-by-step guide to checking a company name online:

1. Visit the MCA Website: Go to www.mca.gov.in.
2. Access the Name Availability Tool: Under the ‘MCA Services’ section, select ‘For Services’ from the drop-down menu and then select ‘Check Company/LLP Name’.
3. Enter the Proposed Name: Type the desired company name in the search box and click on the ‘Search’ button.
4. Review the Results: The portal will indicate whether the name is available or already registered.

Additional Checks for Better Approval Chances

• Trademark Search: Use the Razorpay Rize Name Search Tool to check for potential trademark conflicts.
• Alternative Name Options: Verify multiple name options to avoid rejection and ensure compliance with naming rules.

Conclusion

Choosing the right company or LLP name is crucial for legal compliance and brand identity. Ensure the name is unique, relevant, and adheres to MCA guidelines to avoid objections. Conduct a thorough name availability check on the MCA portal and verify potential trademark conflicts before finalising a name. A well-chosen name not only simplifies registration but also builds a strong brand identity while ensuring long-term legal compliance.

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Frequently Asked Questions

What are the Benefits of Company Incorporation in India?

Registering a company in India comes with a host of advantages that can elevate your business to new levels of success. From enhanced credibility to legal protection and access to funding, company registration provides a solid foundation for growth. Let's explore these benefits in more detail.

1. Legal Entity

One of the primary benefits of business registration is that the company becomes a separate legal entity. Under the Companies Act, a registered company is considered an artificial person, distinct from its directors and shareholders. This means that upon incorporation, the company acquires its legal personality, allowing it to own property, incur debts, and engage in legal proceedings under its name.

The concept of a separate legal entity provides several advantages:

• The company can enter into contracts and agreements independently
  
• It can sue or be sued in its name
  
• The company's assets and liabilities are separate from those of its owners
  
• The company's existence is not tied to the lifespan of its members
  

This legal separation is crucial for protecting the personal assets of the company's owners, as they are not personally liable for the company's debts or legal obligations.

2. Perpetual Succession

Company registration ensures perpetual succession, which is a significant advantage for businesses. Perpetual succession means that the company's existence continues indefinitely, regardless of any changes in its membership, staff, or shareholders. This stability is a key benefit of incorporating a business, as it ensures that the company can outlast individual members or leadership changes.

Here are some key points about perpetual succession:

• The company's existence is not affected by the death, retirement, or resignation of its members
  
• Shares can be transferred without disrupting the company's operations
  
• The company remains operational until it is legally dissolved
  
• Perpetual succession allows for long-term planning and execution of business strategies
  

By incorporating your business, you create a stable and enduring entity that can withstand changes in ownership and management, providing a solid foundation for growth and success.

3. Limited Liability

Limited liability is one of the most significant benefits of registering a private limited company. In a registered company, the shareholder's assets are protected from the company's debts and legal obligations. This means that in the event of financial losses or legal issues, the shareholders are only liable to the extent of their investment in the company.

Key points about limited liability:

• Shareholders' assets (e.g., houses, cars, bank accounts) are safeguarded
  
• Directors are not personally liable for the company's debts or legal liabilities
  
• Limited liability encourages entrepreneurship and risk-taking
  
• It provides a layer of protection for business owners
  

In contrast, sole proprietors and partners in unregistered businesses are personally liable for all business debts and obligations, putting their assets at risk. Limited liability is a crucial advantage of company registration, offering peace of mind and financial security for business owners.

4. Free & Easy Transferability of Shares

One of the advantages of incorporation of a company is the free and easy transferability of shares. In a registered company, shares can be transferred from one shareholder to another without affecting the company's operations. This flexibility in ownership transfer is a significant benefit, particularly for growing businesses.

Here are some key aspects of share transferability:

• Public companies: Shares are freely transferable, and shareholders can sell their shares to anyone without restrictions.
  
• Private companies: While share transfer is possible, there may be some restrictions imposed by the company's bylaws or shareholder agreements.
  
• The transfer process typically involves a signed share transfer form and the handover of the share certificate to the buyer.
  
• Easy share transferability allows for smooth succession planning and exit opportunities for shareholders.
  

Free share transfer attracts investors, raises capital, and enables ownership changes without disrupting operations.

5. Owning Property

As a separate legal entity, a registered company can acquire, own, and transfer property in its name. This is a significant advantage of company registration, as it distinguishes the company's assets from those of its shareholders. Shareholders do not have direct ownership rights over the company's property; instead, their interest lies in the shares they hold.

Key points about company property ownership:

• The company can purchase, lease, or sell property independently
  
• Shareholders' personal assets are protected from claims against the company's property
  
• The company's property remains an exclusive asset of the company, not its individual members
  
• Owning property in the company's name can provide tax benefits and asset protection
  

By owning property as a separate legal entity, a registered company can secure its assets, attract investors, and create a stable foundation for long-term growth and success.

6. Can Sue or Be Sued

Another advantage of company registration is that a registered company can sue or be sued in its name. As a separate legal entity, the company has the right to initiate legal proceedings or defend itself against legal claims, just like an individual. This ability to engage in legal matters independently is a crucial aspect of a company's legal status.

Key points about a company's legal standing:

• The company can file lawsuits to protect its interests, such as intellectual property rights or breach of contract
  
• It can defend itself against legal claims without involving its shareholders or directors personally
  
• The company's legal actions remain separate from the personal legal matters of its members
  
• This legal independence helps maintain the company's professional reputation and protects its shareholders
  

The ability to sue or be sued in its name provides a registered company with the necessary legal tools to safeguard its interests, resolve disputes, and maintain its professional standing in the business world.

7. Dual Relationship

One of the unique advantages of incorporation of company is the ability to have a dual relationship with its members. In a registered company, an individual can simultaneously hold multiple roles, such as being a shareholder, creditor, director, and employee. This flexibility allows for a more complex and adaptable business structure.

Key points about dual relationships in a company:

• A person can be a shareholder and an employee at the same time
  
• Directors can also be shareholders, allowing for a more vested interest in the company's success
  
• Shareholders can provide loans to the company, becoming creditors while maintaining their ownership stake
  
• These dual roles are legally permissible and common in registered companies
  

A dual relationship with the company fosters ownership, commitment, and multi-role contributions to its success.

8. Borrowing Capacity

Company registration significantly enhances a business's borrowing capacity. Registered companies have access to a wider range of financing options compared to sole proprietorships or partnerships. This increased borrowing capacity is a crucial advantage for businesses looking to expand, invest in new projects, or maintain financial stability.

Key points about a company's borrowing capacity:

• Companies can issue debentures to raise capital from the public
  
• Registered companies are seen as more credible and stable by banks and financial institutions
  
• Larger financial assistance is available to companies, making borrowing more accessible
  
• Companies can secure loans by offering their assets as collateral
  

Company registration boosts borrowing capacity, enabling growth, expansion, and operational stability for a competitive edge.

9. Equity Raising

Another significant advantage of company registration is the ability to raise equity funding. Registered companies, particularly private limited companies, have access to a broader pool of investors and can attract equity investments from various sources. This equity raising potential is crucial for businesses looking to expand, scale operations, and increase their market presence.

Key points about equity raising in a registered company:

• Private limited companies can attract investments from angel investors and private equity firms
  
• Equity funding provides growth capital without the burden of debt repayment
  
• Public limited companies can raise funds through initial public offerings (IPOs) and list their shares on stock exchanges
  
• Equity investments often come with strategic partnerships and valuable industry connections
  

The ability to raise equity funding through company registration opens up new avenues for business growth, allowing companies to tap into the expertise and resources of investors while maintaining control over their operations.

10. Brand Building

Company registration plays a vital role in brand building and establishing a strong business identity. By registering your company, you create a distinct and recognizable brand that sets you apart from competitors. A registered company name provides legal protection and prevents others from using a similar name, safeguarding your brand's uniqueness.

Key points about brand building through company registration:

• A registered company name adds credibility and professionalism to your brand
  
• It helps build trust among customers, suppliers, and partners
  
• Legal protection for your brand name reduces the risk of confusion and infringement
  
• A strong brand identity attracts customers, investors, and top talent
  

Registering a company builds a strong, lasting brand and sets the foundation for long-term success.

What Does Online Company Registration Entail?

The Companies Act of 2013 has made the process of company registration more streamlined and accessible through online means. The process involves several steps, including:

Key points about brand building through company registration:

1. Selecting the type of company (Private Limited, Limited Liability Partnership, etc.)
   
2. Applying for a Director Identification Number (DIN)
   
3. Obtaining Digital Signature Certificates (DSC)
   
4. Filing the necessary forms with the Ministry of Corporate Affairs (MCA)
   

It is crucial to verify the availability of the desired company name and ensure compliance with legal requirements throughout the registration process.

Types of Companies You Can Register

The Companies Act of 2013 provides for various types of companies that can be registered, each with its own characteristics and requirements. Some of the common types include:

1. Private Limited Company: A company with a minimum of two and a maximum of 200 shareholders, with restrictions on the transfer of shares.
   
2. Public Limited Company: A company that can have an unlimited number of shareholders and can offer shares to the public.
   
3. One Person Company (OPC): A company with a single shareholder and director, suitable for solo entrepreneurs.
   
4. Limited Liability Partnership (LLP): A partnership structure that provides limited liability to its partners.
   
5. Section 8 Company: A non-profit company formed for charitable or social purposes.
   

Choosing the right type of company depends on factors such as business size, goals, and structure.

Conclusion

Registering a company is a strategic decision that offers numerous advantages for businesses. From limited liability protection to enhanced credibility and access to funding, company registration provides a solid foundation for growth and success. By understanding the benefits of company registration, entrepreneurs can make informed decisions and position their ventures for long-term prosperity.

Frequently Asked Questions