Startup Registration vs MSME Registration: Key Differences Explained

Jun 18, 2025
Private Limited Company vs. Limited Liability Partnerships

As India’s entrepreneurial ecosystem grows rapidly, so does the need to understand the different pathways to formalise a business. Two common routes available to new and small businesses are Startup Registration (under the Startup India initiative) and MSME Registration (now Udyam Registration under the Ministry of MSME).

While both offer government recognition and support, their purpose, growth models, funding access, and compliance paths are distinct. Whether you're building a tech-driven disruptor or running a traditional service business, knowing the difference can help you make better strategic decisions.

Table of Contents

What is a Startup?

A startup is a young company founded to solve a problem through innovation, technology, or a novel business model. Unlike traditional businesses, startups are designed to grow quickly, scale globally, and often operate in uncertain or untested markets.

Key traits of a startup include:

  • Innovation-first approach: Either in product, process, or business model
  • Scalability: Designed to serve large or global markets with minimal incremental costs
  • Technology-driven: Often built on tech platforms or software solutions
  • High risk, high reward: Operates in dynamic environments with a focus on fast growth

Startups registered under the Startup India scheme receive benefits such as tax exemptions, fast-track IP protection, and easier compliance processes.

What is an MSME?

Micro, Small, and Medium Enterprises (MSMEs) are the backbone of India’s economy. They focus more on incremental growth, cost efficiency, and local market needs. MSMEs are generally rooted in traditional sectors, such as manufacturing, retail, and services, and aim for sustainable profitability over rapid scaling.

Unlike startups, MSMEs usually:

  • Focus on improving existing processes or delivering standard products/services
  • Operate with limited risk appetite
  • Prioritise steady revenue and employment generation
  • Leverage known technologies and business models
Classification Micro Small Medium
Investment Investment in Plant and Machinery or Equipment:
Not more than Rs. 2.5 crore
Investment in Plant and Machinery or Equipment:
Not more than Rs. 25 crore
Investment in Plant and Machinery or Equipment:
Not more than Rs. 125 crore
Turnover Annual Turnover not more than Rs. 10 crore Annual Turnover not more than Rs. 100 crore Annual Turnover not more than Rs. 500 crore

MSMEs are recognised under the Udyam Registration system and benefit from credit schemes, subsidies, and easier access to bank loans.

Growth and Scalability

  • Startups are designed for rapid growth, often scaling 10x in short timeframes, especially in sectors like fintech, SaaS, healthtech, or edtech. Growth is typically fueled by technology, network effects, and venture funding.
  • Conversely, MSMEs prioritise gradual, sustainable growth, often within a well-defined geographic or sectoral niche. Their scaling is rooted in stability, profitability, and local expansion, not exponential leaps.

Risk Appetite and Funding

  • Startups thrive in high-risk environments, betting on new ideas or technologies. They actively seek external funding from angel investors, venture capitalists, or startup-specific government schemes (like Fund of Funds for Startups).

  • MSMEs are typically risk-averse, aiming for consistent revenue. They rely on traditional funding like bank loans, government subsidies, and schemes like CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises).

Ready to launch your business? Get expert assistance with Startup registration and unlock exclusive benefits today.

Innovation and Adaptability

  • Startups focus on disruption; they aim to change how industries work by introducing new tools, services, or models. Agility, rapid experimentation, and quick pivots are part of their DNA.

  • MSMEs tend to prioritise adapting existing technologies or methods to improve efficiency. Their innovation is often incremental, refining what already works rather than reinventing it.

Regulations and Compliance

Both startups and MSMEs benefit from supportive government policies, but the nature of compliance and regulatory support varies.

For Startups:

  • Eligible for benefits under the Startup India scheme
  • Tax holiday for 3 years under Section 80-IAC
  • Faster IP protection and easier public procurement norms
  • More legal scrutiny as they scale, especially in sectors like fintech, health, or data

For MSMEs:

  • Registered under Udyam Registration
  • Access to collateral-free loans, subsidies, and credit guarantees
  • Simplified compliance norms, especially for micro and small enterprises
  • Priority in government tenders and incentives for manufacturing/export

Employment Contribution

  • Startups create fewer but highly skilled jobs, especially in product development, data science, marketing, and growth. Their contribution lies in creating future-ready roles and digital talent.

  • MSMEs are India’s largest employers after agriculture. They generate mass employment, particularly in manufacturing, services, and rural sectors, contributing significantly to India’s GDP and industrial base.

Market Reach

  • Startups often think global from day one. Companies like Freshworks, Byju’s, and Zerodha are built to serve a digital-first, borderless audience.
  • MSMEs typically cater to local or regional markets, with products tailored to domestic demand. Some medium-sized enterprises expand globally through exports, especially in textiles, handicrafts, or auto components.

Advantages of a Startup

  • High innovation potential and the ability to disrupt industries
  • Agility in decision-making and operations
  • Rapid scalability with lower marginal costs via digital tools
  • Access to VC funding, tax benefits, and government grants
  • Lean teams and remote-first models reduce operational overhead

These traits make startups ideal for solving complex problems at scale, especially with technology as a lever.

Advantages of an MSME

  • Consistent contributors to India’s economic growth
  • Flexibility to adapt to local market changes and demands
  • Support regional employment and entrepreneurship
  • Strengthen local supply chains and ecosystem resilience
  • Benefit from low compliance burdens and cost-effective operations

MSMEs play a foundational role in inclusive growth, uplifting rural economies and providing livelihood opportunities at scale.

Frequently Asked Questions

rize image

Register your Business at just 1,499 + Govt. Fee

Register your business
rize image

Register your Private Limited Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your One Person Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your Business starting at just 1,499 + Govt. Fee

Register your business
rize image

Register your Limited Liability Partnership in just 1,499 + Govt. Fee

Register your business

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

Can a startup register as an MSME?

Yes, a startup can register as an MSME (now called Udyam Registration) as long as it meets the investment and turnover criteria defined for Micro, Small, or Medium Enterprises under the MSME classification.

What are the benefits of registering startups as MSMEs?

Registering a startup under the MSME (Udyam) scheme offers several advantages, especially in terms of financial and operational support. Key benefits include:

  • Access to Collateral-Free Loans
  • Subsidised Patent and Trademark Fees
  • Priority in Government Tenders
  • Interest Subsidies on Loans
  • Easier Access to Credit and Finance
  • Eligibility for Government Incentives and Subsidies

Who cannot register under MSME?

Not all businesses or entities are eligible for MSME registration. The following cannot register as an MSME under the Udyam scheme:

  • Non-business Entities
  • Foreign Companies and Subsidiaries
  • Large Enterprises
  • Agricultural Activities
  • Duplicate or Multiple Registrations

Related Posts

Procedure for Converting a Private Limited Company to an OPC

Procedure for Converting a Private Limited Company to an OPC

As startups evolve and founders reassess business needs, many look for simpler structures that offer flexibility without compromising legal benefits. One such move gaining traction is the conversion of a Private Limited Company (Pvt Ltd) into a One Person Company (OPC) — especially when a company reduces to a single shareholder or no longer requires multiple directors.

In this blog, we break down the process, eligibility, benefits, and post-conversion obligations involved in converting a Private Limited Company to an OPC in India.

Table of Contents

Private Limited Company

A Private Limited Company is a widely preferred structure for startups and growing businesses in India. It requires:

  • A minimum of 2 directors and 2 shareholders
  • Limited liability protection
  • Separate legal identity
  • Mandatory compliance with the Companies Act, 2013

This structure is ideal for businesses seeking external funding and operational scale. However, it can become administratively heavy for a solo founder or small team.

Related Read: Characteristics of Private Limited Company

One Person Company (OPC)

An OPC is a simplified structure designed for solo entrepreneurs who want the benefits of a corporate entity without the complexities of a Private Limited Company. Key features include:

  • Only one shareholder and one nominee required
  • Limited liability protection
  • Separate legal identity
  • Lesser compliance burden

An OPC is ideal for solo founders, consultants, and professionals transitioning from informal to formal business setups.

Related Read: Advantages of One Person Company

Eligibility Criteria for Converting a Company into an OPC

As per Rule 7 of the Companies (Incorporation) Rules, 2014, a Private Limited Company can be converted into an OPC if:

  • The company has no more than one shareholder (at the time of conversion)
  • The shareholder is an Indian citizen and resident in India (staying in India for at least 120 days during the financial year)
  • The company has no outstanding liabilities or ongoing litigation
  • The company’s paid-up capital is less than ₹50 lakh, and its annual turnover is under ₹2 crore (as per past financials)

Note: These limits may be relaxed depending on MCA updates, so always check the latest provisions.

Benefits of Converting a Company to an OPC

  • Lower compliance requirements – Less paperwork, fewer meetings
  • Sole ownership with control – Ideal for solo founders
  • Limited liability – Personal assets remain protected
  • Separate legal entity – Recognised as a company under law
  • Brand credibility – Enjoys more trust than sole proprietorships

Process for Converting a Private Limited Company to an OPC

Here's a step-by-step breakdown:

1. Board Meeting

  • Pass a resolution to convert the Pvt Ltd company into an OPC
  • Approve a draft of the special resolution for shareholder approval

2. Shareholder Approval

  • Convene an Extraordinary General Meeting (EGM)
  • Pass a special resolution authorising conversion into an OPC

3. Filing with ROC (Registrar of Companies)

  • File Form MGT-14 within 30 days of passing the special resolution
  • File Form INC-6 with the following attachments:
    • Board & shareholder resolutions
    • Updated MOA & AOA (altered for OPC structure)
    • Declaration by directors and shareholders
    • Latest audited financial statements
    • Affidavit stating the company is free of debts and litigation

4. Scrutiny by ROC

  • The Registrar reviews all filings and may request clarifications

Issue of Certificate

Upon successful verification, the ROC issues a Certificate of Incorporation reflecting the conversion from Private Limited to OPC. This certificate carries the same company registration number (CIN), but the company name is updated to include “(OPC) Private Limited.”

Post-Conversion Requirements by the OPC

After conversion, the newly formed OPC must:

  • Update PAN, TAN, GST registrations, bank accounts, contracts, etc.
  • Use the new name with “(OPC) Private Limited” on all communications
  • Maintain books of accounts and comply with annual filing requirements (though fewer compared to a Pvt Ltd)
  • Inform all stakeholders, vendors, and customers about the structural change

Final Thoughts

If you're a solo founder managing a Private Limited Company and want to streamline operations while retaining limited liability, converting to an OPC could be a strategic move. With reduced compliance and full control, you get the best of both worlds- formal recognition with solo flexibility.

rize image

Register your Business at just 1,499 + Govt. Fee

Register your business
rize image

Register your Private Limited Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your One Person Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your Business starting at just 1,499 + Govt. Fee

Register your business
rize image

Register your Limited Liability Partnership in just 1,499 + Govt. Fee

Register your business

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What are the turnover and capital limits for conversion?

To convert a Private Limited Company into an OPC, the following financial thresholds must be met:

  • Paid-up capital must be less than ₹50 lakhs
  • Annual turnover must be less than ₹2 crores (as per the latest profit and loss statement)

These limits are prescribed under Rule 7 of the Companies (Incorporation) Rules, 2014. If your company exceeds these limits, conversion may not be permitted.

How long does it take to convert a private limited company into an OPC?

The conversion process typically takes 3 to 4 weeks, depending on:

  • Accuracy of documentation
  • Timely approval from shareholders
  • Workload at the concerned Registrar of Companies (ROC)
  • Any queries or objections raised by the authorities

Filing forms like MGT-14 and INC-6 correctly the first time helps avoid delays.

Is shareholder approval required for conversion?

Yes, shareholder approval is mandatory. A special resolution must be passed in a duly held Extraordinary General Meeting (EGM). The resolution, along with supporting documents, is then filed with the ROC via Form MGT-14.

Can a foreign national form or be part of an OPC?

No, a foreign national cannot incorporate or be a member/nominee of an OPC in India. Only a natural person who is a citizen of India and a Resident in India (i.e., stayed in India for at least 120 days during the previous financial year) is eligible to form an OPC or be appointed as its nominee.

Characteristics of Private Limited Company - Razorpay Rize

Characteristics of Private Limited Company - Razorpay Rize

Table of Contents

What is a Private Limited Company?

A Private Limited Company is a business structure in India registered under the Companies Act, 2013. It is a separate legal entity from its owners, with its own rights and liabilities. Characteristics of private company include limited liability for shareholders, restrictions on share transfers, and a minimum of two members.

Under Section 2(68) of the Companies Act, 2013, a Private Limited Company is defined as a company that restricts the right to transfer its shares, limits the number of members to 200 (excluding employees), and prohibits any invitation to the public to subscribe for its securities.

Characteristics of a Private Limited Company

Characteristics of private companies make it a preferred business structure for growing startups and SMEs in India. A Private Limited Company has several distinct characteristics that define its structure, ownership, and operations. Features of a private limited company such as limited liability, perpetual succession, easier fundraising, and professional image help entrepreneurs scale their business while mitigating risks. Understanding these features of a private limited company is crucial for entrepreneurs considering this business model. These include:

Separate Legal Entity

A Private Limited Company is a separate legal entity from its shareholders. This means the company can enter into contracts, own assets, incur liabilities, and sue or be sued in its own name. The company's existence is independent of its members, providing continuity and perpetual succession.

Limited Liability of Members

One of the biggest advantages of a Private Limited Company is the limited liability protection it offers to its shareholders. The liability of members is limited to the amount of share capital they have subscribed to. Their personal assets are protected in case the company faces losses or legal issues. This reduces the financial risk for shareholders.

Minimum and Maximum Members

A Private Limited Company requires a minimum of two members and can have a maximum of 200 members (excluding employees). These members can be individuals, other companies, or foreign entities. Having multiple shareholders allows for pooling of resources and expertise.

Restriction on Share Transfer

Shares of a Private Limited Company cannot be freely transferred to the public. Any transfer of shares requires the approval of the company's Board of Directors. The right to transfer shares is restricted by the company's Articles of Association, and existing shareholders have the first right to purchase any shares offered for sale. This helps maintain control over ownership.

Minimum Capital Requirement

There is no minimum capital requirement for incorporating a Private Limited Company in India. This makes it easier for startups and small businesses to adopt this structure without significant upfront investment. However, the company's authorized and paid-up capital must be mentioned in its Memorandum of Association.

Perpetual Succession

A Private Limited Company has perpetual succession, which means its existence is not affected by the entry or exit of members. The company continues to operate even if all the original shareholders and directors change over time, providing stability and continuity for the business.

Use of "Private Limited" in Name

A Private Limited Company must use the words "Private Limited" or "Pvt Ltd" at the end of its name. This helps distinguish it from public limited companies and sole proprietorships. The name should not be identical or too similar to any existing company to avoid confusion.

Mandatory Registration

Incorporation of a Private Limited Company is mandatory and must be registered with the Registrar of Companies (ROC). The company comes into existence only upon registration and is given a Certificate of Incorporation. This is different from sole proprietorships and partnerships, which can operate without formal registration.

Statutory Compliance

Private Limited Companies are subject to various statutory compliances under the Companies Act, 2013. These include conducting board meetings, maintaining statutory registers and records, filing annual returns, and appointing auditors. Non-compliance can lead to penalties and legal consequences.

Documents Required to Register a Private Limited Company

1. Director Identification Number (DIN) for each proposed director

2. Digital Signature Certificate (DSC) for each proposed director

3. Proof of identity and address for directors and shareholders

4. Proof of registered office address

5. Memorandum of Association (MOA) and Articles of Association (AOA)

6. Consent letters from directors

7. PAN card of directors and shareholders

8. Passport-size photographs of directors

Process to Register Private Limited Company

Incorporating a Private Limited Company involves obtaining Director Identification Number (DIN), Digital Signature Certificate (DSC), and filing necessary documents required for pvt ltd registration. Seeking professional advice from legal and financial experts can help navigate the registration process smoothly. The process of registering a Private Limited Company involves the following steps:

  1. Obtain Director Identification Number (DIN) for each proposed director: Directors must apply for a DIN through the SPICe+ (Simplified Proforma for Incorporating a Company Electronically Plus) form. DIN can also be applied during incorporation.
  2. Acquire Digital Signature Certificate (DSC) for each proposed director: All directors and shareholders must obtain a Class 3 Digital Signature Certificate (DSC). The DSC is used to sign forms electronically during the registration process.
  3. Select and apply for a unique company name through the RUN (Reserve Unique Name) service: Use the RUN (Reserve Unique Name) service on the MCA portal to propose a unique company name. Ensure compliance with the Companies Act, 2013 and avoid prohibited or identical names.
  4. Draft the Memorandum of Association (MOA) and Articles of Association (AOA): Draft key documents, including:
  • Memorandum of Association (MoA) – Defines the company’s objectives.
  • Articles of Association (AoA) – Details operational rules and regulations. Obtain affidavits, declarations, and consent from directors.
  1. File the SPICe+ form along with required documents and payment of fees: Submit the SPICe+ form on the MCA portal with DSC. Attach MoA, AoA, and applications for PAN, TAN, and GST registration (if applicable). Pay the required fees and stamp duty online.
  2. Obtain Certificate of Incorporation from ROC upon successful registration: Upon approval, the Certificate of Incorporation is issued by the Registrar of Companies (RoC). This includes the Company Identification Number (CIN), confirming legal status.

{{pvt-cta}}

Types of Private Limited Companies

Based on the liability of members, Private Limited Companies can be categorised into three types:

  1. Company Limited by Shares: The liability of members is limited to the amount unpaid on their shares. This is the most common type of Private Limited Company.
  2. Company Limited by Guarantee: The liability of members is limited to the amount they have agreed to contribute to the company's assets in the event of its winding up.
  3. Unlimited Company: Members' liability is unlimited. They are liable for the company's debts and obligations.

Frequently Asked Questions:

rize image

Register your Business at just 1,499 + Govt. Fee

Register your business
rize image

Register your Private Limited Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your One Person Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your Business starting at just 1,499 + Govt. Fee

Register your business
rize image

Register your Limited Liability Partnership in just 1,499 + Govt. Fee

Register your business

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What are the benefits of a private limited company?

Some key benefits of a private limited company include limited liability protection for shareholders, better credibility and professional image, perpetual succession, easier access to funding, and ability to offer Employee Stock Options (ESOPs).

What is the difference between pvt ltd and llp?

Private Limited Company vs. Limited Liability Partnerships: A Private Limited Company has shareholders and directors, while an LLP has partners. LLPs have lesser compliance requirements compared to Private Limited Companies. However, Private Limited Companies offer more flexibility in ownership structure and fundraising.

Who is the owner of Pvt Ltd?

The owners of a Private Limited Company are its shareholders. The ownership is determined by the number of shares held by each member. The shareholders appoint directors to manage the day-to-day operations of the company.

How much tax does a private limited company pay?

Private Limited Companies are taxed as separate legal entities. The corporate tax rate is 25% for companies with an annual turnover of up to Rs. 400 crores (as of FY 2021-22). Surcharge and cess are applicable based on the company's income level.

What are the tax benefits of Pvt Ltd company?

Private Limited Companies can avail several tax benefits and deductions, such as:

  • Deduction of business expenses incurred wholly for the purpose of the business
  • Depreciation on fixed assets
  • Carry forward and set off of losses
  • Deductions for employee welfare expenses
  • Deductions for donations made to charitable organizations

Is GST required for a private limited company?

Yes, a Private Limited Company is required to register for Goods and Services Tax (GST) if its annual turnover exceeds the threshold limit (Rs. 40 lakhs for goods and Rs. 20 lakhs for services, as of FY 2021-22). GST registration is mandatory for companies engaged in inter-state transactions, irrespective of turnover.

Form ADT-1: A Complete Guide to Auditor Appointment Filing

Form ADT-1: A Complete Guide to Auditor Appointment Filing

Filing Form ADT-1 is a crucial step in ensuring compliance with the Companies Act regarding the appointment of the first auditor. This form notifies the Ministry of Corporate Affairs (MCA) about the auditor's appointment within 30 days of company incorporation. It is essential for companies to understand the importance of this form and adhere to the filing requirements and deadlines to avoid penalties.

Table of Contents

What is Form ADT-1?

Form ADT-1 is a mandatory filing under the Companies Act, 2013, used to inform the Registrar of Companies (ROC) about the appointment of an auditor in a company.

Key Points on Auditor Appointment & Filing Requirements

1. Appointment of First Auditor (New Companies)

For companies (excluding government companies):

The Board of Directors must appoint the first auditor within 30 days of incorporation.

If the Board fails to do so, the members must appoint the first auditor within 90 days at an Extraordinary General Meeting (EGM).

The first auditor holds office until the conclusion of the first Annual General Meeting (AGM).

Note: Filing Form ADT-1 is NOT required for the first auditor’s appointment. However, companies may choose to file it for compliance and record-keeping purposes.

2. Appointment of Subsequent Auditors

After the first AGM, companies must appoint an auditor for a five-year term (for private and public companies) or as per shareholder approval.

Form ADT-1 must be filed within 15 days of the auditor’s appointment to inform the ROC.

Timely filing of Form ADT-1 is crucial for companies to:

  • Comply with legal requirements under the Companies Act
  • Avoid penalties and legal consequences
  • Maintain transparency in auditor appointments
  • Ensure proper oversight of financial reporting

Who Needs to File Form ADT-1?

Is Form ADT-1 mandatory for all companies?

All companies incorporated under the Companies Act, 2013, are required to file Form ADT-1, including:

What happens if a company fails to file Form ADT-1?

Failure to file Form ADT-1 within the prescribed time can result in penalties and legal consequences for the company and its directors. The company may be fined between ₹25,000 to ₹5,00,000, and every defaulting officer may be punishable with imprisonment of up to 1 year, a fine between ₹10,000 to ₹1,00,000, or both.

Law Governing the Form ADT-1

The filing of Form ADT-1 is mandated under Section 139(1) of the Companies Act, 2013. This section requires companies to file the form with the ROC to inform them about the auditor's appointment, which is done after the AGM. The form contains essential details about the appointed auditor, such as their name, address, membership number, and date of appointment. Companies must submit Form ADT-1 within 15 days of the AGM to fulfil their legal obligations and avoid potential penalties for non-compliance.

Requirements for Filing Form ADT-1

  • The company has appointed an auditor as per the provisions of the Companies Act, 2013
  • The appointed auditor has provided written consent to act as the auditor
  • The auditor has issued a certificate confirming they are not disqualified under Section 141 of the Act
  • The company has obtained a Director Identification Number (DIN) for the signing director
  • The signatory has a valid Digital Signature Certificate (DSC)

Companies must attach the necessary supporting documents, such as the board resolution for auditor appointment, auditor's consent letter, and certificate of eligibility while filing the form. Failing to meet these requirements can lead to the rejection of the form by the ROC.

Fees for Filing Form ADT-1

The filing fees for Form ADT-1 depend on the company's authorised share capital, as per the table below:

Authorised Share Capital Filing Fee
Up to ₹1,00,000 ₹200
₹1,00,001 to ₹5,00,000 ₹300
₹5,00,001 to ₹10,00,000 ₹400
Above ₹10,00,000 ₹600

For LLP Companies without share capital, the filing fee is a flat ₹200.

Late filing of Form ADT-1 attracts additional fees, which increase based on the delay duration:

  • Up to 30 days delay: 2 times the normal fees
  • 31 to 60 days delay: 4 times the normal fees
  • 61 to 90 days delay: 6 times the normal fees
  • 91 to 180 days delay: 10 times the normal fees
  • More than 180 days delay: 12 times the normal fees

Due Date For Filing MCA Form ADT-1

The due date for filing Form ADT-1 depends on whether the company is newly incorporated or existing:

For newly incorporated companies:

  • ADT-1 for the first auditor must be filed within 15 days of the first Board Meeting
  • This Board Meeting must be held within 30 days of incorporation, where the first auditor is appointed

For existing companies:

  • Form ADT-1 should be filed within 15 days of the AGM where the auditor was appointed or reappointed
  • Example: If the AGM was held on September 30, 2023, the ADT-1 due date would be October 14, 2023

While filing the form, companies must provide the following details about the appointed auditor:

  1. Auditor's category (individual or firm)
  2. Membership number of the auditor or firm's registration number
  3. Address and email ID of the auditor
  4. Permanent Account Number (PAN) of the auditor
  5. Period of appointment
  6. Membership number of the previous auditor in case of vacancy
  7. Date of appointment and AGM date
  8. Details of any casual vacancy (date and reason)

Along with these details, companies must attach the following supporting documents:

  1. Certified copy of the Board Resolution for auditor appointment
  2. Written consent of the auditor to act as such
  3. Certificate by the auditor confirming their eligibility under Section 141
  4. Copy of the intimation letter sent by the company to the auditor regarding their appointment

Penalty on Delayed Filing of Form ADT-1

Delayed filing of Form ADT-1 attracts penalties, which increase based on the duration of the delay:

  • Up to 30 days delay: Twice the normal filing fees
  • 31 to 60 days delay: Four times the normal filing fees
  • 61 to 90 days delay: Six times the normal filing fees
  • 91 to 180 days delay: Ten times the normal filing fees
  • More than 180 days delay: Twelve times the normal filing fees

Companies must be mindful of the ADT-1 due date and ensure timely filing to avoid these escalating penalty fees. Repeated non-compliance can also lead to more severe consequences, such as fines and legal action against the company and its officers.

Important Points to Consider Regarding Form ADT-1

  • Filing Form ADT-1 is mandatory for all types of companies, including private, public, and one-person companies.
  • The responsibility of filing the form lies with the company and its directors, not the auditor.
  • Form ADT-1 must be filed even in case of filling casual vacancies in the auditor's office.
  • Companies should file Form ADT-1 for the appointment of the first auditor as well.
  • Timely filing of the form with all necessary details and documents is crucial to avoid penalties and legal complications.

Process for Filing Form ADT-1

  1. Obtain a Digital Signature Certificate (DSC) for at least one Director of the company from a licensed Certifying Authority
  2. Ensure the signing director has a valid Director Identification Number (DIN)
  3. Download Form ADT-1 from the MCA portal
  4. Fill in the required company and auditor details accurately
  5. Attach the necessary supporting documents (Board Resolution, auditor consent, eligibility certificate, etc.)
  6. Verify the form using the director's DSC
  7. Submit the form electronically on the MCA portal
  8. Pay the requisite filing fees online using a credit card, debit card, or net banking
  9. Receive an acknowledgement email from MCA as proof of filing

Frequently Asked Questions

rize image

Register your Business at just 1,499 + Govt. Fee

Register your business
rize image

Register your Private Limited Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your One Person Company in just 1,499 + Govt. Fee

Register your business
rize image

Register your Business starting at just 1,499 + Govt. Fee

Register your business
rize image

Register your Limited Liability Partnership in just 1,499 + Govt. Fee

Register your business

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What is the ADT-1 form?

Form ADT-1 is a mandatory form filed by companies to inform the Registrar of Companies (ROC) about the appointment of an auditor, except for the first auditor. It must be filed within 15 days of the appointment of a subsequent auditor.

Is ADT-1 mandatory for the first auditor in OPC?

Yes, filing ADT-1 for the first auditor is mandatory for all companies, including OPCs.

Can we file ADT-1 without filing ADT-3?

Yes, Form ADT-1 can be filed independently without filing ADT-3, which is used for the resignation of an auditor.

Who will file ADT 2?

Form ADT-2 is filed by the auditor to the company and ROC in case of their resignation. The company does not file this form.

What is the time limit for filing ADT-1 for the first auditor?

For newly incorporated companies, the first auditor appointment due date for filing ADT-1 is within 15 days of the first Board Meeting held within 30 days of incorporation.

Who is the first auditor of OPC?

In an OPC, the Board of Directors appoints the first auditor within 30 days of incorporation, and their appointment is ratified in the first AGM.

Akash Goel

Akash Goel is an experienced Company Secretary specializing in startup compliance and advisory across India. He has worked with numerous early and growth-stage startups, supporting them through critical funding rounds involving top VCs like Matrix Partners, India Quotient, Shunwei, KStart, VH Capital, SAIF Partners, and Pravega Ventures.

His expertise spans Secretarial compliance, IPR, FEMA, valuation, and due diligence, helping founders understand how startups operate and the complexities of legal regulations.

Read more

Rize.Start

Hassle free company registration through Razorpay Rize

in just 1,499 + Govt. Fee
With ₹0 hidden charges

Make your business ready to scale. Become an incorporated company through Razorpay Rize.

Made with ❤️ for founders

View our wall of love

Smooth onboarding, seamless incorporation and a wonderful community. Thanks to the #razorpayrize team! #rizeincorporation
Dhaval Trivedi
Basanth Verma
shopeg.in
Exciting news! Incorporation of our company, FoxSell, with Razorpay Rize was extremely smooth and straightforward. We highly recommend them. Thank you Razorpay Rize for making it easy to set up our business in India.
@foxsellapp
#razorpayrize #rizeincorporation
Dhaval Trivedi
Prakhar Shrivastava
foxsell.app
We would recommend Razorpay Rize incorporation services to any founder without a second doubt. The process was beyond efficient and show's razorpay founder's commitment and vision to truly help entrepreneur's and early stage startups to get them incorporated with ease. If you wanna get incorporated, pick them. Thanks for the help Razorpay.

#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
TBS Magazine
Hey, Guys!
We just got incorporated yesterday.
Thanks to Rize team for all the Support.
It was a wonderful experience.
CHEERS 🥂
#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
Nayan Mishra
https://zillout.com/
Smooth onboarding, seamless incorporation and a wonderful community. Thanks to the #razorpayrize team! #rizeincorporation
Dhaval Trivedi
Basanth Verma
shopeg.in
Exciting news! Incorporation of our company, FoxSell, with Razorpay Rize was extremely smooth and straightforward. We highly recommend them. Thank you Razorpay Rize for making it easy to set up our business in India.
@foxsellapp
#razorpayrize #rizeincorporation
Dhaval Trivedi
Prakhar Shrivastava
foxsell.app
We would recommend Razorpay Rize incorporation services to any founder without a second doubt. The process was beyond efficient and show's razorpay founder's commitment and vision to truly help entrepreneur's and early stage startups to get them incorporated with ease. If you wanna get incorporated, pick them. Thanks for the help Razorpay.

#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
TBS Magazine
Hey, Guys!
We just got incorporated yesterday.
Thanks to Rize team for all the Support.
It was a wonderful experience.
CHEERS 🥂
#entrepreneur #tbsmagazine #rize #razorpay #feedback
Dhaval Trivedi
Nayan Mishra
https://zillout.com/