One Person Company Registration Fees in India

The Shop and Establishment Act

The Shop and Establishment Act is a state-specific legislation aimed at regulating and standardising the working conditions in shops, commercial establishments, hotels, restaurants, and other service-oriented businesses. The primary objective of this Act is to ensure fair and humane treatment of workers by stipulating guidelines for:

• Work hours and overtime
• Minimum wages
• Leave and holiday policies
• Employee welfare and benefits

Since each state has its own version of the Act, the specific rules and regulations may vary depending on where your business is located. However, the core principles of employee protection and standardised work conditions remain consistent across all states.

Registration Under The Shop and Establishment Act

For most businesses in India, registration under the Shop and Establishment Act is mandatory. Any shop, commercial establishment, or service-based enterprise—whether physical, online, or home-based—must obtain this license within 30 days of starting operations, as per state-specific regulations.

The registration process involves submitting an application to the Chief Inspector or Labour Commissioner of your area, along with the required documents and fees. Upon verification and approval, you'll receive a Shop and Establishment License, which serves as proof of your legal compliance and is essential for:

• Opening business bank accounts
• Applying for loans and financial assistance
• Availing government schemes and benefits

Failing to obtain the necessary registration can result in penalties, fines, and legal consequences, so it's crucial to prioritise this process as you set up your business.

Setting up your business? Get expert help with Shop and Establishment Registration and Company Registration today.

Regulations Under The Shop and Establishment Act

To ensure fair and safe working conditions for employees, the Shop and Establishment Act lays down several regulations that employers must adhere to. Some of the key areas covered under the Act include:

1. Work Hours and Overtime:
   
   • Standard work hours for adults are typically limited to 8-9 hours per day and 48 hours per week.
   • Overtime wages, usually double the regular rate, must be paid for work beyond the standard hours.
   • Employees are entitled to a weekly off of at least 24 consecutive hours.
2. Wages:
   
   • Employers must pay wages on time, typically by the 7th or 10th of the following month, depending on employee count.
   • Men and women must receive equal remuneration for the same work, as per the Equal Remuneration Act, 1976.
3. Leave and Holidays:
   
   • Workers are entitled to various types of leave, such as earned leave, casual leave, and sick leave.
   • The number of leave days and paid holidays varies by state.
4. Employee Welfare:
   
   • Employers must provide basic amenities such as drinking water, clean toilets, first-aid kits, and a crèche (if employing more than 50 women).
   • The workplace should be well-ventilated, adequately lit, and maintained at a comfortable temperature.
5. Record-Keeping:
   
   • Businesses must maintain proper records of work hours, leave, overtime, wages, and other employee-related data.
   • Wage slips must be provided to employees every month, detailing their earnings and deductions.
6. Display of Notices and Registers:
   
   • The Shop and Establishment Registration certificate and an abstract of the Act must be prominently displayed in the local language.
   • Employers must maintain registers such as appointment letters, service books, leave records, and wage registers.

By adhering to these regulations, businesses can create a safe, fair, and compliant work environment for their employees.

Eligible Businesses under the Shops and Establishments Act

The Shops and Establishments Act applies to a wide range of businesses, including but not limited to:

• Shops and retail establishments
• Commercial offices (e.g. legal, accounting, consulting)
• Service providers (e.g. IT firms, salons, courier services)
• Hotels, restaurants, and eateries
• Educational institutions and training centres (e.g. coaching centres, training institutes)
• Healthcare facilities and clinics (e.g. clinics, diagnostic centres)
• Entertainment and recreational centres (e.g. theatres, gyms, amusement parks)

However, the specific applicability may vary from state to state. For example, some states require registration for establishments with a minimum of 10 employees, while others have a lower threshold. Manufacturing units and factories are generally not covered under this Act, as they are governed by the Factories Act.

To ensure compliance, it's essential to verify your business's eligibility with your local state authority and adhere to the specific requirements laid down by your state's Shop and Establishment Act.

Requirements to obtain the Shop and Establishment Act Registration

To obtain the Shop and Establishment Act Registration, you'll need to apply along with the following documents and details:

1. Business Information:
   
   • Name and address of the establishment
   • Nature of business activity
   • Number of employees
   • Working hours and shifts
2. Proof of Identity and Address:
   
   • Owner's identity proof (Aadhaar card, PAN card, etc.)
   • Proof of business address (rental agreement, property deed, etc.)
3. Other Documents:
   
   • Partnership deed or incorporation certificate (for partnership firms and companies)
   • Layout plan of the establishment
   • List of employees with their details
   • Consent letter from the property owner (if operating from rented premises)
4. Registration Form:
   
   • Duly filled and signed application form, which can be obtained from the local labour department or downloaded from their website.
5. Fees:
   
   • Registration fees vary by state and are typically based on the number of employees and the nature of the business.

Some states may have additional requirements, so it's essential to check with your local labour department for the exact list of documents and procedures specific to your state.

Process For Obtaining Shop and Establishment Registration

The process for obtaining the Shop and Establishment Registration may vary slightly from state to state, but the general steps involved are as follows:

1. Visit the website of your state's labour department or the online portal for Shop and Establishment Act Registration.
2. Fill out the online application form with the required details, such as:
   
   • Employer name and contact information
   • Establishment name and address
   • Nature of business
   • Number of employees
   • Working hours and shifts
3. Upload the necessary documents, as mentioned in the previous section, in the prescribed format (usually PDF or JPEG).
4. Pay the registration fees online using a credit card, debit card, or net banking.
5. Submit the application and wait for the labour department to verify your documents and details.
6. Upon successful verification, you will receive the Shop and Establishment Registration certificate, either electronically or by post.

Alternatively, you can also opt for the offline process by visiting the local labour department office, submitting the physical application form, and paying the fees in person. However, the online process is generally faster and more convenient.

Once you obtain the registration certificate, make sure to display it prominently at your establishment and renew it before the expiry date to maintain compliance with the Act.

Validity of Shop And Establishment Registration

The validity of the shop and establishment license varies from state to state. Some states provide a lifetime registration, while others require periodic renewal. The renewal period can range from 1 to 5 years, depending on the state. Some states, like Maharashtra and Delhi, offer long-term or lifetime validity—up to 10 years or even 21 years—while others such as Karnataka, Tamil Nadu, and Uttar Pradesh require periodic renewal every 3 to 5 years. The registration fees also differ and are typically calculated based on the number of employees, the nature of the business, and the duration of registration selected.

It's crucial to keep track of your registration's validity and initiate the renewal process well before the expiry date to avoid any lapses in compliance. Renewal fees and procedures may also differ by state, so make sure to check with your local labour department for the most up-to-date information.

Conclusion

Registering under the Shop and Establishment Act is a vital step for any business operating in India’s commercial sector. It not only ensures legal compliance but also promotes transparent and fair employment practices. By understanding your state’s specific rules, maintaining accurate records, and renewing your registration on time, you can protect your business and your employees.

Compliance isn't just a legal formality—it's a foundation for sustainable growth and a responsible workplace.

Frequently Asked Questions

Definition of Company Promoter

A company promoter is a person or entity that undertakes the responsibility of forming a company. As per legal definitions, a promoter is someone who conceives the idea of the business, takes the necessary steps to incorporate the company, and facilitates its registration.

For instance, if an individual drafts the Memorandum of Association (MOA) and Articles of Association (AOA) for a business and secures initial funding, they qualify as a promoter. Promoters can be:

• Individuals (e.g., founders of a startup)
• Groups of people (e.g., a partnership forming a company)
• Organisations (e.g., a holding company promoting a subsidiary)

Who Are the Promoters of a Company?

Promoters can be anyone involved in the process of establishing a company. This includes:

1. Founders – Entrepreneurs or individuals initiating the business idea.
2. Investors – Entities that fund the company’s formation and help in structuring.
3. Professional Firms – Companies that specialise in managing incorporation and initial stages.

It is important to differentiate between named promoters, whose roles are mentioned in legal documents like the prospectus, and unofficial contributors, who may assist without formal recognition.

Types of Promoters of a Company

Promoters can be classified based on their involvement and expertise:

1. Professional Promoters

These are specialists with expertise in company formation. For example, consulting firms or legal advisors assisting in setting up a company.

2. Occasional Promoters

Individuals who promote companies sporadically, typically when they spot a business opportunity, such as a seasoned entrepreneur launching a startup.

3. Financial Promoters

Entities like venture capitalists or investment firms promote businesses by providing initial funding.

4. Entrepreneurial Promoters

Business owners or founders who initiate the company based on their vision and strategy. An example is a tech founder creating a software startup.

Functions of a Promoter

The role of a promoter is multifaceted. Their primary functions include:

1. Identifying a Business Opportunity
   Promoters analyse market trends, identify viable opportunities, and decide on the scope of the business.
2. Preparing Necessary Documentation
   Drafting the MOA, AOA, and other legal documents essential for company registration.
3. Securing Capital and Initial Funding
   Approaching investors or institutions to raise funds for the company.
4. Registering the Company
   Ensuring the company’s incorporation by meeting all legal requirements, such as filing with the Registrar of Companies (RoC).
5. Establishing Operations
   Setting up offices, hiring the initial workforce, and laying out the operational roadmap.

Duties of a Company Promoter

Promoters have critical duties to uphold the integrity and governance of a company. These include:

1. Acting in Good Faith
   They must prioritise the company’s interests over personal gain.
2. Avoiding Conflicts of Interest
   Promoters are obligated to disclose any potential conflicts that may affect the company.
3. Disclosure of Personal Interests
   Any benefits or transactions involving the promoter must be transparently disclosed.
4. Providing Accurate Information
   Misrepresentation of facts during the company’s formation can lead to legal consequences.

Rights of a Promoter

Despite their duties, promoters are entitled to certain rights:

1. Right to Indemnity
   They can claim indemnity for liabilities incurred during company formation.
2. Right to Recover Preliminary Expenses
   Expenses made for incorporation can be reimbursed.
3. Right to Remuneration
   Promoters can receive remuneration for their services, either as cash or shares.

Liability of a Promoter

Promoters may face liabilities in specific scenarios:

• Civil Liability: Misrepresentation or breach of duties can result in compensation claims.
• Criminal Liability: Fraud or deliberate misconduct can lead to prosecution.
• Public Examination: Promoters may be publicly examined in cases of company insolvency.
• Personal Liability: They can be personally held liable for contracts signed before incorporation if the company does not ratify them.

Difference Between Promoters and Directors

Related Read - Who is a Director of a Private Limited Company?

Real-Life Examples of Famous Company Promoters

1. Dhirubhai Ambani (Reliance Industries)

Dhirubhai Ambani, the visionary founder of Reliance Industries, started the company in 1966 as a small polyester trading firm. Through his entrepreneurial spirit, he transformed it into a global conglomerate spanning petrochemicals, textiles, and telecommunications, making Reliance a household name in India.

2. Narayana Murthy (Infosys)

Narayana Murthy, the co-founder of Infosys, played a pivotal role in establishing one of India’s most successful IT companies in 1981. His commitment to transparency, innovation, and customer-centricity positioned Infosys as a global leader in software services and outsourcing.

3. Elon Musk (Tesla, SpaceX)

Elon Musk is a modern-day promoter known for revolutionising industries through Tesla and SpaceX. By promoting electric vehicles and renewable energy with Tesla and pioneering space exploration with SpaceX, Musk has demonstrated how visionary leadership can disrupt traditional industries and redefine the future.

Frequently Asked Questions

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Eligibility

• Should be recognised by DPIIT.
• Startups should not have received more than Rs 10 lakh of monetary support under other significant government schemes.
• The Startup shall have been in existence for no more than two years at the time of application.
• Should be using technology as its core product or service to create innovative solutions in different sectors.
• Must have a business idea to develop the product with a scope of scaling
• According to the Companies Act of 2013 and the SEBI (ICDR) Regulations of 2018, Indian promoters must own at least 51 percent of the company at the time of application to the incubator.
• The seed support is generally available in grants and debt/convertible debentures.

Application procedure for Startups

The application procedure for availing the seed fund from the incubators by the startups under the StartUp India Seed Fund Scheme is as follows:

Startup India Registration

• Go to https://seedfund.startupindia.gov.in/.
• On the top right side of the homepage, click the 'Login' button, then the 'Create an Account' option at the bottom of the "Login" tab.
• The ‘Startup India’ registration page will open.
• After filling out the form, click the 'Register' button.
• An OTP will be sent. Enter the OTP and click the ‘Submit’ button.

Startup India Seed Fund Application

• Go to the website again and click on the ‘Apply Now’ button on the right-hand side of the homepage.
• Click on the ‘Apply Now’ button under the ‘For Startups’ option and log in using the username and password registered.
• The application form will open. Put in all the details, upload the documents, and click on the ‘Submit’ button.
• The application will be submitted for the selection of the startup.

Selection of Startups for the Scheme

The Eligible Incubator will select startups for this scheme based on the following criteria:

• Idea
• Feasibility
• Novelty
• Fund Utilization Plan
• Business Plan
• Presentation
• Potential Impact

Benefits

To register a company in the U.S., several essential criteria must be met.

• Under this scheme, up to Rs 50 lakh in financial assistance will be provided to startups at an early stage through incubators.
• The incubator will disburse the seed fund to an eligible startup:
  - As a grant for validation of “prototype development, proof of concept or product trials”-  Up to Rs. 20 Lakh        
  - Investment for commercialization, market-entry, or scaling up through debt-linked instruments - Up to Rs. 50 Lakh
• Once incubated, physical infrastructure, testing support, mentoring for prototype or commercialization, human resources, and legal compliances are provided to the startups, all by the incubators.
• For eligible startups, income tax and capital gains tax exemptions are available.

Post funding process

Each incubator must track specific criteria for each beneficiary startup. Every beneficiary startup must present the reports to its incubators periodically. The data is submitted to Startup India in real-time via their web dashboards and further to the EAC quarterly. Each Startup’s return on investment is also reported by the designated incubator.

• Proof of concept
• Prototype development
• Progress of product development & field trials
• Turnover of startup
• Progress of market launch
• Quantum of loan, angel, or VC funding raised
• Jobs created by startup

Frequently Asked Questions