How To Register a Construction Company In India

In India, construction companies have significant demand since it is a developing country and much construction work happens. Many also demolish old buildings or houses and reconstruct them with new designs.

Thus, the construction industry is experiencing rapid growth. However, this business is capital-intensive since you must purchase equipment for construction work. The process of construction company registration is provided below.

What is a Construction Business?

The construction business is a business which carries on the work of building a structure or renovating it. It is a type of business engaging in the activities such as infrastructure, constructing roads, developing buildings and carrying out other construction projects.

Different Business Structures of Construction Company

You can choose the below business structures to establish a construction company:

• Private limited company: It is a company operated privately by a group of people. The shares of this company cannot be publicly traded.  
• Public limited company: It is a company established by more than seven members, and the shares of this company can be publicly traded.
• Limited Liability Partnership (LLP): A LLP is established by two or more designated partners. It is operated like a partnership firm but has the features of a company.
• One Person Company (OPC): OPC is established by a single person. It has the features of a company but cannot have more than one member.
• Partnership firm: A firm does not have the features of a company. Two or more partners operate it under a partnership deed.
• Subsidiary company: A foreign company can establish a construction company in India as an Indian subsidiary company.

Requirements to Start a Construction Company

Create a business plan

It is essential to make a business plan before starting a construction company. A business plan should include everything needed to carry on the business, such as costs, investments, funding, competitors, the money required and limits. A business plan is required to apply for equity or debt funding and send it to investors to obtain funding and grow the business.

Have office premises

A construction company must have an office space or premises to carry out its business. Clients will visit your company to discuss their plans and construction requirements. The office space can be rented or purchased. The office address will be the address for correspondence during the company registration process.

Register the company

You should apply for company registration with the Registrar of Companies (ROC) to operate the business legally. Before applying for company registration, you should prepare your company’s Memorandum of Association (MOA) and Articles of Association (AOA). You should obtain the shop and establishment registration. You should also apply for permissions from local authorities like the fire department, water department, panchayat or municipality, etc. 

Get insurance for the company

You should get insurance for the business to avoid losses arising from unexpected circumstances. Insurance for construction companies should ideally cover the losses from unforeseen accidents during the course of project execution relating to civil engineering works and the construction of buildings. You should also get insurance for your company workers to cover expenses arising from injury or accident during construction works.

Purchase the required equipment

A construction company must have the required equipment, tools and machinery to carry out the construction work. Thus, you must purchase the equipment before starting the business. After purchasing or leasing the equipment, you need to check if they are in working condition from time to time. You will also have to plan the costs required for the repair of the equipment when damaged due to wear and tear. 

Hire workforce

To run a construction business, you have to hire a workforce. A construction company requires staff with construction skills and experience to carry out the construction work. The staff of a construction company includes a civil engineer, contractor and daily wage workers.

Market the business

After starting the construction business, you must market the business to acquire customers. You must promote your company by marketing it on social media and in advertising. You can advertise it through banners or newspapers to reach many people. You can even develop a network with contractors and engineers to promote your business.

Process of Construction Company Registration in India

Decide the structure

You need first to decide the business structure for the company. Since the company requires considerable staff and funding to do construction work, a private or public limited company is the preferred business structure to establish a construction company in India. Nowadays, many are choosing the LLP structure also. It is difficult for an OPC and partnership firm to get the capital and funds required to hire workers and purchase equipment for the construction business. Thus, many business owners do not prefer an OPC or partnership firm to establish a construction company.

Get DIN and DSC of directors

The directors of the company must apply for Director Identification Number (DIN) and Digital Signature Certificate (DSC) before applying for registration. The DIN and DSC are required to file the company incorporation form. In the case of an LLP, the designated partners must apply for a Designated Partner Identification Number (DPIN)  and DSC to file the LLP registration form.

Reserve the company name

The company owner must decide the company name which complies with the requirements of the Companies Act, 2013 and its rules. The company name should contain the words construction or infrastructure, such as ‘ABC construction private limited’ or ‘ABC infra private limited’. After deciding on the name, the company must reserve the name by filing the Part-A of the SPICe+ form on the Ministry of Corporate Affairs (MCA) website. The ROC will check the name and approve it when it is not similar to an already registered company name or trademark. 

Submit the company incorporation form

Once the above formalities are completed, the company must fill the Part-B of the SPICe+ form on the MCA portal. The SPICe+ form is the company incorporation form. The required documents must be attached to the SPICe+ form, and the company must pay the registration fee. The process of submission of the SPICe+ form is an entirely online process.

Company registration certificate

After submission of the SPICe+ form on the MCA website, the ROC will examine the form and the documents. Once the ROC approves the company incorporation form, it will issue the certificate of registration of the company. The company registration certificate is evidence of the company’s establishment.

Documents Required for Construction Company Registration

• PAN of all directors and shareholders
• ID and address proof of all directors and shareholders 
• Proof of registered office of the company
• NOC from the owner of the registered office premises when it is on a rented/leased property
• Company MOA and AOA
• Passport, in case of foreign director