Buying and Selling Registered Companies in India: A Complete Legal & Practical Guide for Beginners

Introduction: Why Buying and Selling Registered Companies Is Growing Fast in India

India has emerged as one of the fastest-growing business ecosystems in the world. Along with startups and new incorporations, there is a rising demand for buying and selling registered companies in India. Entrepreneurs, investors, and professionals increasingly prefer acquiring an already registered company instead of starting from scratch.

Buying or selling a registered company in India is a completely legal process when done in compliance with the Companies Act, 2013, FEMA regulations (if applicable), and tax laws. However, beginners often find the process confusing due to legal, financial, and compliance complexities.

This guide explains everything you need to know about buying and selling registered companies in India, in a simple and beginner-friendly manner.

What Does Buying and Selling a Registered Company Mean?

Buying and selling a registered company refers to the transfer of ownership and control of an already incorporated business entity. This is typically achieved by:

Transfer of shares
Change in directors
Change in shareholders
Change in management control

The company remains the same legal entity, but ownership changes hands.

Types of Registered Companies That Can Be Bought or Sold in India

1. Private Limited Companies

The most commonly traded entities due to ease of transfer and scalability.

2. Limited Liability Partnerships (LLPs)

Ownership changes through amendment in LLP agreement and partner details.

3. One Person Companies (OPC)

Transfer is allowed subject to legal conditions and conversion requirements.

4. Dormant or Shelf Companies

Companies incorporated earlier but with minimal or no business activity.

Why People Buy Registered Companies in India

1. Immediate Business Start

Buying a registered company saves weeks or months required for incorporation.

2. Faster Access to Banking & Contracts

Existing PAN, TAN, GST (if active), and bank accounts speed up operations.

3. Established Business History

Some buyers prefer companies with past financial records or turnover.

4. Eligibility for Tenders & Licenses

Older companies often qualify for government tenders and approvals.

Why People Sell Registered Companies in India

Change in business plans
Financial restructuring
Exit from business
Strategic mergers or acquisitions
Non-operational or unused companies

Selling a registered company allows promoters to legally exit and recover value.

Is Buying and Selling Registered Companies Legal in India?

Yes. Buying and selling registered companies in India is fully legal, provided:

Share transfers comply with Companies Act, 2013
ROC filings are completed
Tax liabilities are disclosed
No fraudulent intent exists

Illegal practices include selling shell companies for money laundering or tax evasion, which attract strict penalties.

Legal Process of Buying a Registered Company in India

Step 1: Due Diligence

A thorough check of:

ROC records
Financial statements
Tax filings
Outstanding liabilities
Legal disputes

Step 2: Valuation of the Company

Company value depends on:

Net worth
Turnover
Assets & liabilities
Brand value (if any)

Step 3: Share Purchase Agreement (SPA)

A legally drafted agreement covering:

Purchase price
Payment terms
Representations and warranties
Indemnity clauses

Step 4: Share Transfer

Execution of:

Share transfer deeds
Stamp duty payment
Share certificate endorsement

Step 5: Change in Directors & Shareholders

Filing necessary forms with MCA/ROC.

Legal Process of Selling a Registered Company in India

Selling a company involves:

Preparing updated compliance records
Clearing pending filings
Disclosing liabilities
Executing transfer documents
Filing ROC forms

Transparency is critical to avoid future legal disputes.

Key ROC Forms Involved

MGT-7 / MGT-7A – Annual return
AOC-4 – Financial statements
DIR-12 – Change in directors
SH-4 – Share transfer instrument

Tax Implications of Buying and Selling Registered Companies

Capital Gains Tax

Selling shareholders may attract:

Short-term capital gains
Long-term capital gains

Stamp Duty

Applicable on share transfer depending on state laws.

GST

Generally not applicable on share transfer, but exceptions may apply.

Risks Involved in Buying a Registered Company

Hidden liabilities
Pending tax demands
Undisclosed legal disputes
Non-compliance penalties

This is why professional due diligence is essential.

Shelf Companies vs Active Companies

Factor	Shelf Company	Active Company
Business History	None	Existing
Risk Level	Lower	Depends on records
Cost	Lower	Higher
Compliance	Minimal	Requires audit

Buying Registered Companies for Startups & Investors

Startups often buy registered companies to:

Save time
Quickly onboard clients
Access credit facilities

Investors may acquire companies for:

Mergers
Asset acquisition
Market entry

Buying and Selling Registered Companies for NRIs & Foreign Investors

NRIs and foreign investors can buy Indian companies subject to:

FEMA guidelines
RBI reporting
Sectoral caps
FDI regulations

Professional compliance handling is crucial.

Common Mistakes to Avoid

Skipping due diligence
Ignoring past tax filings
Using informal agreements
Not filing ROC updates
Buying companies with unknown liabilities

How Long Does the Process Take?

On average:

Due diligence: 5–10 days
Documentation: 5–7 days
ROC approvals: 7–15 days

Total time: 2–4 weeks

Why Professional Assistance Is Important

Buying and selling registered companies involves:

Legal drafting
Financial analysis
Tax planning
ROC compliance

Professional handling protects buyers and sellers from future disputes.

Why Choose Manjeet Singh Sandhu for Buying & Selling Registered Companies

Manjeet Singh Sandhu provides end-to-end support for:

Buying registered companies
Selling companies legally
Due diligence & valuation
ROC & MCA filings
Compliance and structuring

Key Advantages:

Transparent process
Legal & tax expertise
Domestic & international client support
Complete confidentiality
Beginner-friendly guidance

📞 Contact Now – Buy or Sell a Registered Company Safely

📌 Manjeet Singh Sandhu
📱 Call / WhatsApp: 8700237256 | 9811993953
📧 Email: manjeetsinghsandhu@zohomail.com
🌍 Serving India, USA, Canada & International Clients

👉 Get expert guidance before buying or selling any registered company in India.

FAQs: Buying and Selling Registered Companies in India

Is it legal to buy a registered company in India?
Yes, if done as per law and compliance requirements.
Can a private limited company be sold completely?
Yes, through transfer of shares.
Are shelf companies legal in India?
Yes, if used for lawful purposes.
Do I need ROC approval for selling a company?
ROC filings are mandatory after changes.
What is due diligence in company purchase?
It is a legal and financial verification process.
Can NRIs buy Indian registered companies?
Yes, subject to FEMA and RBI rules.
How much does it cost to buy a registered company?
Cost varies based on company profile.
Is GST applicable on company sale?
Usually no, but exceptions apply.
Can loss-making companies be sold?
Yes, but valuation differs.
How to avoid fraud while buying companies?
Use professional legal and accounting support.

Conclusion

Buying and selling registered companies in India is a smart business strategy when done correctly. With proper due diligence, legal documentation, and professional guidance, it offers speed, flexibility, and growth opportunities for entrepreneurs and investors.

📞 Contact Manjeet Singh Sandhu today for safe, legal, and transparent company transactions.