Private Limited Company
Private Limited companies are one of the most popular business structures in India. About 93% of companies are registered as Private Limited Company. This type of business entity limits owner liability to their shares and restricts shareholders from publicly trading shares. Their tremendous benefits and least requirements make it an easy and beneficial business structure.
The ownership of a Private Limited Company is split into shares owned by shareholders. A company must distribute the profits of the company among shareholders once it has paid corporation tax out of profit. A private limited company is operated by directors who are legally required to perform certain duties for the company and its shareholders.
What is Private Limited Company Registration?
Private limited companies are one of the most efficient business structures registered as per the provisions of Company Act, 2013. These worthwhile companies are regulated by the Ministry of Corporate Affairs and governed under the rules of Companies Incorporation Rules, 2014.
Incorporated with the least requirements such as two shareholders and two directors, it is the first choice of growing businesses and startups in India. A person can act as a shareholder and a director at the same time. Corporate legal entities can only be part of a company as a shareholder. Apart from the ease in incorporation, it has various other benefits such as separate legal entity, perpetual succession, limited liabilities, etc.
What are benefits of online Private Limited Company Registration in India?
Private limited companies have various benefits enlisted as follows:
1. Limited Liability of the Shareholders
Registering as a private limited company benefits the shareholders with limited liability to their personal assets. This means, in case the company is suffering from loss or debt, only the investments made in company would be used to clear the debt and loss and the personal assets of the shareholders remains protected.
2. Separate Legal Entity
A registered private limited company is itself a separate legal entity and posses all the rights to sue or be sued. It acts as an artificial person that has its own PAN and can buy a property on its own name.
3. Easy Expansion
Registered Private limited company is considered as a corporate entity that attracts various angel investors and venture capitalists that helps them to expand and raise their funds for the growth of their startups and business.
4. Enhanced Value in Market
A registered company is considered more trustworthy as compared to the non-registered ones. Information regarding the registration of Pvt Ltd Company can easily be obtained from the website of Ministry of Corporate Affairs. Vendors, suppliers and investors trust them over the other business structures. As a result, it enhances the brand value of the company amongst the customers and other investors and suppliers.
5. Ease in transfer of ownership
It is quite easy for private limited companies to transfer their equity to new members and issue fresh shares.
6. Perpetual Succession
Private limited companies are considered as separate legal entities and are separate from the existence of their owners which means they cannot be dissolved or end because of the death, retirement or insanity of any of their member/ director/ shareholder.
7. More Credit Availability
Private limited companies can easily raise their credits with the help of financial institutions and banks due to their organized structure and strict regulations of the compliances.
How to register a Private Limited Company?
There are certain requirements, documents and procedures that need to be followed at the time of registration of Private Limited Company.
Minimum Requirement for Private Limited Company Registration in India:
- Minimum: 2 directors
- Maximum: 15
- Out of all the directors, at least one director should be an Indian Resident.
- Minimum: 2 shareholders
- Maximum: 200 shareholder
3. No capital share requirement
4. Mandatory DIN (Director Identification Number) of all the directors
5. Mandatory DSC (Digital Signature Certificate) for at least one director
Documents required for Private Limited Company Registration
For the Directors: Indian Resident
Here is the list of mandatory documents that Indian Nationals Directors of the company needs:
PAN Card: A copy of PAN of all the proposed directors would be required for the company incorporation. PAN is a unique identification number issued to Taxpayers by the Income Tax Department of India. It is mandatory for all the directors to submit their PAN card during the registration process.
CheckPoint: PAN card details including the name would be used by the MCA throughout the registration process. Any ignorance should be checked and corrected before submission.
Address Proof: All the proposed directors of the company have to submit their address proof. Address proof must contain the full name of the director as mentioned in PAN card and in current address. In addition, the documents should be latest and not older than two months.
Following is the list of documents that can be used as address proof for the Indian Citizens:
- Voter card
- Aadhar Card
- Electricity Bill
- Ration Card
- Telephone Bill
- Driving License
Residential Proof: Along with the address proof, residential proof of the directors is also required during the registration process. Address proof must contain the name of the designated director, as mentioned in his/her PAN card and should not be older than two months.
Here is the list of documents that can be used as a residential proof by the directors:
- Bank Statement
- Electricity Bill
- Mobile bill
For the Foreign National/NRI Directors
Here is the list of mandatory documents for the Foreign Nationals/NRI Directors of the Company:
Passport: Passport is mandatory for the foreign nationals to submit as an identity proof. It must be notarized in the issued country. In case date of birth of the director is not mentioned in the passport then he/she has to submit an additional document verifying D.O.B. Further, if the documents are in some other foreign language apart from English, a notarized copy of translation into English would be submitted along with the same document.
Address Proof: Foreign nationals must submit a notarized copy of address proof. It must contain the name and address of the directors, as mentioned on his/her passport. Additionally it should not be older than one year.
Following documents can be used by them as address proof:
- Driving License
- Bank Statement
- Government issued identity containing address
- Residence Card
CheckPoint: The document should be in English language or should contain a notarized translation document along with it.
Residential Proof: Along with the address proof, foreign national have to submit a residential proof that validates the current address of the proposed director.
Following documents can be used by them as a residential proof:
- Bank Statement
- Electricity Bill
- Mobile bill
Check Point: The document should be in English language or should contain a notarized translation document along with it.
Proof for Registered Office
A proof for registered office is submitted along with other documents or can be submitted within the 30 days of company’s incorporation.
Here is a list of documents required for registered office:
- Registration Document of the premises in the name of the respective company
- Rent agreement along with rent paid receipt which is not older than a month.
- Any utility bill such as electricity, gas, telephone bill that is not older than two months.
- A notarized no objection certificate from the owner of the residence.
How to register Private Limited Company Online?
Company Name Selection
First of all finalize your company’s legal name. The name should be unique and non-offensive to the provisions of the Companies Act, 2013. Check the name availability through the MCA portal.
It is a mandatory document required to sign all the documents such as ROC compliance e-forms, e-income tax returns, etc in an electronic format. All the directors must obtain their DSC that would be used to sign the registration application.
DIN is a short-form used for Director Identification Number. Just like DSC it is also mandatory for all the directors to obtain their DIN. Before the DIN, application was submitted individually but now it can be submitted along with the SPICe form at the time of company incorporation.
Name Approval (RUN):
RUN here stands for Reserve Unique Name. It is an application filed for approving name of the company with the Ministry of Corporate Affairs.
Submission of SPICe Form
Once the name approval has been done, you have to submit the application for company incorporation through SPICe Form to the MCA along with Memorandum of Association and Article of Association.
As per the latest Amendment, AGILE (INC-35) is submitted along with the SPICe form that provides registration for EPFO, ESIC and GST for the proposed company.
After the verification of all the documents, Certificate of Incorporation along with CIN is provided to the company.
Apply for PAN, TAN and Bank Account:
Apply for PAN of the company and open a bank account to start the transactions.
Is it possible to start a new business without registering it?
Anyone can start a business without registration. Running a business without registration simply means operating a business as a sole proprietor. But as a sole proprietor you have to register with your local government to collect and file state taxes. In India, it is necessary to have a current account to operate a business without registration. To open the current account, the bank will ask for any government registration. It can be any government registration such as MSME registration, Shop and establishment registration or GST registration.