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Tanya Verma
| Updated: 19 Nov, 2019 | Category: Company Registration, Private Limited Company

Private Limited Company Registration Procedure in India

Private Limited Company

A Private Limited Company is a type of entity in India which holds many advantages over any other form of existence in our country. Furthermore, as per statistics, about 93% of the entities registered in India is in the form of a Private limited company. In other words, this form of entity is very popular and is opted by major entrepreneurs and industrialists.

What is a Private Limited Company?

A Private Limited Company is a kind of entity in India which is privately held by businesses. Additionally, this type of entity limits owner liability to their shareholdings, the total number of shareholders of the company to 300 and restricts them to trade the shares of the company publically.

Advantages of Private Limited Company Registration

Incorporating a private limited company in India holds numerous benefits for the owners/ members of the company. Some of those advantages are as follows;

  • The limited risk to personal belongings: 

The shareholders of a private company have limited liability. Therefore, it means that as a shareholder[1], you will be responsible for paying for the company’s liability only to the level of the contribution made by you.

  • Legal Entity:

A private limited company has a legal entity separate from the individual owner. This means that the company is accountable for the management of its assets and liabilities, debtors and creditors. And you are not responsible for it. Therefore, the creditors cannot proceed against you to recover the money.

  • Ease in the arrangement of capital:

Although registering a private limited company comes with compliance requirements, it is still preferred by entrepreneurs. It has opted over any other entity type as it helps them raise funds through equity, expand and limits the liability at the same time.

  • Builds Trust:

Companies in India are registered with the registrar of companies(ROC) under Companies Act 2013. Therefore, anyone can check the details of the company through the Ministry of Corporate Affairs (MCA). Also, the details of all the directors are provided at the time of the formation of the company. Hence, a private limited company is a business structure that is trusted more.

  • Continuous Existence:

A company has ‘perpetual succession’, that is continuous or exists uninterrupted until it is legally dissolved. Moreover, a company, being a separate legal person, is unaffected by the death or cessation of any of the member and continues to be in existence irrespective of the changes in membership.

Minimum necessities to start a Private Limited Company

According to the provisions of the Companies Act, 2013, the minimum requirement to incorporate a private limited company as follows;

Two shareholders:

A private limited company need to have at least two shareholders, and on the other hand, the maximum number of shareholders can be two hundred.

Two Directors:

A private limited company have got to have at least two directors. However, the maximum number of directors in the company can be 15. Furthermore, among the directors in the business, at least one of them must be a resident of India.

Unique Name:

The name of your business should be unique. Additionally, the suggested name should not match with any companies or trademarks in India, which are already existing.

Minimum Capital Requirement:

There is no minimum capital requirement for the company.

Registered Office:

The registered office of a company does not have to be a commercial space. Furthermore, even a rented home can be used as the registered office of the company, as long as you obtain a No Objection Certificate or NOC from the landlord.

Documents required

The following documents are required to register a private limited company;

  • Address proof of directors: electricity bill or bank statement or landline bill or mobile bill (not older than one month)
  • Passport size photos of directors
  • Photo ID proof of directors: voter ID card, Passport or Driver License
  • Rent agreement of your registered office
  • Specimen signature
  • Self-declaration of your directorship in other companies
  • No objection certificate or NOC from the owner of the property of the property
  • Aadhaar card
  • PAN card

Read our article:How to Apply for LLP Registration in India

Steps to Procure Private Limited Company Registration

You are required to follow the given steps to obtain private limited company registration;

Step 1: Acquire Digital Signature Certificate:

The first and foremost step is to obtain the DSCs or digital signature certificate of the Personnel involved in the Private Company. The requirement of DSCs arises at the time of filing of e-forms on MCA’s online portal. Digital Signature Certificate, commonly known as DSC, is issued by the Certifying Authority in token form and is valid for one or two years.

The officials involved in company formation in India are the Directors and Subscribers of the proposed company. Furthermore, the Subscriber is a person who is the promoter of the company and the projected shareholder. Additionally, the said shareholders are required to file e-AOA and e-MOA by affixing DSCs while the proposed directors need to obtain DIN by making an online application in the next step.

List of Documents required for obtaining Digital Signature Certificate:

  • Passport size photograph of the applicant;
  • Self-attested Address proof of the applicant; and
  • Self-attested PAN card of the applicant.

Step 2: Obtain Director Identification Number (DIN)

Director Identification Number or DIN is a unique number assigned by the Ministry of Corporate Affairs to the individual making an application for the allotment of DIN. The Director Identification Number is allotted for a lifetime by the Ministry unless it is withdrawn or surrendered.

The directors of the company need to obtain and intimate the DIN during the incorporation of the private limited company. Hence, obtaining DIN is mandatory for those who want to be appointed as a Director in any Company. Furthermore, the Director Identification Number obtained can also be used for the appointment of the same director in any other company and appointment as Designated Partner in the LLP.

Documents required for obtaining DIN

  • Passport size photograph of the applicant
  • Self-attested Address proof of the applicant
  • Self-attested PAN card of the applicant

Step 3: Name Reservation

Ahead of making an application to incorporate and register private limited Company in India, the name for the proposed company need to be reserved. The Application for Reservation of Name of Private Limited Company shall be made in Reserve Unique Name or RUN Form. The person needs to make an application for the name approval considering the provisions laid down by the Act.

Furthermore, the following general practice is adhered to choose and apply for a company name:

  • The name should be easy to remember and spell
  • It should be short & simple
  • Furthermore, it should be able to provide a distinct identity to the company
  • Also, the name should not contain any word which does not comply with the public policies or is banned
  • Lastly, it should not breach any registered Trademark nor should be similar/ identical to any other company or LLP, which is already registered.

After the application is approved, the registrar will reserve the same for a period of 60 days. The promoters need to make an application for the incorporation of a company within a period of 60 days. In other cases, failing to do so can result in the lapse of the reserved name, and you will have to apply for a name in a fresh application.

Step 4: Issuance of Certificate of Incorporation

After reservation of the name for the proposed company by submitting the RUN form, the application for the issuance of Certificate of Incorporation shall be made. Furthermore, the application for online registration of a company is also required to be made by submitting the online application of Simplified Proforma for Incorporating Company Electronically, or SPICe form.

The application is submitted by paying the prescribed Government Fees and Stamp Duty in case of concerned state on the online portal. Upon the review and verification of the application made in the SPICe forms, the registrar after his satisfaction issues the Certificate of Incorporation by providing his seal and signature in electronic form. Furthermore, The issued Certificate of Incorporation (CoI)  includes the date of incorporation as well as the Permanent Account Number (PAN) of the company.

Conclusion

The registration of a private limited Company in India can be processed with ease by consulting a practising professional like Corpbiz. Further, after online private company incorporation, the promoters and directors are required to maintain the active status of the company by complying with the provisions of the company such as filing the annual returns and other requisites as prescribed by the Companies Act, 2013.

Read our article:Public Limited Company Registration Process in India

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Tanya Verma

Tanya is working as writer & editor from past 2 years with experience in covering startup and technology related topics.

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