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 are 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, you will be responsible for paying for the company’s liability only to the level of the contribution made by you.
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.
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.
A company has ‘perpetual succession’, which 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;
A private limited company needs to have at least two shareholders, and on the other hand, the maximum number of shareholders can be two hundred.
A private limited company has 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.
The name of your business should be unique. Additionally, the suggested name should not match with any companies or trademarks in India, which already exist.
Minimum Capital Requirement:
There is no minimum capital requirement for the company.
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.
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
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.
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: Name Reservation
Ahead of making an application to incorporate and register private limited Company in India, the name for the proposed company needs to be reserved. The availability of name can be checked in MCA portal.
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 3: Filing Form SPICe+
After the company’s name has been approved the next step is to file the SPICe+ form Part B with the purpose to get the company registration certificate. Together with it, other information to apply for tax registrations such as PAN and TAN. The forms linked to SPICe+ are AGILE-PRO, SPICe+MoA and SPICe+AoA, URC-1 and INC-9. SPICe+ form Part B and other linked forms can then be uploaded on the MCA portal. For making a payment a Service Request Number is generated towards company incorporation. After the successful payment the forms shall be processed.
All the documents and applications are further verified by the higher authorities and it takes around 7 to 9 working days.
Step 4: Issuance of Certificate of Incorporation
Once all the documents get verified by the authorities, the application for the issuance of Certificate of Incorporation shall be made. 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.
The registration of a private limited Company in India can be processed with ease by consulting a practicing 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:A Guide on Exemptions for Private Limited Companies