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Sakshi Sharda
| Updated: 23 Jul, 2018 | Category: Company Registration, Private Limited Company

Steps for Private Limited Company Incorporation In India

Private Limited Company Incorporation in India

A Private Limited Company is an entity registered under The Companies Act, 2013. The name itself suggests that the liability of the members is limited. The Ministry of Affairs (MoA) of Government of India mandates Private Limited Company Incorporation. The Private Limited Company Incorporation is necessary to enjoy the tax benefits incorporated by the Ministry of Affairs. In this article, we will discuss the procedure followed for Private Limited Company Incorporation in India.

What is a Private Limited Company and its Characteristics?

Private Limited Company is the most popular type of business entity in India. A Private Limited Company is a type of company which offers limited liability to its shareholders with certain restrictions imposed on the ownership. Legal Protection is also provided to the shareholders of the Private Limited Company. The Ministry of Affairs has made the process of Private Limited Company Incorporation very simple now; hence leading an increase in the ease of doing business in India. The Characteristics of the Private Limited Company are as follows:

  • According to the provisions of the Companies Act, 2013 a minimum of 2 members and maximum of 200 required for a Private Limited Company.
  •  The Liability of each shareholder is limited. This means that if the Company faces loss, the shareholder is liable to sell their assets for payment.
  • The Company keeps on existing in the eyes of the law in case of death, the bankruptcy of member or insolvency.
  • No need to maintain an Index of Members
  • Only 2 Directors are needed for a Private Limited Company Incorporation.
  • No need to issue a prospectus of the Company.
  • Minimum subscription is needed for carrying on the business.

What are the Steps followed for Private Limited Incorporation in India?

The process followed for Private Limited Company Incorporation is as follows:

Private Limited Incorporation in India

Name Reservation

The first step to be followed in Private Limited Company Incorporation is Filing for Name Reservation through the RUN (Reserve Unique Name) Form. There should be two names filed in the RUN Form. The Registrar will choose between the two names and will approve one. The Registrar can reject both names and can ask the applicant for re-submission of New Names. Another alternative to file for name reservation is through SPICe+ Form.

DSC and DIN

The Registration Process of the Company is online, so the Digital Signature Certificate (DSC) is required. The DSC can be obtained by the Authorized Agency recognized by the Government of India. DSC is mandatory for all the subscriber and witnesses mentioned in the Memorandum and Articles of Association. Any person (not having DIN) proposed to become a Director in a new Company can apply for Director Identification Certificate (DIN) through the SPICe+ Form. On the other hand, if any person intends to become a Director in an existing Company, then the application should be made through DIR-3 Form.

MoA and AoA Drafting

The Memorandum of Association (MoA) and Articles of Association (AoA) are vital documents for a Private Limited Company Incorporation in India. The MoA and AoA are the documents which clarify the scope of operation and define how the Company will be operated. Both documents are referred to as the Constitution of the Company. These documents explain the relationship of the Company with its shareholders. Now, these documents are in electronic form, i.e. eMoA and eAoA. These documents can be filed online through SPICe+ forms.

Application for Company Incorporation

Once all the documents are completed, the application for Private Limited Company Incorporation is made through the SPICe+ Form with the allotment of PAN and TAN. After the verification of the documents by the concerned Registrar of Companies, the Certificate of Incorporation will be granted for the Private Limited Company.

Read our article:Private Limited Company Registration Procedure in India

What Documents are Required for Private Limited Company Incorporation in India?

In case the Director is an Indian National

  • Identity Proof of Proposed Directors, i.e. Permanent Account Number (PAN) Card.
  • Address Proof of Proposed Directors, i.e. Adhaar Card, Ration Card, Driving License.
  • Proof of Residence of Proposed Directors, i.e. Bank Statement, Electricity Bill, Phone Bill.
  • Board Resolution
  • Digital Signature Certificate of Directors
  • Director Identification Certificate of Directors

In case if the Director is a Foreign National

  • Identity Card of Proposed Director, i.e. Passport.
  • Proof of Residence of Proposed Director, i.e. Residence Card, Drivers License, Passport.
  • Proof of Residence of Proposed Directors, i.e. Bank Statement, Electricity Bill, Phone Bill. 

What is the Benefit of Private Limited Company Incorporation in India?

Separate Legal Entity

The Company is a legal entity and a juristic person established under the Companies Act, 2013[1]. The shareholders of the Company have no personal liability to the creditors for Company debts…

Perpetual Succession

In case of death or insolvency, the Company exists in the eyes of the law forever. Until it is legally dissolved there will be uninterrupted existence of the Company.

Owning Property

Being an artificial person, the Company can acquire, alienate, hold, and enjoy the property in its own name.

Foreign Investment

Through Foreign Direct Investment (FDI), foreign investments are accepted, which helps in the building of the economy of the country.

Conclusion

A Private Limited Company is a company privately held for small business. The Private Limited Company Incorporation is a long and time taking procedure. We at Corpbiz have experienced and expert professionals to help you in the process of Private Limited Company Incorporation. Our professional will guide you and help you in getting through the procedure of Private Limited Company Incorporation. Our professionals will plan ideally and will ensure the successful completion of the process.

Read our article:Advantages of LLP (Limited Liability Partnership) over Private Limited Company

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Sakshi Sharda

Sakshi Sharda has done BBALLB(HONS) and holds a strong knowledge on the matters pertaining to finance and law. From the past one year she is working as a legal advisor and in her leisure time she works on improvising her knowledge. Sakshi is spreading her knowledge by writing for Corpbiz.

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