FAQ on Private Limited Company Registration

How much time is needed for setting up a private limited company in India?

On average it takes 7-12 days for completion of registration, 2 different approvals (Name Approval & Final Approval) are required from government bodies. However, this is dependent on the workload of the Central Registration Centre (CRC), MCA.

Do I need to be physically present during this process?

No, company registration is a completely online process. All the required documents are filed electronically, so you would not need to be physically present at all. You would just need to send us scanned copies of all the required documents & forms.

Who can be a member of a Private Limited Company?

Any individual or organization can become the member/shareholder of the private limited company including foreigners/NRI. However, such a person must be 18+ above in terms of age and should have a valid PAN card.

How many directors are required for the formation of a Private Limited Company?

There should be a minimum of 2 directors in Private Limited Company, out of which atleast 1 director should be a permanent resident of India.

Does a private limited company have continuous existence?

Yes, private limited company shall have perpetual succession as per law. However, it is pertinent to note that statutory annual compliances are required to be completed by company mandatorily. In case of non-compliance Registrar of Companies (ROC) shall be bound to struck off the name of company.

Why is Private Limited Company called as a separate legal entity?

A private limited company is a legal entity and is established as distinct person under the Act. It is treated as a different person which can own a property and have debts or creditors. The members, directors, shareholders of a company have no liability to creditors of a company in case the company is unable to pay the debts.

How should I choose a name for a Private Limited Company?

For incorporation of a company, a unique name of a company must be reserved with the Ministry of Corporate Affairs (MCA). The name should qualify guidelines as prescribed by MCA. To know more about name approval guidelines, refer to our article – https://www.registrationarena.com/name-approval-guidelines-as-per-companies-act-2013/

What are factors one should consider in selecting the company name?

• It must be short & simple – The name must be concise and not be too long. People should be able to say it easily and they should be able to recollect your company’s name the first time they read it or hear it.
• It must be meaningful – The name of the company should be related to the business. It must fit the company’s branding.
• It must be unique – The name of the company mustn’t be the same or identical to an already existing company or a trademark. One must preferably avoid the plural version.
• Add Suffix – The name of the company must end with the suffix “Private Ltd” in a case of a Private limited company and “LLP” in case of a limited liability partnership.
• It shouldn’t be illegal / offensive – The name of the company shouldn’t be against the law. It shouldn’t be abusive or against customs and the beliefs of any religion.

How many names can I submit for name reservation to MCA?

Initially, you can submit 2 names for name reservation to MCA out of which 1 name will be approved based on availability. If the initial 2 names are rejected then one more chance of re-submission for applying fresh 2 names is provided. So, in total 4 names can be applied in a single application.

What is the minimum capital needed to form a Private Limited Company?

There is no minimum capital required as such prescribed. However, one needs to start a company with a minimum capital of Rs. 02.00 if there are 2 shareholders

I am the only director and shareholder; can I form a Private Limited Company alone?

No, there should be atleast 2 directors/shareholders for incorporation of Private Limited Company. However, a single person can register One Person Company (OPC) alone.

Can a salaried person or a person in employment become director of a Private Limited Company?

Yes, a salaried person or person in employment can become director of a private limited, LLP, or OPC. However, one needs to check the employment agreement if that allows for such provisions. In a lot of cases, the employers are quite comfortable with the fact that their employee is a director in another company. However, if there’s a restriction in becoming a director of a company, one can hold shares in a company and become a shareholder alternatively.

Can a person under employment in PSU or a government servant or a professional carrying on his practice be a shareholder in a private limited company?

Yes, a person under employment or a government servant or a professional carrying on his practice can be a shareholder in a private limited company. However, one needs to check if there’s any restriction from governing body, authority or ministry.

What is the difference between a director and a shareholder?

A shareholder or member is an owner of a company who holds certain shares in the company and his name is entered in the register of members of the company. Whereas Director is a person who manages the day-to-day function of a business. Director and shareholder may or may not be the same person.

Can directors and shareholders be the same person in the company?

Yes, directors and shareholders can be the same person in a company. But if you want to have separation in ownership and management then you can appoint a different individual as shareholders and directors.

Can a minor person become a director or shareholder of a Private Limited Company?

No, a minor cannot become a director or shareholder in a company. However, minor can become a member/shareholder of a company through gift and/or inheritance but he cannot enter into agreement to buy shares.

What is Memorandum of Association (MoA) and Articles of Association (AoA)?

The Memorandum of Association (MOA) is a document that sets out the constitution of a company and is therefore the foundation on which the structure of the company is built. It defines the scope of the company’s activities and its relations with the outside world.

The Articles of Association (AOA) are company’s bye-laws or rules and regulations that govern the management and internal affairs and the conduct of its business. Both the documents are required to be registered with the Registrar of Companies at the stage of incorporation of the company.

While incorporating a private limited company, what is the maximum number of shareholders and directors that I can keep?

You can incorporate a private limited company with a maximum of 200 shareholders and 15 directors. However, only 3 DIN’s can be obtained through SPICE+ forms, so if remaining directors are not having DIN they shall be admitted as directors after the company is incorporated.

Is it required to have a company’s books audited?

Yes, a private limited company should get its book audited and file the same with the Registrar of Companies (ROC) every year.

Can I register a Private Limited Company on my home or residential address?

Yes, you can register the company at your residential address. You need to submit the utility bill of your home address along with the No Objection Certificate from the owner of the premises.

Can NRIs/Foreign Nationals become Director and Shareholder in a Private Limited Company in India?

Yes, NRIs and Foreign National can become directors and shareholders in a Private Limited Company along with the required documents, also they can hold majority shares in the company. However, at least one Director on the Board of Directors should be a permanent resident of India.

What if there are no partners available, can I register a company with my family members as director and shareholder?

Yes, it is good to register a family member as a partner i.e., shareholder/director in a private limited company. After registration of company, shareholding or directorship can be changed at any point of time as per convenience and requirement.

What is the minimum number of directors required to form a private limited company?

Minimum no. of directors for incorporating a Private Limited Company: 2, for One Person Company: 1, for Public Limited Company: 3 and, for producer company: 5.

What is the minimum number of shareholders/subscribers required to form a private limited company?

Minimum no. of subscribers/shareholders to form a Private Limited Company: 2, for One Person Company: 1, for Public Limited Company: 7, and for Producer company: 10.

What is Director Identification Number (DIN)?

DIN is a unique Identification Number allotted to an individual who is appointed as a director of a company, in respect of a new company an application for allotment of a maximum of 3 DIN’s shall be made through SPICe+ form at the time of its incorporation

How do I apply for a name if the name of a Trade Mark is included in the proposed name?

In case the proposed name includes a reference to a Trademark name, the applicant must ensure that he has attached the No objection certificate (NOC) from the owner of the trademark.

Can I induct any other Company or LLP as a shareholder in my company?

Yes, you can induct or allot shares to any other Private Limited Company, Public Company, LLP, and Registered Society. However, HUF and Partnership firm cannot hold shares in any Private Limited Company.

What are SPICe+ Form?

SPICe+ is an integrated Web form for incorporation of a company simultaneously offering 10 services by 3 Central Govt Ministries & Departments. (Ministry of Corporate Affairs, Ministry of Labour & Department of Revenue in the Ministry of Finance) and Two-State Government (Maharashtra & Karnataka), thereby saving as many procedures, time, and cost for Starting a Business in India. SPICe+ is a part of various initiatives and commitments of the Government of India towards Ease of Doing Business (EODB).

Is registration for Profession Tax through SPICe+ mandatory all over India?

No. Registration for Profession Tax shall be mandatory through SPICe+ only in respect of new companies incorporated in the State of Maharashtra and Karnataka.

Is it mandatory for all new companies incorporated all over India to get Registration for EPFO and ESIC through SPICe+? 

Yes. Registration for EPFO and ESIC shall be mandatory for all new companies incorporated w.e.f 23rd February 2020 through SPICe+ webform and EPFO & ESIC registration numbers shall not be separately issued by the respective agencies. However, in case the company is being incorporated in an area that falls under ‘no implemented area’ for ESIC, ESIC registration shall not be applicable.

However, compliances are not required to be carried out in respect of EPFO and ESIC provisions until the company surpasses the threshold limit provided in EPFO and ESIC provisions.

How will I get my Incorporation documents like Certificate of Incorporation, MoA, AoA, PAN, TAN, etc.?

You will receive these documents in soft copy via email as well as we shall send you a printout of these documents at your address.

Can I do Private Limited Company registration myself?

No, you have to take help from a Professional CS/CA/CMA/Advocate/Consulting Firm for registration of the company as it will require certification from any of these professional

How can I verify whether my Company is registered or not?

You will receive a certificate of Incorporation of Company approved by Government, alternatively, you can also check Corporate Identification Number (CIN) and the name of the company on the Ministry of Corporate Affairs (MCA) portal under “View Company/LLP Master Data” option.

What are the Authorised capital and paid-up capital of the company?

The authorised capital is the maximum limit of capital that a company may raise through the issue of shares to the shareholders. On the other hand, paid-up capital is the amount that is actually paid and subscribed by the shareholders of the company. The Paid-up capital of a company cannot exceed authorise capital of a company. Stamp duty is paid on the authorised capital of a company.

Is GST mandatory for a Private Limited Company?

No, GST registration is required for those businesses whose aggregate turnover crosses the prescribed limit or such business that does the inter-state supply of goods/services, etc. So, every company has to check whether it supplies goods to different states or qualifies for the prescribed turnover limit or any other conditions as specified under GST laws.

Can I do multiple businesses in one Private Limited Company?

Yes, you can do multiple businesses in one private limited company. However, the company’s MOA should contain such objects and such MOA should be approved by the Registrar of Companies (ROC). Unrelated activities must be avoided.

Do I need to invest any paid-up capital before or at the time of incorporation of the company?

No, you don’t need to invest any capital before or at the time of incorporation of a company.

When do I need to invest paid-up capital into the company?

Paid-up capital which was subscribed in the MOA at the time of incorporation has to be deposited by all shareholders into the bank account of the company within a period of 180 days from the date of incorporation.

How is a public limited company different from a private limited company?

A public limited company is a company that is not a private limited company and can be formed for any lawful purpose by 7 or more persons. The securities of a public company may be quoted on a Stock Exchange. Its number of members is not limited to 200 and can induct unlimited members.

Is there any renewal process or charge for a private limited company?

No, there is no renewal of a private limited company, once it’s registered it will be valid for a lifetime. However, you have to do mandatory compliance every year.

What are the mandatory compliances for private limited companies?

Know about mandatory compliances here –

Can I change the registered office address of the company later on?

Yes, you can change the registered office address of the company after the company is registered, by following the prescribed procedure as per law.

Can I keep the virtual office or Co-working space as the registered office address of my company?

Yes, you can keep virtual office or co-working space as registered office address of the company by providing utility bill of such office premises along with No Objection Certificate (NOC) from the owner. However, you have to make sure that you have the facility to receive and acknowledge letters, notices, and documents from various authorities at that address. Also, you have to paint or affix the company’s name and address outside office.

Will there be any physical verification of the registered office address by the Registrar of Companies (ROC)?

There is no physical verification of the registered office but if the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may cause a physical verification of the registered office of the company.

Is there any stamp duty required for the incorporation of a company and how it is paid?

Yes, there is a stamp duty to be paid during incorporation. The stamp duty depends on authorised capital and it is different for each state. The stamp duty is generally paid online during the incorporation process.

What is Digital Signature Certificate (DSC)?

Digital Signature Certificates (DSC) are the digital/electronic format of physical or paper certificates. Few Examples of physical certificates are drivers’ licenses, passports, or membership cards. Certificates serve as proof of identity of an individual for a certain purpose; for example, a driver’s license identifies someone who can legally drive in a particular country. Likewise, a digital certificate can be presented electronically to prove one’s identity, to access information or services on the Internet, or to sign certain documents digitally.

Why is Digital Signature Certificate (DSC) required?

Physical documents are signed manually, similarly, electronic documents, for example, e-forms are required to be signed digitally using a Digital Signature Certificate.

Who issues the Digital Signature Certificate?

A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate under Section 24 of the Indian IT-Act 2000.

Whether every subscriber and/or director must obtain DSC at the time of incorporation? 

Yes, in case the number of subscribers and/or directors to eMoA and eAoA is up to 20 and all such subscribers and/or directors have DIN/PAN, it shall be mandatory for each one of them to obtain a DSC.