Private Limited Company Registration in Chennai

Chennai, also known as Madras is the capital of the Indian state of Tamil Nadu. It is the biggest cultural, economic, and educational center. In addition, Chennai is the sixth most populous city in India. It is mostly visited by foreign tourists.

The Quality of Living Survey rated Chennai as the safest city in India. Also, this city is the second-largest exporter of information technology (IT) and business process outsourcing (BPO) services.

A business start-up or a company start-up is a decision of an entrepreneur and requires in-depth strategic, business, and legal considerations. Tamil Nadu is a state which offers us enormous business opportunities and scale of enterprises.

Therefore, if you are looking to build a business in India, Chennai is a place you should consider. Once you come up with a business idea and decide to start a business you need to follow some procedures to register a company in India.

Amongst small, medium, and large businesses in India, a Pvt Ltd Company is considered one of the most popular legal structures. Anyone who is looking to build a scalable business can choose it. Its Registration requires a minimum of two members and a maximum of two hundred members.

Introduction to Pvt Ltd Company

A Pvt Ltd Company is a type of small business entity that is held privately. In addition, the liability of members is limited to their shares and there can be a maximum of 200 members.

Further, a Pvt Ltd Company cannot invite the general public for subscribing to its securities. Ministry of Corporate Affairs (MCA), Companies Act 2013, and Companies Incorporation Rules, 2014 govern the Pvt Ltd Company registration in India.

The liability of shareholders is limited towards creditors, it is restricted only to the unpaid amount of shares. For that reason, banks/creditors can sell only the company’s assets but not the personal assets of directors and shareholders in case of default.

As a Private Limited Company can raise funds from outside India limits the liabilities of its shareholders, and offers employee stock options to attract top talent, it is generally chosen by startups and growing businesses.

Moreover, as these entities must hold board meetings and file annual returns with the Ministry of Corporate Affairs (MCA), they tend to be viewed with more credibility than a Sole Proprietorship or General Partnership.

• Membership

A Private Limited Company can be formed with a minimum of 2 members or shareholders. An individual person above 18 years of age or a corporate body can be a member or shareholder in it. Moreover, the maximum number of members/shareholders in a Private Limited Company can go up to 200.

• Directorship

A Pvt Ltd Company needs to have a minimum of 2 directors who shall manage the conduct and affairs of the company. The directors may be existing shareholders of the company or can be a person other than a shareholder. There may be a maximum of 15 directors in any company. Furthermore, every Indian Company has to ensure that they have 1 director who is a permanent resident of India.

• Restriction on Transfer of Shares

The members/shareholders of private limited companies cannot transfer their shares publicly. Therefore, there can be a restriction on the transferability of shares in these companies.

• Foreign Direct Investment (FDI)

Foreign citizens, foreign corporate entities, NRIs, or OCIs can invest in a Private Limited Company and become its shareholder. This is why foreign promoters prefer Private Limited Companies.

• Prohibition on Inviting Investments from Public

A Pvt Company cannot invite the general public to purchase or subscribe to its shares or any other kind of securities. Also, it cannot accept deposits from the public other than its members, directors, or relatives of directors.