Online Private Limited Company Formation2023-08-02T19:57:46+05:30

Private Limited Company Registration in India

A Private Limited Company Registration is one of the popular options to start a business amongst startups and emerging businesses. It is a corporate entity that is easy to register, manage and run. It can induct up to 200 shareholders wherein the liability of each member is limited.

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    Pvt Ltd Company Formation in India

    Small, medium, and large businesses in India consider a Pvt Ltd Company as one of the most popular legal structures. Anyone looking to build a scalable business can choose it. Registering a Pvt Ltd Company requires a minimum of two members and allows for a maximum of two hundred members.

    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.

    Features of Company Incorporation in India

    • 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 Ltd 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.

    Benefits Of Private Limited Company Registration in India

    • Separate legal entity

      After registration, a Pvt Ltd Company becomes an artificial person, separate from its members. Also, the members of a Pvt Ltd Company have limited liability. It means that if a company faces loss under any circumstances, then its shareholders are not liable to sell their own assets for payment. Thus, the personal, individual assets of the shareholders are not at risk.

    • Easy to register, manage & run

      One can register a Private Limited Company completely in online mode with less paperwork. The registration process takes 7-12 working days to complete. Also, it offers flexibility in operations like the addition of new directors, allotting new shares, ESOPs, and other various other features.

    • No minimum capital required

      After the Companies Amendment Act 2017, the minimum requirement of capital of Rs. 1 lakh for private limited companies was abolished. So now, it is possible to form a company even with minimum capital (Ex. Rs. 2000).

    • Easy allocation of ownership and management

      Businesses that will require funding from venture capitalists (VCs), angel investors, etc need to register as private limited companies. This is because such investors can become directors and shareholders in a company. Whereas, in the case of an LLP, investment is possible only if such investors become the partners of the LLP.

    • Easy to dissolve or wind-up

      The structure of a Pvt Ltd Company provides faster exit opportunities to those companies which do not have any assets or outstanding liabilities and want to close their business operations due to some extraordinary circumstances.

    • Preferred by banks, VCs & investors

      An independent auditor audits the books of a Private Limited Company annually. Therefore, banks, VCs, and investors prefer a Pvt Ltd Company over other forms of business.

    Minimum Requirements to Incorporate a Company in India

    • Minimum 2 Directors/Shareholders

    • At least 1 Director shall be a permanent resident of India

    • Minimum capital of 2 Rupees

    • DIN & DSC’s for all Directors/Shareholders

    What Does Our Pvt Ltd Incorporation Package Include?

    • Company name search and approval

    • Digital Signature Certificate (DSC) for 2 Director/Shareholder

    • Director Identification Number (DIN) for 2 Directors

    • Certificate of Incorporation/Registration

    • Company PAN and TAN

    • Memorandum of Association (MOA) and Articles of Association (AOA)

    • Supporting Document for opening Bank Account

    • Employees State Insurance Corporation Registration (ESIC) and Employees Provident Fund Registration (EPFO)

    • Professional Tax Registration (For Companies registered in the state of Maharashtra and Karnataka only)

    • Company Master File Kit

    Pvt Ltd Company Formation Procedure

    • Application for Name Approval

      An applicant has to provide 2 different names and main objectives for the proposed company. These names are then submitted to MCA, and MCA will approve one out of the two names. Names provided should ideally be unique and suggestive of company business, they should end with the word “Private Limited”

    • Application for Digital Signature Certificate (DSC)

      The next step is to apply for obtaining a Digital Signature Certificate (DSC) of directors and shareholders for the digital signing of forms. If the directors/shareholders already have DSC, then this step can be skipped.

    • Final Submission of SPICE+ forms along with MOA and AOA

      After name approval and obtaining DSC, we need to prepare and submit an incorporation application in SPICE+ forms along with a Memorandum of Association (MOA), Articles of Association (AOA), and AGILE form for final approval.

    • Get Incorporation Documents

      After the final submission, it typically takes 3-5 days to receive the incorporation certificate, which serves as proof of company registration. Simultaneously, the company will also receive the PAN, TAN, ESIC, EPFO, and Professional Tax registration certificates.

    • Opening of Bank Account

      Applicant can submit the Incorporation certificate, MOA, AOA, PAN, TAN, and other required documents to the bank to open the current account and start the business operations.

    Documents Required for Company Registration in India

    • List of documents of Director and Shareholders –

      All the proposed directors and shareholders of the company shall submit the following documents. All documents submitted should be valid and readable.

      Scanned copy of –

      • PAN Card
      • Aadhaar Card/Voters ID/Passport/Driving License
      • Latest Bank Statement/Telephone Bill/Post-paid Mobile Bill/Electricity Bill (The address proof shall be recent and not older than 2 months)
      • Passport-sized photograph

      In the case of foreign nationals or NRI Director and Shareholders, the documents list can be checked here
      Document Checklist for Foreign Nationals or NRI Director and Shareholders

    • Registered Office Proof

      A Private Limited Company should have a registered office place in India. The office address can be residential or commercial premises. The address proof shall be recent and not older than 2 months. The following documents are acceptable as a proof of registered office address –

      • Scanned copies of utility bills such as Electricity bills/Mobile Post-paid bills/Landline Post-paid bills/Gas bills/Water bills
      • Scanned copy of a No-objection Certificate from the property owner or whose name appears on such utility bill

    FAQ

    Do I need to be physically present during this process?2021-08-23T21:05:52+05:30

    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.

    How should I choose a name for a Private Limited Company?2021-08-23T21:02:46+05:30

    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/

    I am the only director and shareholder; can I form a Private Limited Company alone?2021-08-23T21:00:09+05:30

    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?2021-08-23T20:59:41+05:30

    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 minor person become a director or shareholder of a Private Limited Company?2022-05-10T13:12:04+05:30

    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)?2021-08-23T20:55:01+05:30

    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?2022-05-10T13:13:49+05:30

    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.

    Can I register a Private Limited Company on my home or residential address?2021-08-23T20:51:53+05:30

    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.

    What is Director Identification Number (DIN)?2021-08-23T20:44:54+05:30

    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

    Is GST mandatory for a Private Limited Company?2021-08-23T20:27:16+05:30

    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 change the registered office address of the company later on?2021-08-23T20:23:34+05:30

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

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