The registration of Private Limited Companies in India is done through the MCA portal by furnishing the required documents and by filling out the appropriate forms. If the RoC finds the same to be in line with the Companies Act, 2013 and devoid of any discrepancies, the Certification of Incorporation is awarded.
The registration of Private Limited Companies in India is done through the MCA portal by furnishing the required documents and by filling out the appropriate forms. If the RoC finds the same to be in line with the Companies Act, 2013 and devoid of any discrepancies, the Certification of Incorporation is awarded.
A Private Limited Company is one of the prime options for entrepreneurs to evolve their business. Amongst various corporate entities, a Private Limited Company gets the most visibility and recognition from the clients. This, in turn, boosts the customer base undeniably. Therefore, most start-up ventures choose a private limited company to launch their operations with their eyes closed.
Private Limited Company
Private Limited Companies are governed by the Companies Act, 2013 and it falls under the Ministry of Corporate Affairs (MCA). The Act fails to provide a clear-cut definition for the word “company”. But in general, a company is considered to be an association of persons who carry out a common business under an identical seal. A company is a separate legal entity and is different from its members and has perpetual existence. Being a separate legal entity would mean that a company can have assets of its own, can sue, and can be sued by other parties. Companies are predominantly of two types, private and public limited companies. This article would throw light on Private Limited Companies in India.
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Although a private limited company is put together by means of the paid-up share capital, there is no stipulated minimum capital that is mandatory to get a company registered. In a private limited company in India, the shares are not transferable, thus prohibiting the public from subscribing to the shares of the company. This is, therefore, one of the most remarkable differences between a public and a private limited company in India. In a private limited company, the liability of the members is proportional merely to the number of shares held by them.
Advantages of Private Limited Companies
- A private limited company is a separate legal entity and possesses a personality of its own. The company can enter contracts by itself and hold a bank account in its name
- The company, being a legal person, can sue and be sued by third parties. Also, in case of any legal hassles pertaining to the company, the members of the company cannot be held liable for the same
- A private limited company is under no obligation to reveal its annual reports or other documents to the public.
Disadvantages of Private Limited Companies
- The company’s shares are not transferable to the public. This might result in a situation where the company might get stuck without growing further
- Raising funds and having financial aid approved are quite a challenge in the case of private limited companies
- In times of financial crisis, the shareholders of a private company are at a higher risk, as the company is completely dependent on them.
Basic Requirements for Registration of Private Limited Companies
- The company should have a minimum of 2 and a maximum of 200 members. There should be a minimum of 2 directors and the company can have a maximum of 15 directors
- The Directors should possess a Director Identification Number (DIN), which is given by the MCA. At least one of the directors must be a resident of India, which means that the designated Director must have been staying in India for at least 182 days in the preceding calendar year
- The name of the company should be approved by the Registrar of Companies (RoC). For this purpose, about 5-6 names should be submitted for the RoC’s perusal. The name shall be unique and should not have a resemblance to the name of any other existing companies or Trademarks. The name should have the words “private limited” attached to the end, for instance, ABC Hotels Private Limited
- The address of the registered office must be submitted. Prior to the registration, the temporary address must be provided for the purpose of communication. Once the registration is accomplished, the address is designated as the permanent address. All official documents of the company shall be placed at the office at the registered address. The main business affairs of the company take place at the registered office
- A Digital Signature Certificate (DSC) is incumbent to authorize the transactions done online. The Directors of the company are required to hold a valid DSC.
Documents Required for Registration of a Private Limited Company
The following documents are required in order
- Identity Proof such as PAN card, Aadhar card, or a valid Indian Passport of all the directors and shareholders are to be submitted.
- Passport size photograph of the directors and shareholders is to be furnished
- Proof of Address such as the most recent telephone bills, electricity bills, bank statements of the directors and shareholders are to be presented
- When the registered office is in rented space, the rental agreement and NOC from the owner are required. Further, in the case of the own property of the company, the sale deed is to be furnished
- DSC is mandatory for all the Directors and has to be present in an application for registration.
The Process to Register a Company in India
Step 1:
The appropriate forms in the MCA portal are to be filled and duly signed using the respective Digital Signatures.
Step 2:
The DIN (Director Identification Number) of the respective director, along with name and other details have to be filled in the registration form.
Step 3:
The SPICe+ form has to be filled out and duly submitted in the MCA portal. Prior to this, the director has to get registered in the MCA portal, after which access can be obtained to fill the required e-forms.
Step 4:
Once all the required forms are filled and documents are submitted, the Registrar examines the same. On being satisfied, the Certificate of Incorporation along with TAN and PAN are awarded. After the registration is accomplished, a bank account in the name of the company has to be begun in order to carry out the financial dealings of the company.
Thus, the registration of a private limited company is one of the first steps that a business has to take. The registration would bestow a legal personality on the company, which otherwise would not happen. Registering the company would also enable the business to avoid legal issues which might arise in the future. Thus, regardless of how convoluted the process of registration is, getting it done is of utmost importance to private limited companies.
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