Registering a private limited company is one of the most popular ways of starting a business in India. It has various tax and regulatory advantages.
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Private Limited Company, the most popular legal structure for businesses, should be chosen by anyone looking to build a scalable business. It is one of the most popular legal structure option for businesses in India. A Private limited company has a minimum of two members and a maximum of fifty members. A director of a private limited company has limited liability to creditors. In case of a default, banks / creditors can sell only company’s assets but not the personal assets of a directors. A Private limited company is considered one of the most popular corporate entity amongst the small, medium and the large businesses in India due to its various advantages.
Start-ups and growing businesses choose to register a company in India because it allows outside funding to be raised easily, limits the liabilities of its shareholders and enables them to offer employee stock options to attract top talent. As these entities must hold board meetings and file annual returns with the Ministry of Corporate Affairs (MCA), they tend also to be viewed with more credibility than a Limited Liability Partnership (LLP), One Person Company (OPC), or General Partnership. At VakilSearch, we are continuously available to help you understand how to register a private limited company. Company Registration in India can be done through VakilSearch in all major cities including Hyderabad, Mumbai, and New Delhi, Chennai, Kolkata & all other Indian cities.Choose Private Limited Company Registration as
A Private limited company registration is governed by the Ministry of Corporate Affairs, Companies Act, 2013 and the Companies Incorporation Rules, 2014. A natural person can be a director and as well as shareholder, where a corporate legal entity can only be a shareholder. In addition to that, foreign nationals, foreign corporate entities or NRIs are also allowed to be the Directors and/or Shareholders of a Company with Foreign Direct Investment, making it the preferred choice of entity for foreign promoters.
Some of the unique features of a private limited company like the limited liability protection to shareholders, the ability to raise the equity funds, separate legal entity status and the perpetual existence make it one of the most recommended type of business entity for the millions of small and medium sized businesses that are owned by families or professionally managed.
It takes 10-15 working days on an average to complete online company registration, subject to the government processing time and the client document submission.
A private limited company is an entity with two directors and two shareholders at the minimum. If you are a single shareholder, you can also bring in your mother, father or any other relative to be part of the limited company with just one single share.
Simple. Start-ups set-up private limited companies so that they can raise venture capital funding and offer their best employees stock options. Without funding and stock options, it's almost impossible to build and scale a large business. Banks and other lenders would also much rather lend to private limited companies, as compared to sole proprietors.
Initially, we help you get a digital signature certificate (also known as DSC), which is nothing but an e-signature to help you complete the new company registration online. It usually takes two days to get the DSC from the time you submit the documents. Next, we apply for the Director Identification Number (also called a DIN). This typically takes one day. The third phase involves selection of a name for your company. Now, do remember that your company name need not be your brand name. For example, Naukri.com has been incorporated as InfoEdge Technologies. Once done, we will prepare the Memorandum and Articles of Association and apply for the Certificate of Incorporation.
A private limited company must have at least two directors and shareholders, and can have a maximum of 15 directors and 50 shareholders.
Good news. You don't need to invest any money upfront. Most entrepreneurs do bring computers and other necessities at the very beginning. These can be the assets of the company. Private limited companies in India do not need to have any paid-up capital (that is, they do not need to introduce any money into the company).
As private limited companies are not traded publicly, regulatory requirements placed on them are fewer than on public companies. For example, they need not disclose their books of accounts. Because of this advantage, they need only worry about the long term rather than face the music from their shareholders in case their results in a particular quarter are poor.
Identity and the address proof will be needed for all the directors and the shareholders of the company to be incorporated. In case of an Indian national, PAN card is mandatory. For the foreign nationals, apostilled or notarised copy of the passport has to be submitted mandatorily. All documents submitted should be valid. The residence proof documents like the bank statement or the electricity bill must be less than 2 months old.
All companies should have a registered office in India. To prove admittance to the registered office, a recent copy of electricity bill or the property tax receipt or water bill must be submitted. Along with the rental agreement, utility bill or the sale deed and a letter from the landlord with her/ his consent to use the office as a registered office of the company should be submitted.
Businesses often need to borrow money. In structures such as General Partnership, partners are personally liable for all the debt raised. So if it cannot be repaid by the business, the partners would have to sell their personal possessions to do so. In a private limited company, only the amount invested in starting the business would be lost; the directors' personal property would be safe.
A Private Limited Company is legal entity and juristic person established under the Companies Act. Therefore, a company has a large range of legal capacities including that of opening of a bank account, hiring employees, taking on the equity or obtaining the licenses and more as an independent corporate entity. A member (Shareholders/Directors) of a company has no personal liability to the creditors of a company for company's debts.
Private limited companies easily accommodate equity funding as there is a clear distinction between shareholders and directors as well as limited liability. In fact, venture capitalists and private equity funds are unlikely to invest in any other structure. This is because LLPs would require them to become partners in the business, while an OPC can have only one shareholder. This feature also gives you the ability to hire top talent you may not be able to afford by merely paying a salary.
A private limited company has more options for taking on debt than LLPs. Not only are bank loans easy to obtain (relative to OPCs and LLPs), the option of issuing debentures and convertible debentures are always available to it.
A Private Limited Company can raise the equity funds in India. The Companies can also issue equity shares, preference shares, debentures and accept the deposits with RBI permission. The Banks and Financial Institutions prefer to provide the funding to a company rather than the partnership firms or proprietary concerns.
A Private Limited Company has 'perpetual succession', that means, it has an uninterrupted existence until it is legally dissolved. As a company is a separate legal person, it is unaffected by death or other the departure of any member and it continues to be in existence irrespective of the changes in ownership.
The ownership of a business can be very easily transferred in a company by transferring the shares. The signing, transfer and filing of share transfer form and the share certificates is adequate to transfer the ownership of a company. In a private limited company, the consent of other shareholders may be required to effect share transfers.
A Private Limited Company being an artificial person, can obtain, enjoy, own and alienate, property in its name. Property owned by a company may be building, machinery, intangible assets, land, residential property, factory, etc., No shareholder can stake a claim upon the property of the company - as long as the company is the going concern.
The name of the company is very important. It is considered the first impression for the suppliers, buyers and the stakeholders. It must, therefore, be suggestive, relevant and attractive. There are various factors that one must keep in mind while naming the company.
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.
The name of the company should be related to the business. It must fit the company’s branding.
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
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.
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.
One director must apply for the Digital Signature Certificate (DSC), which is necessary to file the company registration documents. For this, you will only need to provide a few scanned documents and details; our representatives will fill the form and submit it online.
As soon as we apply for the DSC, we will ask you to pick a name for your company, and send us some scanned documents regarding it and its directors. These will be used to file SPICe i.e. INC-32 and the Memorandum of Association (MoA) and Articles of Association (AoA). The Certificate of Incorporation will be approved at the end of this process.
Every company needs a registered Permanent Account Number (PAN) and Tax Account Number (TAN). We will make the application online ourselves, but you will need to courier hard copies of the required documents yourself. The PAN and TAN will be couriered to your registered office address in 21 working days.
|Private Limited Company||Limited Liability Partnership||One Person Company||Partnership |
|Start-ups and growing companies||Professional services firms||Sole promoters||Home businesses||Small traders and manufacturers|
Ease of Accommodating Investment
|Very easy to accommodate||Possible, but unlikely||Possible, but severely unlikely||Almost impossible||Impossible|
Limited Liability Protection
|Few benefits||Most efficient||Few benefits||Minimal||Minimal|
|Know More »||Know More »||Know More »||Know More »|
Just tell us a few details about your brand and we'll process your application. In three working days, you'll be ready to use the symbol alongside your brand name.
We make your interaction with government as smooth as is possible by doing all the paperwork for you. We will also give you absolute clarity on the process to set realistic expectations.
Our team of experienced business advisors are a phone call away, should you have any queries about the process. But we'll try to ensure that your doubts are cleared before they even arise.