The default option for start-ups and growing businesses as only private limited companies can raise venture capital.
The directors must be registered with the MCA
We will then help you pick a unique name
We will draft your company's constitution
Your company is now incorporated
We will send in a request to the NSDL
Private Limited Company, the most popular legal structure for businesses, should be chosen by anyone looking to build a scalable business. 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. All such businesses must have at least two directors and shareholders on inception.
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. Startups 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 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.
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.
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.
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.