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Private Limited Company Registration

Private Limited (Pvt Ltd) Company Registration

Private Limited Company Registration Starting at just ₹999 + Govt Fee
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Private Limited (PVT LTD) Company Registration in India

Registering a private limited company in India is governed by the Companies Act, 2013, and regulated by the Ministry of Corporate Affairs (MCA). The registration process involves submitting the SPICe+ (Simplified Proforma for Incorporating Company Electronically) form to the Registrar of Companies (RoC), along with obtaining a Digital Signature Certificate (DSC) and Director Identification Number (DIN) for each director.

Once the RoC reviews and approves the documents, the company receives a Certificate of Incorporation, officially establishing it as a legal entity. After incorporation, companies must fulfill additional compliance requirements, such as registering for GST (Goods and Services Tax), applying for a PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number), and adhering to annual filing and audit obligations. Maintaining accurate financial records and preparing timely audit reports are also essential post-registration responsibilities.

Registering as a private limited company offers several advantages, such as limited liability protection for shareholders and potential tax benefits, including reduced dividend distribution tax rates. However, the process also presents challenges, such as potential name rejections, director disqualifications, and ongoing compliance obligations. With expert assistance, your company can navigate these challenges smoothly, ensuring compliance and avoiding delays or rejections in the registration process.

What is a Private Limited Company?

A private limited company is a corporation that can restrict the sales of its shares, cannot have more than 200 shareholders, and does not allow selling of shares to the general public.
As per Section 2(68) of the Companies Act, 2013, a private limited company is a company that:

Limit the shares' transferability
Limits the maximum number of members to 200
And does not make any offer to the public of its securities for subscription.

Features of a Private Limited Company

A private limited company comes with its share of benefits that almost all business owners would be considered attractive. Features of these companies include:

No Minimum Capital Needed: The Corporations Act, 2015 of India cancelled the requirement for minimum capital to start a private limited company, allowing access to many entrepreneurs
Membership: It requires a minimum 2 members & maximum of 200
Limited Transferability of Shares: In the case of a private limited company, you cannot readily transfer shares. It ensures control over the business by keeping ownership within a small circle
Private Limited: The name of the company should contain private limited, meaning it's private and not public
Private Limited Company Dispensations and Exemptions: Private limited companies benefit from certain dispensations or exemptions that are not permitted to public companies
Director-Person Resident Indian: At least one director of the business should be a resident in India with respect to who exactly lives near any way they ought not stop by from outside on conveyance-making finds
Limited Liability: The liability of shareholders is, at most, limited to their holdings. They do not risk more than what they have invested in the company when it comes to debts owed by that business
Foreign Direct Investment (FDI): Private limited companies can receive FDI up to 100% in any sector without needing government approval, other than sectors where domestic investment is restricted
Credibility: A private limited company is more credible, and it becomes much easier to find investors or take loans.
Limited liability Protection: The company is a separate legal entity from the owners. That is to say, it can acquire property, create liabilities, and enter into contracts under its own name
Ownership and shareholders: Shareholders own the company in exchange for buying shares of stock (investing) in it
Management: Private limited company is managed by a board of directors, who serve to oversee the company and are appointed members solely for being elected or voted in/out by shareholders
Minimum Capital Requirements: Although there is no longer a legal framework for minimum capital, the company must maintain sufficient capital to meet its operational needs.
Continuous Existence: The company continues its existence despite change of ownership or demise/malady of its members. It lasts forever unless it is diluted
Privacy and Confidentiality: Private limited companies are not obliged to disclose as much information as the public, meaning they can maintain a level of privacy and confidentiality about the affairs of their business
Number of Directors: Minimum 02 (two) and Maximum limit is fifteen directors
Perpetual Succession: The company continues to remain in existence even when the members change, promoting continuity of business
Authorised and Paid-up Share Capital: There must be an authorised share capital of the company as per the Companies Act of 2013; however, post 1 April 2014, there is no minimum paid-up capital.
The name must be ‘Private Limited’: Hence, this is how you know if it is a private company (rather than another type of business form) and while one reads the next question.
Prospectus: A private limited company does not issue a prospectus, as it is not inviting the public to subscribe to its shares like in the case of a public limited company.
Index of Members: Unlike public companies, where it is mandatory to maintain an index for members, private limited companies are not required to do so.

Difference Between Private Limited Company and Other Business Structures

A Private Limited Company limits the liability of its shareholders rather than being a business structure such as Sole-Proprietorship or Partnership in which their owners are fully liable for any debt of enterprise and sometimes they are not allowed to have enough capacity to raise capital when compared with private limited companies.

Private Limited Company vs. Public Limited Company

A private limited company is a type of company that offers more control, greater levels of privacy, and an easier method in terms of share transfers often involving far fewer shareholders, giving the government access to very key financial information. A public limited company can raise funds from the general public; therefore, a large number of shareholders are there, and they have to comply with more legal formalities than the private company. Difference Between a Private Limited Company and a Public Company The following table provides us with most of the relevant points differentiating a private limited company from a public company.

Aspect	Public Company	Private Limited Company
Ownership and Shareholders	Owned by a diverse group of shareholders, including the general public; shares are traded on stock exchanges.	Owned by a smaller group of individuals, often the company founders; shares are not traded publicly.
Minimum Members	Requires a minimum of seven shareholders to register, though this may vary by jurisdiction.	Requires at least two shareholders, suitable for smaller businesses with limited ownership.
Minimum Capital Requirement	Often has specific minimum paid-up capital requirements, which can be substantial.	Many jurisdictions do not impose a minimum capital requirement, offering more flexibility for startups.
Regulatory Compliance	Subject to rigorous regulatory requirements, including strict financial disclosure and reporting standards.	Fewer regulatory obligations and greater privacy in operations; may not need to disclose financial details publicly.
Share Transferability	Shares can be freely traded on stock exchanges, providing liquidity and flexibility to investors.	Share transfer is often restricted and may require approval from existing shareholders, limiting liquidity.
Access to Capital	Can raise substantial capital by selling shares to the public, suitable for larger-scale projects.	Relies on a smaller group of investors and lenders for capital, typically on a smaller scale.
Management and Control	Management decisions often require approval from the board of directors and shareholders due to the broader ownership base.	Founders or a select group of shareholders may have greater control over decision-making.
Disclosure and Transparency	Required to maintain high levels of transparency and disclose extensive financial information, subject to public scrutiny.	Often enjoys more privacy and may not be required to disclose financial details publicly.
Listing on Stock Exchange	Can list and trade shares on stock exchanges, providing visibility and access to a wide range of investors.	Cannot list shares on public stock exchanges.
Exit Strategy	Provides a clear exit strategy for investors by selling publicly traded shares, offering liquidity and flexibility.	Exit options may be more limited, often requiring agreement among shareholders; liquidity can be more challenging.
Number of Shareholders	Minimum of 7, no maximum limit.	Minimum of 2, maximum of 200.
Number of Directors	Minimum of 3, no maximum limit.	Minimum of 2, maximum of 15.
Transferability of Shares	Shares can be freely traded on the stock exchange.	Shares are restricted and cannot be freely transferred without approval.

Public Company

Owned by a diverse group of shareholders, including the general public; shares are traded on stock exchanges.

Private Limited Company

Owned by a smaller group of individuals, often the company founders; shares are not traded publicly.

Private Limited vs. LLP (Limited Liability Partnership)

A Private Limited Company requires compliance with the Companies Act, including mandatory audit requirements, regular board meetings, and detailed disclosure of financial information, whereas LLPs (Limited Liability Partnerships) are governed by the LLP Act and have more relaxed audit requirements only above a certain turnover or capital threshold. Here is a complete differences between a Private Limited Company and a Limited Liability Partnership:

Aspect	Private Limited	LLP
Registration Process	Registered with the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013; Requires Director Identification Number (DIN) and SPICe+ form for registration.	Registered with the Ministry of Corporate Affairs (MCA) under the Limited Liability Partnership Act, 2008; Requires Designated Partner Identification Number (DPIN) and FILLIP form for registration.
Governing Documents	Memorandum of Association (MOA) and Articles of Association (AOA), which are public documents available for a fee.	LLP agreement registered with MCA, but not a public document.
Ownership	Shareholders own the company but do not have managerial powers; management is conducted by the board of directors.	Partners are both owners and managers; no distinction between management and ownership.
Membership and Directors	Minimum of 2 members, maximum of 200; Minimum of 2 directors, maximum of 15.	Minimum of 2 designated partners; no limit on the maximum number of partners.
Filing Requirements	Must file annual financial statements (Form AOC 4) and annual return (Form MGT 7) with the ROC.	Must file a statement of account and solvency (Form 8 LLP) and an annual return (Form 11 LLP) with the ROC.
Funding	Can raise funds from Venture Capitalists (VCs) and angel investors; shares can be easily transferred.	Cannot raise funds from VCs or angel investors without making them partners; funding is usually raised through financial institutions like banks.
Foreign Direct Investment (FDI)	FDI is permitted under the automatic route in most sectors, and also under the approval route.	FDI is allowed only with prior approval from the Reserve Bank of India (RBI) and the Foreign Investment Promotion Board (FIPB), subject to specific conditions.
Taxation	25% tax rate if annual revenue is less than ₹400 crores; 30% if it exceeds ₹400 crores; New rates of 22% for existing companies and 15% for new companies.	30% fixed tax rate on total income; a surcharge of 12% is applicable if total income exceeds ₹1 crore.
Ideal for	Entrepreneurs seeking external funding, high growth, and expansion opportunities.	Partners looking to start and run a business in partnership with benefits such as limited liability, perpetual succession, and a separate legal entity.

Private Limited

Registered with the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013; Requires Director Identification Number (DIN) and SPICe+ form for registration.

LLP

Registered with the Ministry of Corporate Affairs (MCA) under the Limited Liability Partnership Act, 2008; Requires Designated Partner Identification Number (DPIN) and FILLIP form for registration.

Private Limited vs. Sole Proprietorship

A Private Limited Company (Pvt. Ltd.) is a separate legal entity under the Companies Act, with a structured incorporation procedure, requiring name approval and a minimum of two shareholders and directors to manage its operations. In contrast, a Sole Proprietorship is owned and managed by a single individual, with no need for incorporation or name approval, and the owner has full control over all business decisions. Here is a complete differences between a Private Limited Company and a Sole Proprietorship:

Feature	Private Limited Company	Sole Proprietorship
Ownership	Owned by multiple shareholders, with a minimum of 2 and a maximum of 200 members.	Owned and operated by a single individual.
Liability	Shareholders have limited liability, limited to the amount of their investment.	The owner has unlimited liability; personal assets can be used to cover business debts.
Legal Status	A separate legal entity; the company can sue or be sued, own property, and enter into contracts.	Not a separate legal entity; the business and the owner are legally the same.
Capital	Can raise capital by selling shares to investors.	Capital is limited to the owner's personal savings and loans.
Control	Management is handled by directors appointed by shareholders; decision-making is based on shareholding.	The owner has full control over all business decisions.
Taxation	Taxed as a separate entity, often resulting in a lower tax rate for the company.	The income is taxed as the owner's personal income.
Duration	The company continues to exist regardless of changes in ownership or the death of shareholders.	The business typically ends upon the owner's death or decision to close the business.
Name Approval	Name approval is mandatory during incorporation; the name must end with ‘Pvt. Ltd.’	No formal name approval process is required.
Members	Requires a minimum of 2 members, with a maximum limit of 200.	Only one member (the owner) is allowed.
Transferability of Shares	Shares are non-transferable to the public; transfer is restricted and requires approval.	No shares exist, as the business is solely owned by one person.
Compliance and Regulations	Governed by the Companies Act, 2013; subject to moderate compliance requirements.	No specific compliance rules under the Companies Act, 2013.
Incorporation	Incorporation is mandatory under the Companies Act, 2013.	No formal incorporation procedure is required.

Private Limited Company

Owned by multiple shareholders, with a minimum of 2 and a maximum of 200 members.

Sole Proprietorship

Owned and operated by a single individual.

Private Limited vs Partnership Firm

A Private Limited Company (Pvt. Ltd.) is a separate legal entity under the Companies Act, 2013 requiring formal incorporation, with shareholders and directors managing the business and limited liability for owners. In contrast, a partnership Firm is governed by the Partnership Act, where partners jointly manage the business and are personally liable for its debts, with liability extending to personal assets. Here's a table comparing a Partnership Firm and a Private Limited Company:

Particulars	Partnership Firm	Private Limited Company
Creation	Created by executing a partnership deed that outlines objectives, terms, capital, and profit-sharing. Requires at least two partners.	Involves promotion and incorporation steps; requires Memorandum of Association, Articles of Association, and at least two directors.
Registration	Registration is not compulsory unless it is a Limited Liability Partnership (LLP). Registration is regulated by the Registrar of Firms (RoFs) of the State Government.	Mandatory registration under the Companies Act, 2013, regulated by the Registrar of Companies (RoCs) of the Central Government.
Distribution of Profits	Profits are distributed among partners as per the partnership deed.	No obligation to distribute profits among members; profits shared as dividends when declared.
Liability	Partners have unlimited liability; they are jointly and severally liable for the firm’s actions. Personal assets can be used to cover business liabilities.	Shareholders have limited liability up to the unpaid value of their shares in the company.
Capital Requirement	No minimum capital requirement for starting a partnership firm.	Requires a minimum authorised capital of ₹1,00,000 as per the Companies Act, 2013.
Dissolution/Winding Up	Can be dissolved by mutual consent, by agreement, or due to certain events (e.g., insolvency, death of a partner, unlawful activities).	Winding up can be voluntary by selling majority shares or compulsory by a tribunal if involved in unlawful or fraudulent activities.
Legal Status	No separate legal status; the firm is not distinct from its partners.	A separate legal entity distinct from its members; can hold assets and incur liabilities in its name.
Succession	No perpetual succession; the firm ceases to exist upon the death of a partner or change in partners, leading to dissolution or reformation.	Perpetual succession; the company continues to exist regardless of changes in membership or the death of members.
Agency	All partners are agents of each other and the firm; they can bind the firm and its partners in business matters.	Members are not agents of other members or the company; they are liable only for their actions and do not bind the company or other members.
Transferability of Shares	Shares cannot be transferred without the consent of all partners.	Shares can be transferred according to the company's articles of association and legal provisions.
Management	All partners are entitled to participate in the management and control of the firm unless otherwise agreed upon.	Members are not entitled to participate in management unless appointed as directors; they have voting rights in general meetings for specific decisions like appointing auditors.
Property	The property, termed as ‘Joint Estate,’ belongs to all partners and not to any individual partner separately.	The company’s property is separate from its shareholders; shareholders can only receive returns through dividends or return of capital.

Partnership Firm

Created by executing a partnership deed that outlines objectives, terms, capital, and profit-sharing. Requires at least two partners.

Private Limited Company

Involves promotion and incorporation steps; requires Memorandum of Association, Articles of Association, and at least two directors.

Laws Governing Legal Framework for Private Limited Company Registration

The Companies Act, 2013, the Ministry of Corporate Affairs (MCA), and the Registrar of Companies (RoC) are key pillars in India's corporate governance structure. The Companies Act establishes the legal foundation for company formation, management, and regulation. The MCA ensures compliance with corporate laws, while the RoC manages company registrations and oversees adherence to statutory guidelines across different regions. Below are complete details of the same:

Companies Act, 2013

The Companies Act 2013 (No. 18 of 2013) is the primary source of Indian company law. It received presidential assent on 29 August 2013 and largely replaced the Companies Act 1956. The Act was implemented in stages. Section 1 came into force on 30 August 2013. 98 sections became effective on 12 September 2013 with some changes. Another 183 sections were enforced from 1 April 2014.

Role of the Ministry of Corporate Affairs (MCA)

MCA ensures companies in India follow good corporate governance practices to maintain transparency and accountability. MCA helps in the Implementation of the Companies Act, 2013 and administers the Companies Act, overseeing the incorporation, regulation, and dissolution of companies. MCA manages various acts including:

Limited Liability Partnership Act, 2008

Company Secretaries Act, 1980

Chartered Accountants Act, 1949

Role of the Ministry of Corporate Affairs (MCA)

The MCA assesses if the companies are abiding by statutory requirements by scrutinising various filings and reports like annual returns, financial statements, etc. Overseeing the process of registration, it enforces compliance with incorporation requirements for new companies. Company and LLP registration, being the basic entities of doing business in India, are governed by the Registrar of Companies (RoC) functioning under the Ministry of Corporate Affairs (MCA). MCA is also responsible for administering laws pertaining to corporate businesses in India, regulating the management of Indian companies, supporting the establishment or dissolution of corporations previously registered under the legislation, and offering supervision over different regulatory executions done by the Companies Act, including filing complaints concerning disclosure and investor interests.

Registrar of Companies (RoC)

The Registrar of Companies (RoC) provides services under the provisions of the Indian Companies Act 2013 related to company registration and limited-liability partnership formation in India. The RoC makes sure that these bodies adopt the governance framework laid down in the Companies Act, 2013. The RoC comes under the jurisdiction of the Ministry of Corporate Affairs (MCA) and manages major legislation such as:

Companies Act, 2013

LLP will have to comply as per the provisions of the LLP Act, 2008.

Company Secretaries Act, 1980

The Chartered Accountants Act, 1949

RoCs have been appointed under Section 609 of the Companies Act, 2013 to survey and regulate companies registered across states as well as Union Territories in India. Things taken care of by them: Compliance of all statutory requirements.

Companies Act, 2013: Section 609

RoCs have been appointed under Section 609 of the Companies Act, 2013 to survey and regulate companies registered across states as well as Union Territories in India.

Compliance and Enforcement

The role of the RoC is essential to monitor the companies for compliance with corporate laws. This includes compliance with companies, such as necessary filings like annual returns and financial statements submitted within a legal framework, etc.

Jurisdiction

RoCs are functioning under the Ministry of Corporate Affairs (MCA), Government of India, having geographical jurisdiction across the country. Companies and LLPs are registered in the respective states as per MCA jurisdiction.

Historical Context

The office of the RoC was established in 1956 and has played a critical role in company regulation as an essential component of corporate governance.

Ministerial Oversight

RoC functions under the minister in charge of Corporate Affairs (currently Nirmala Sitharaman), which ensures that it is consistent with the government's corporate governance mandate as a whole.

Compliance Required for Pvt. Ltd. Company

For the financial year 2014-15, private limited companies are required to comply with certain yearly compliance requirements, which include filing of annual returns and financial statements with the Registrar of Companies (RoC) as per the provisions applicable under the Companies Act, 2013.

Event-Triggered Compliance

Certain compliances need to be done based on events within the company, such as changes in management, share capital, or registered office. Making timely filings to stay in compliance

Board Meetings

The first board meeting is to be held within 30 days of incorporation. Or, it must convene at a minimum four board meetings each year and that the gap between two such meetings shall not exceed 120 days.

Annual General Meeting (AGM)

AGMs must be held within 9 months from the end of their financial year, and no more than 15 months between one AGM and the next.

Mandatory Audit Appointment

The appointment of the auditor is required within 30 days from the date of incorporation. This is required to be confirmed by the shareholders during the AGM and filed with ROC through Form ADT-1.

Documentation required with ROC

Form AOC-4 for financial statements the steel Divisionwards form must be filed within 30 days of the AGM. Also must file the financials of a company with higher turnover.

Director KYC

For every director, it is obligatory to complete the e-verification of DIR-3 by filing Form DIR-3-KYC BEFORE the 30th of September each year with ROC.

Statutory Registers & Books of Accounts

Companies are required to preserve and keep updated Statutory Registers, Minutes of Board meetings / AGMs, the considerable books Accounts/Financial Statements, etc. These records are supposed to be available for scrutiny at the registered office.

Filing of Returns

It is mandatory to file specific returns within stipulated time frames. Return Annual: MGT-7 Deposit (DPT 3) Form

Compliance Requirements for Private Limited Companies

Private limited companies in India have to comply with annual compliance requirements such as filing of the financial statements and annual returns every year within prescribed time limits with the Registrar of Companies (RoC) under the new Companies Act, 2013.

Event-Based Compliance

Some compliances get initiated as and when an event happens in the company, like a change of management, share capital, or registered office. The biggest necessity is compliance; in order to adhere, timely filings are essential.

Board Meetings

First board meeting has to be done within 30 days of incorporation The number of board meetings to be held in a year shall not be less than four, more than 120 days between any two meetings.

Annual General Meeting (AGM)

In the first AGM, it shall be held within 9 months from the end of the upcoming financial year, and in any other subsequent annual general meeting will suit a calendar appointment at intervals of no more than six consecutive calendar months after that fiscal period ends

Appointment of Auditor

The auditor shall be appointed within 30 days from the date for incorporation. The appointment has to be ratified by members of the AGM and filed with the RoC using Form ADT-1.

Filing of Financial Statements

AOC-4 for financial statements will be filed with RoC within 30 days from the AGM. XBRL Filing for companies with higher turnover.

KYC OF DIRECTOR

Each director of every company is required to file form DIR-3 KYC on or before the 30 September in each financial year with the Registrar (ROC) while filing.

Statutory Registers

Minutes of Board Meetings and AGMs , Books of Accounts, and Financial Statements: Companies are to also keep and update their statutory registers. These documents must be kept at the registered office and are open for inspection

Due dates for filing of Returns

Within a time limit, certain returns must be filed. Annual return and deposit are required in MGT-7 with Form DPT-3, respectively

Eligibility and Requirements to Register Private Limited Company in India

Minimum two shareholders and two directors are necessary to register a private limited company. At least one Indian resident director documents, such as the MOA and AOA, along with DIN and DSC, are the necessary key factors. Register Company Name must be unique, related, and also as per MCA norms. To simplify the registration process, Vakilsearch offers a service to check name availability, as this helps in making sure your selected name is legal.

Minimum Requirements for Registration

The minimum requirements for registration ensure that entities meet basic legal and operational standards before commencing business activities. Below are the criteria for the same:

Minimum Shareholders: 2 Or More (Need at Least One) Those shareholders are going to either an individual or corporate entity
Minimum Directors: Two directors have to be appointed, and one of them has Indian residency
Authorised and Paid-Up Capital: There is no provision regarding minimum paid-up capital, but the authorised capital should be sufficient for meeting the needs of the company’s business at the state or union territory (regulatory requirement).

Documents Required for PVT Ltd Company Registration

To register a Private Limited Company, essential documents include identity proof and address proof of all directors and shareholders, such as Aadhar cards or passports. Here is a list of documents for the same :

Proof of Identity: PAN (self-attested copy of Pan card), Aadhar Card, Passport & Voter ID for Indian Nationals. This could be in the shape of a notarized passport if you are an outsider.

Proof of address: Not more than two months old mobile bill/electricity bill/corporate tax receipt/bank passbook.

Office documents: Business address proof, utility bills, lease/rent agreement, and NOC from landlord.

Memorandum of Association (MoA): It is a document that legally describes the purpose and states which part it plays in the operations of a firm.

Articles Of Association (AoA): The AoA of a company is its internal rule book, setting out how the company will be managed and controlled.

DIN of the director: Each and every director in a company ought to have DIN

Class 2 Digital Signature Certificate (DSC): It will be needed for the e-signing of incorporation documents and other filings with authorities.

Relevance: Business or activities done by the company

Legal Compliance: It should be proper in accordance with MCA guidelines and shall not have any banned words or phrases.

No Confusing Terms: One should not construct an incorrect or irrelevant impression about the events and relationships.

Naming Your Private Limited Company

Choosing a name for your private limited company is a crucial step in the registration process. The name should comply with the Companies Act, 2013, and meet the following approval requirements set by the Ministry of Corporate Affairs:

Rules for Selecting a Company Name

Uniqueness: The name should be exclusive and cannot have an existing company or trademark that is exactly (or substantially similar) to the same.
Relevance: It should be the nature of business or activities done by company
Legal Compliance: The name should be in accordance with MCA guidelines and not contain any banned words/ phrases.
No Misleading Terms: One should never create a wrong or extraneous sense concerning the activities and relationships.

Importance of Company Name Approval

Legal Requirement: The final approval by the ROC ensures that your proposed name is not violating the rules and regulations of Company registration.
Brand Identity: Having a name that is unique and fits your niche can aid in brand recognition by itself.
Avoids Legal Issues: Appropriate approval prevents possible litigation and the honouring of intellectual property rights.

Steps to Check Name Availability

Visit MCA Portal: Go to the Ministry of Corporate Affairs (MCA) website and visit the Name Reservation tool on it.
Trademark Search: Do a search to check if the name is not registered under someone else's trademark by checking in the Trade Mark Registry.
Verify Via Vakilsearch: You can conduct a comprehensive company name search along with name availability through Vakilsearch.
Reserve Unique Name (RUN): Application for name by way of reservation in MCA portal.
File Name Approval Request: Next, reserve the desired name, and after that, proceed with company registration.

Step-by-Step Private Limited Company Registration Process

A Private Limited Company provides limited liability protection to its shareholders, making it a popular business entity choice for entrepreneurs in India, New Delhi. The incorporation process involves submitting necessary documents, including the residential address and Bank Statement of the proposed directors, to complete registration. Companies must also maintain a current account for smooth financial transactions. Here is a detailed process for the same:

Step 1: Procuring a Digital Signature Certificate (DSC)

For filing any signed documents with the Ministry of Corporate Affairs (MCA), it is mandatory to have a Digital Signature Certificate. It guarantees the validity and consistency of each file it sends out. We will assist you in getting the DSC registration done on your behalf.

Step 2: Get Director Identification Number (DIN)

A Director Identification Number (DIN) is a unique number allocated to an individual intending on being the director of any entity. By filling out the DIN-1 form from our team, we will apply through the MCA portal.

Step 3: Naming Approval Process

File the RUN form in the MCA portal to apply for a company name. The name should adhere to the laws of the Companies Act, 2013 and must not be a similar one with any already existing one.

Confirm that the name is not already in use by another company.

Observe name selection guidelines by MCA.

The name should be directly related to the business.

Step 4: Filling up Incorporation Form SPICe+ (Simplified Proforma for Integrating Company Electronically Plus)

SPICe+ is a single, harmonised online form that allows the incorporation of a company laid down in Rule 38(1) along with various other services. Our Team Will file Part A for name reservation, and within 3 working days from receipt of Part—III will file LLP Form 8 with ROC and obtain a Certificate of Incorporation as well as manage follow-up like PAN, TAN, and GST.

Step 5: Drafting and Filing MOA and AOA

Memorandum of Association (MOA)—to describe the purposes and extent with which they will operate. Articles of Association (AOA) denote the internal management and governance system. All the vital clauses in MoA and AoA will be added by our team.

Step 6: Get Certificate of Incorporation

Incorporation certificate is a legal document issued by the Registrar of Companies (ROC) after company incorporation. Apply for PAN and TAN at the Income Tax Department. Our team will open a company bank account using the certificate on your behalf and guide you to start business operations as per statutory/legal compliance.

Post-Registration Compliance

After the registration process of a Private Limited Company is complete there are certain key compliance that needs to be undertaken for legal and operational integrity. These steps include things like getting a Tax ID called PAN, which is mandatory to transact and continue with the legal process of filing taxes in India or seeking tax-related incentives when opening bank accounts for companies.
GST registration is mandatory for businesses with turnover above a certain limit. Furthermore, as per government requirements we have to assist the Registrants in Filing Annual returns with MCA which is must from a transparency and legal perspective. Compliance with these annual requirements safeguards the company from fines and adds to its reputation for sustainability and craftsmanship. Registered companies should also opt for Professional Tax Registration, MSME Registration and Trademark Registration for long-term protection.

PAN and TAN Application

Why are PAN and TAN Important?

To comply with taxes in India, businesses and individuals need PAN (Permanent Account Number) and TAN (Tax Deduction & Collection Account Number). PAN is a unique identifier for tax paying individuals that allows the income tax authorities to identify and collect taxes from them. A TAN, on the other hand, is used specifically for tax deduction at source(TDS) and to collect accurate reporting of taxes. Both numbers are important to keep financial transactions transparent and able to meet legal tax obligations.

How to Apply for PAN and TAN?

PAN (Permanent Account Number) is a unique 10-digit alphanumeric identifier issued by the Income Tax Department, essential for tax-related purposes and financial transactions during company registration. Similarly, TAN (Tax Deduction and Collection Account Number) is a mandatory 10-digit alphanumeric code required for companies to deduct or collect tax at the source, as per the Income Tax Act, 1961. Both PAN and TAN are crucial for compliance with tax regulations in India.

How to Apply for PAN:

Step 1: Go to the official PAN card application sites : NSDL or UTIITSL

Step 2: Enter your Details in Form 49A

Step 3 : Upload Identity, Address, Date of Birth Proofs

Step 4: Pay application fee online

Step 5: The procedure consists merely of submitting the products and passing on your PAN card to you.

How to Apply for TAN:

Step 1: Go to the official TAN application website (NSDL)

Step 2: Complete Form 49B with your business details

Step 3: Attach the required business documents

Step 4: Pay the application fee online

Step 5: Submit the form and receive your TAN at your registered address.

Opening a Bank Account for the Company

After the Certificate of Incorporation, opening a business bank account is an important step. In order to get started you will need few most important documents like Memorandum of Association (MoA), Articles of Association, the application form duly filled in, your board resolution for opening an account with finbucket.com(non-individual) bank, sogency's PAN Card and Certificate Incorporation. These documents are crucial for the company in order to guarantee its full legal standing and maintain that a bank account is set up under the name of Enterprise, making financial management so much more smoother within it.

Steps to Open a Corporate Bank Account

Board Approval: Opening a corporate bank account requires the approval of the board of directors. This involves choosing the right bank as well as features for an account

Document Preparation: Submit the following documents: Certificate of Incorporation/Documents related to incorporation, Memorandum Of Association (MOA),Article Of association(AOA), Valid PAN card of the Company/Mandatory KYC all director Proposed signatory Board Resolution

Pin up the Account Type: Designate if this will be an operational account, investment or dual purpose based on financial needs of the company

Application Submission: At the time of application, approach your selected bank with essential documents along with a filled form

Verification: The bank will verify the supporting documents and information given. Where appropriate, the process might involve a physical visit to your registered office address for verification

Account Activation: After successful verification, the bank will deliver corporate account details and activation of an operational business account.

Compliance with GST Registration

Is GST Registration Mandatory?

For the taxpayers who have an annual turnover more than ₹20 lakhs, it is necessary to comply with GST Act by getting registered under GST act 2016. It mandates the registration to any type of entities that are into supplying goods or services and registered under Indian tax law. Not registering under GST is punishable with heavy fiscal penalties. GST registration is all about making sure that businesses comply with tax laws and duly contribute to the revenue system of the country.

How to Apply for GST Registration?

Applying for GST registration with Vakilsearch is a simple and streamlined process. Vakilsearch assists businesses in completing the necessary paperwork, ensuring compliance with GST laws, and submitting the application online. Here's how you can apply:

Step 1: Consult a GST expert from Vakilsearch

Step 2: Share your business information such as PAN, address with our team

Step 3: Our experts will fill out and submit your GST application on the GST portal.

Step 4: Once verified, you will receive your GSTIN and certificate.

Filing Annual Returns and Financial Statements

All companies, which include private limited companies and even other entities, must file an annual return to the Ministry of Corporate Affairs (MCA) on a yearly basis. That includes even the act of filing an income tax return. Different forms are required depending upon the structure of your company – Form 23 ACA for profit and loss account, Form 20B in case of companies having share capital), Form 21A if company without share capital) or Form 66 (compliance certificates).

Importance of Annual Compliance

Annual Compliance is the compliance of legal and regulatory requirements that are mandatory to be fulfilled by a Private Limited Company in one year. These requirements keep companies within the bounds of law and ensure transparency, accountability, and a level of ethical behaviour. It will be a must for every company who wants to keep their status as well as more investors and of course they can save themselves from penalty or direct corporate fine, if these requirements are in compliance. Non-compliance with these obligations can result in default status, which affects the reputation and maintenance capabilities of a company. Not just the legal obligation, it is a measure of accountability as well.

Penalties for Non-Compliance

Monetary penalties are the norm in case of any default, they have a penal amount that can be anywhere between ₹50,000 for smallest defaults or has highs as much as ₹5 lakhs. The consequences of non-compliance may also have worse repercussions such as a tarnished reputation, going out-of-business (G.O.B.), imprisonment, etc.

Taxation and Financial Considerations

Private Limited Companies Registrations in India have the level of compliances involving Taxes, such as corporate tax rates & Dividend Distribution Tax (DDT) and all financial compliance amidst demand required to keep very important documents. Besides, these companies get certain tax benefits and are subject to internal audit requirements under the Companies Act, 2013.
Companies must conduct the audit to maintain legal compliance over financial matters, appoint a Statutory Auditor and observe stringent requirements of accountancy. These practices meet legal needs and improve clarity, accountability to keep businesses growing with the regulation standards.

Corporate Tax Rates for Private Limited Companies

Corporate Tax Rates in India (2024)

Below is a comprehensive breakdown of corporate tax rates in India, including the relevant sections, applicable conditions, and corresponding tax rates:

Section	Conditions	Tax Rate
First Schedule to Finance Act, 2010	Applicable if the company's turnover or gross receipts are less than ₹4 billion in the previous financial year.	25%
Section 115BA	The company was established and registered on or after March 1, 2016. It must be engaged in manufacturing or production, and it does not claim specific exemptions or deductions.	25%
Section 115BAA	The company does not claim any specified exemptions, deductions, or incentives.	22%
Section 115BAB	Applicable to companies established and registered on or after 1 October 2019. They must be engaged in manufacturing or production, with operations commencing on or before 31 March 2024. These companies do not claim specified incentives or deductions.	15%
First Schedule to Finance Act, 2010	Applicable to all other domestic companies that do not fall under specific categories.	30%

Note : In the Union Budget 2024, Finance Minister Nirmala Sitharaman announced a significant revision in the corporate tax rate for foreign companies, reducing it from 40% to 35%. This move is expected to enhance India's appeal as a destination for foreign investment.

Understanding Dividend Distribution Tax

Dividend distribution tax i.e DDT is a type of taxation imposed on domestic companies in India when the company declares or distributes dividends to its shareholders. According to the provisions of the Finance Act, 15% is a standard rate for DDT on gross amount of dividend as mentioned under Section 115-O of Income Tax.) But when surcharges and cess are accounted for, the true tax rate can be as high as 17.65%, or up to a maximum of around 20.56%. DDT rate can go up to 30% for certain dividends as defined in Section 2(22)(e) It is a mandatory dividend distribution tax to be paid by the companies, so as to comply with Indian Tax Laws.

Tax Benefits and Exemptions for Private Limited Companies

These include tax breaks and exemptions that help to relieve the fiscal burden on private limited companies in India. These firms may benefit from the Minimum Alternate Tax (MAT) guidelines which grant them a lower tax rate if their taxable income is less than or equivalent to an established level. Furthermore, private limited companies have some tax advantages associated with transfers of business or capital assets in ways that the disposal may qualify for an income tax deduction.

Besides, private limited companies are not required to conduct Annual General Meeting (AGM) every year and this activity also reduces the administrative work. Similarly they are not forced to disclose directors salaries and this remains proprietary. Moreover, such companies are also availed of certain exemptions under section 2(76) and Section 188 read along with Companies Act with regard to compliance requirement in connection with the related party transactions. This exemption allows private organisations greater freedom in how they pursue their operations, enabling them to concentrate on developing the organisation and reducing resources from regulatory consent.

Tax Benefits and Exemptions for Private Limited Companies

Managing Company Accounts and Audits

Maintaining Books of Accounts: Private Limited Companies in India are also required to maintain proper books of accounts which give a clear, accurate and fair view of its state. These records are the Cash Book, Journal and Ledger Books with financial statements like Profit loss or income statement and Balance Sheet. It is a mandatory provision as per the Companies Act thereby bringing transparency and accountability in financial dealings of the Company.

Internal Audits: Irrespective of the turnover and nature of business all Private Limited Companies are subjected to an Internal Audit as per The Companies Act, 2013. This is necessary for the accounting records to be authentic and in compliance with legal standards. Further a cost audit, if applicable may have to be conducted to evaluate the cost records of the company Input Audit: This audit is an internal evaluation of the company, done on a suggestive basis by the management team and it directly contributes towards financial integrity being preserved transparency-related.

Statutory Auditor Appointment

As per the provisions of Companies Act, 2013 a Private Limited Company in India is required to appoint a Statutory Auditor. This is appointed by the Board of Directors subject to approval at an Annual General Meeting (AGM) being held in a calendar year. The Financial Statements are examined by the Statutory Auditor who provides an Auditor's Report. It is a necessary report that is required to maintain transparency and assail the financial records (along with any cost audit if warranted) of the company under strict compliance as mandated by statute.

Common Challenges in Private Limited Company Registration

Setting up a private limited company has its own set of challenges as name approval rejections and disqualifications of directors. For name rejections, research is key and full compliance with guidelines of MCA. A reputed NCLAT lawyer can fight the case very effectively(stage wise) and implement this guidance in order to save an appeal from director disqualification.
Dealing with the issues cited requires more mindfulness, attention to detail and must strictly adhere to due process of law. For name approval, you have to make sure that the name is unique and also submit a complete set of documents; whereas in case of director disqualifications appeals must be filed timely and stay orders from courts are needed. Overcoming these obstacles helps the agency to register more smoothly and ensure continued compliance.

How to Avoid Name Approval Rejections?

Conduct Thorough Research: Before submitting the name approval application, conduct a thorough search to ensure the proposed name is unique and does not conflict with existing company names or trademarks.

Comply with MCA Guidelines: Ensure that the proposed name adheres to the naming conventions set by the MCA, including avoiding prohibited words or phrases and ensuring the name reflects the company’s objectives.

Use a Suitable Prefix: Incorporate a suitable prefix that is unique and relevant to the business. Avoid using prefixes that are common or similar to existing trademarks or company names.

Avoid General or Common Words: Avoid using general or overly common words that lack distinctiveness. The MCA may reject names that do not offer a unique identity to the company.

Provide All Necessary Documents: Ensure all required documents are accurately completed and submitted with the name approval application to avoid delays or rejections.

Dealing with Director Disqualification

Appeal Process: If a director is disqualified, they have the right to appeal the decision to the National Company Law Appellate Tribunal (NCLAT). This appeal can include a request for a temporary stay order to delay the enforcement of the disqualification.

Stay Order: Under the Companies Act 2013, the disqualification order does not come into immediate effect. There is a 30-day window before the order is enforced, allowing the director time to file an appeal and seek a stay order.

NCLAT Role: The National Company Law Appellate Tribunal (NCLAT) is the appellate authority where directors can challenge their disqualification. The tribunal can provide relief by temporarily halting the disqualification while the appeal is considered.

Why Vakilsearch for Private Limited Company Registration?

Registration of a Private Limited Company is the beginning point to set up a valid concern in India. The process covers the procurement of DSC and DIN, filing SPICe+ form as well as complying with various provisions stipulated under Companies Act 2013 which can be quite intricate to follow
Vakilsearch eases this up by helping you at each step of the way with experienced advice. We will take care of all documentation, compliance requirements and other government formalities with accuracy which guarantees smooth registration. We take care of all post registration help such as PAN, TAN, GST Registration and annual filing making sure the compliance remains adhered to throughout. Vakilsearch is the best option if you need an efficient Private Limited Company registration process, with years of experience and invested in your company's future.

FAQs on Private Limited Company Registration

Find answers to common questions about Private Limited Company registration in India, including timelines, requirements for directors and shareholders, compliance obligations, and guidelines for foreign nationals to help you understand the process thoroughly

How long does it take to complete the Private Limited Company registration process?

The registration process typically takes 10-15 working days, depending on the completion and submission of all required documents and approvals from the Ministry of Corporate Affairs (MCA).

Can a Private Limited Company be started with one person?

No, a Private Limited Company requires a minimum of two shareholders and two directors. For a single-person business, you can consider forming a One Person Company (OPC).

Is it mandatory to have a company secretary for a Private Limited Company?

It is not mandatory for small Private Limited Companies with a turnover of less than Rs. 2 crores. However, it becomes mandatory as per the Companies Act for larger companies.

How is the shareholding structure determined in a Private Limited Company?

The shareholding structure is determined based on the capital contribution by each shareholder. The Articles of Association (AOA) and Memorandum of Association (MOA) detail the shareholding and rights of shareholders.

Can the registered office of a Private Limited Company be changed after incorporation?

Yes, the registered office can be changed within the same city or state with board approval. If moving to a different state, a special resolution and approval from the Regional Director of MCA are required.

How much capital is required to start a Private Limited Company?

There is no minimum capital requirement post the Companies Amendment Act, 2015. However, the company must declare an authorised capital in its MOA.

What happens if the name proposed during registration is rejected?

If the name is rejected, the applicant can submit up to two more names for approval. It's important to conduct a preliminary name search to avoid rejection.

Can foreign nationals or NRIs become directors or shareholders in a Private Limited Company?

Yes, foreign nationals and NRIs can become directors or shareholders, but they need to obtain a valid Director Identification Number (DIN) and Digital Signature Certificate (DSC).

Can a Foreign National Be a Director in an Indian Private Limited Company?

Yes, a foreign national can be a director in an Indian Private Limited Company. However, they must obtain a Director Identification Number (DIN) and a Digital Signature Certificate (DSC). Additionally, at least one of the directors must be an Indian resident. The foreign director’s address proof and identity documents must be notarized and apostilled if they are non-residents. Compliance with Foreign Exchange Management Act (FEMA) regulations is also required when foreign nationals are involved in the company's management.

What Happens If Compliance Is Not Maintained?

Failure to maintain compliance can lead to severe penalties for a Private Limited Company. Non-compliance may result in fines, legal actions, and disqualification of directors. The company could also be marked as inactive or struck off the register by the Registrar of Companies (ROC). Additionally, continuous non-compliance can damage the company’s reputation, making it difficult to secure financing or attract investors. Directors may face personal liability, and the company may incur additional costs to restore its compliance status.

Authors

Written by Nithya, Reviewed by Mithra Menon. Last updated on Nov 7 2024, 10:22 AM

Mithra Menonexcels in Corporate Law Matters and Debt and Money Recovery. She offers assistance in company incorporation both domestically and internationally, along with partnership firm registration. Additionally, she provides advisory services on compliance and LLP registration in India.

Nithya Ramani Iyer,a criminologist and writer, serves as the SME and manages communications at Vakilsearch. Drawing from her experience at Seasearch Intelligence and Legal domains, she enriches our content with insightful perspectives.

Introduction to Private Limited Companies

Starting the Journey

Registration Process

Post-Registration Essentials

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