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Private Limited Company Registration

Name: Private Limited Company Registration
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Private Limited Company - An Overview

Companies Act, 2013 (India)

This act governs the incorporation, regulation, and winding up of companies in India. It specifies the procedures for registering a private limited company with the Registrar of Companies (ROC)

A private limited company is a business entity where ownership is restricted to a small number of shareholders, and shares cannot be publicly traded. Here the shareholder liability is limited to their investment in the company and can have up to 200 shareholders. The shares are not publicly traded. The company's registration and operations are governed by the Register of Companies (ROC). The directors have to submit their Director Identification Number (DIN) and Digital Signature Certificate (DSC) for incorporation. Documents like the Memorandum of Association (MoA) and Articles of Association (AoA) have to be submitted in the MCA portal. Post registration, the Ministry of Corporate Affairs (MCA)will provide the incorporation certificate and will display the company's details on the website.

Advantages of Registering as a Private Limited Company

One of the major advantages of a private limited company is that it provides a flexible management structure. Apart from this, it also has perpetual succession, which means it has a continued or Perpetual existence until it is legally dissolved. Here are some other benefits of registering as a Private limited company:

Limited Liability Protection

The legal liability of a private limited company's stockholders is restricted. You will be responsible for paying the liabilities of the company as a shareholder to the extent of your contribution. This protects your personal assets to cover the company's debts.

Separate Legal Entity

The company in itself is recognised as a legal entity and is responsible for the management of its liabilities and assets. This prevents the creditors from claiming personal assets of the directors and shareholders for money recovery.

Perpetual Succession

Registered private limited company functions continuously until it is officially dissolved and this is called perpetual succession. It is a state where the death of any founders of the company does not affect its existence.

Easy to Raise Capital

A registered private limited company is perceived as a legal entity and is capable of raising funds. Entrepreneurs can raise capital through equity and expand their business within the provided time limits of the liability.

Trustworthiness

Registered private limited companies provide access to director information and other crucial data of the company. This increases the trust factor of the general public and the investor. All the important details of the company and the directors are published in the MCA portal.

Free and Easy Transferability of Shares

Unlike public limited companies, In a private limited company, shares can be easily transferred from one person to another without having an impact on the company's operations. This provides greater flexibility for shareholders and also makes it attractive for investors.

Owning Property

Private companies are treated as separate legal entities and can own properties acquired and cell under their name. This helps the company manage its assets independently of the personal assets of the shareholders.

Dual Relationship

Members of a private limited company can act as both shareholders and employees of the company. This improves the company's operational efficiency and overall governance.

Capacity to Sue and Be Sued

The company can initiate legal proceedings and can also have legal actions taken in its name. This ensures that all the legal matters handled in the company's name protect the shareholders from their personal liability.

Borrowing Capacity

Private limited companies, when registered, have better access to funding from banks and other financial institutions. This enables the company to fund itself and operate as a separate legal entity in the future.

Limited Liability Protection

Separate Legal Entity

Perpetual Succession

Easy to Raise Capital

Trustworthiness

Free and Easy Transferability of Shares

Owning Property

Dual Relationship

Members of a private limited company can act as both shareholders and employees of the company. This improves the company's operational efficiency and overall governance.

Capacity to Sue and Be Sued

Borrowing Capacity

Eligibility Criteria for Private Limited Company Online Registration

As per MCA guidelines, a private limited company must be registered with at least two directors and shareholders. While stockholders may be either natural people or corporate entities, directors must be people. Additionally, a registered office address in India is mandatory. The following criterias must be met while filing for private limited company registration:

The applicant's minimum age should be eighteen years old
The applicant must be a citizen or resident of India
There should be between 200 and 300 members
Minimum number of Directors or shareholders must be 2

Checklist for Private Limited Company Registration

As per the MCA, a checklist has to be met for registering your company. Here is a clear outline of a checklist for private limited company registration to follow:

At least 2 Directors
Directors and shareholders can be the same person
All the Directors should have DIN and DSC
Have the minimum Authorised share capital
Have the minimum Paid up share capital
Draft and MoA and AoA
Need details of the company working address
NOC and Rental Agreement from the landlord

PVT Ltd Company Registration Documents Required

The following necessary documents are crucial for Private limited company registration in India:

Photographs of directors in passport size
Residential address proof for directors
Photo identification proof for directors
Sample signatures
A self-declaration confirming directorship in other companies
Lease/Rent agreement for the registered office
Letter of no objection from the property owner
Aadhaar card
PAN card
Director Identification Number (DIN)
Digital Signature Certificate (DSC)
Memorandum of Association (MoA)
Articles of Association (AoA)

Documents necessary for filing SPICe+ form (INC-32) for the registration of a private limited company are outlined as follows:

A. For Indian Nationals serving as directors and subscribers:

Affidavit on stamp paper: a declaration by all subscribers affirming their intention to become shareholders of the company
Office address proof like the Rental Agreement or Ownership Deed
Electricity bill, water bill and other utility bills of the last two months
Copy of approval if required
Trademark registration details
NOC from property owner
Proof of identity and address

B. Required Documents For Foreign Nationals serving as directors/Shareholders

Passport: Proof of identity
Address proof: Accepted documents include a driving license, residence card, bank statement, or government-issued identification with a valid address.

Types of Private Limited Company

In India, private limited businesses are differentiated into different types based on share distribution and other aspects. Here are 3 different types of PVT ltd Companies:

Companies Limited by Shares

These are the most common types of private limited companies.In this type the company has a share capital. And the liability of the shareholders are capped based on the quantity of unpaid shares.

PVT Companies Limited by Guarantee

This type of company does not have a share capital. The firm's members commit to donate a specific sum to the company's assets in the event that the company is wound up.

Unlimited Company

In this type there is no limit on the liability of the members. This type is uncommon as it puts its members at greater risk.

Characteristics/Features of a Private Limited Company

The characteristics of a Private Limited Company include restricted share transfers, a separate legal entity status, and limited responsibility for shareholders. Here is a clear outline of the same:

It is a separate legal entity with a Limited Liability Structure
Property and assets can be owned under the name of the company
Legal Business activity can be conducted under the company name
There is no minimum paid up capital for registering a Private limited company
A private limited company is separate from the shareholders
The shareholders enjoy limited liability with respect to the shares in the company
The total number of shareholders is limited to around 200
Individuals and corporate entities can be shareholders
The Companies Act of 2013 governs the private limited company complaints
The private limited company should file legal requirements like annual financial statements
Registered private limited companies should hold annual general meetings
Shares of the private limited company cannot be traded publicly
Transfer of shares is highly restricted and requires approval of existing shareholders and the board of directors
The shareholders can appoint the directors to manage the company's day-to-day task
The shareholders and the directors can be one and the same
Registered private limited companies can issue shares to investors to raise capital
The capital can be generated through loans from banks and other means
Company capital is not based on the personal assets of the shareholder.

Steps to Register Your Private Limited Company

To register a private limited company in India, you need to obtain a Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the proposed directors, and then file the incorporation documents with the Ministry of Corporate Affairs (MCA) through the online SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form. Vakilsearch offers an easy, three step process for business registering:

Consult our Experts

Provide all the Required Documents

FIle MoA, AoA, PAN, TAN and Get
Incorporation Certificate

1. Name Approval Process

After you finalise an unique name for your company our team will check for the name availability we will file a RUN form or SPICe-A form. Post name approval our team will file SPICe-B form.

2. Get Your (DSC) and (DIN)

We file form DIR-3 and help you to procure your Director Identification Number (DIN) and Digital Signature Certificate (DSC), which are essential for online document filing.

3. Filing and Incorporation

We will file your Incorporation Documents like MoA, AoA, Spice+ form and will make sure that your company gets its PAN and TAN ensuring all necessary paperwork is submitted accurately. MCA provides the certificate of incorporation post registration.

Private Limited Company Registration Fees

There are several criteria that determine the total fees structure to form a private limited business in India. Fees like stamp duty and government fees are required. Professional fees will be assessed if you engage any experts. Apart from this, applications for filing DSC, DIN, Notary fees, PAN, TAN and GST registration should be accounted for. An all-in-one platform for online private limited company registration in India is offered by Vakilsearch. Depending on your demands, you can choose from our affordably priced packages and begin the registration process.

Post-Registration Compliances After Filling of FORM 3

As per Section 12(1), a company must have a registered office within 30 days of incorporation. Additionally, PAN and TAN applications should be submitted, leading to the company's registration under the Income Tax Act, 1961. As per MCA guidelines all the registered private limited companies should meet all the following compliance requirement:

Conduct the Initial Board Meeting

As per Section 173(1) the companies Act 2013 registered private limited company should conduct its first board of directors meeting within 30 days of incorporation.

Open a Bank Account

Having a current account under the company's name is crucial for business operations.. As per law, a company is a legal entity and the financial transaction should be conducted in its name not in the name of an individual.

Have an Official Address

With respect to Section 12 (1) of the Companies Registration Act of 2013 registered business should have an official address within 30 days of incorporation. This address is the point of contact for receiving communications from government authorities. The official address should be informed to the resistor within the first 30 days of company incorporation.

Branding and Legal Compliance

Registered company name should be displayed in all the business locations. The local language should be used in the billboards. Seals and Letterheads should be prepared.

Appoint an Auditor

The board of directors should appoint an auditor as per Section 139(1) within 30 days of company registration.

Interest Disclosure and Statutory Compliance

In the first board meeting, all the directors of the company should declare their interests with respect to other companies. According to Section 184 of the Companies Act of 2013, this is required. Companies are required by law to keep a statutory register at the registered office.

Share Certificate Issuance

Share certificates must be issued to shareholders within 60 days from the date of incorporation, or in the case of additional share allotments, within 60 days from the allotment date.

Bookkeeping and Financial Reporting

As per Section 128, every company must maintain accurate and fair books of accounts, adhering to the double entry system and accrual basis of accounting.

Commencement of Business Certification

A company needs to get a certificate of commencement of business within 180 days. A disclosure attesting to each subscriber's payment of the outstanding balance on their shares must be filed by directors.

Copyright Registration

For a private limited company, copyright registration is essential to protect its original works, such as software, manuals, logos, promotional materials, and other creative content. We have a dedicated team of IP lawyers who can help in copyright registration and other IP related issues.

Professional Tax Registration

Professional tax is a state-level tax imposed on professionals and businesses in India. Employers are required to deduct professional tax from the salaries of employees and remit the same to the state government. The tax rates are fixed by the state government and vary for other states. Our team of chartered accountants can help in the registration and filing of Professional tax in India.

Tax Implications of Business Structures

A Business entity must comply with a number of tax compliances that are divided into three categories namely:

Monthly Requirements

File a challan-cum-statement where tax is deducted under sections 194-IA, 194-IB, 194M, or 194S (by a designated person)

Pay TDS and TCS if taxes are deducted or collected

Issue TDS certificate if you withheld under sections 194-IA, 194-IB, 194M, or 194S (by a designated person)

Quarterly Requirements

Businesses need to follow these quarterly obligations to comply with Income-tax laws:

Pay advance tax

Submit TDS/TCS returns if taxes are deducted/collected

Provide TDS certificates for payments other than salary

Provide TCS certificates for collected taxes and submitted returns

Yearly Requirements

Provide TDS certificates to all the employees with respect to salary payments and taxes withheld from their paychecks from the previous year

Send in the yearly income return, updated and revised

Submit audit reports in accordance with Section 44AB

Provide transfer price reports in accordance with Section 92E for assesses participating in foreign or designated domestic transactions

Role of Company Directors and Shareholders in a Private Limited Company

Directors and shareholders play a major role in the governance and decision-making processes of a private limited company. The directors are chosen by the shareholders and are responsible for managing day-to-day operations, creating strategic plans, and ensuring legal compliance.The role of a company director is to handle the daily operations of the organisation and make significant strategic and operational decisions to ensure the company meets its objectives. If the company has shareholders, the director may be accountable to them, overseeing how the directors manage the company and sharing in the profits in return for their investment.

Company Directors

Approving major business decisions like investments, expansions, mergers, and acquisitions.
Establishing ethical company procedures, adhering to legal and regulatory standards, and keeping accurate financial records.
Appointing and overseeing the management team, setting performance objectives, and monitoring progress.
Serving the interests of the business, its creditors, employees, and shareholders.
Maintaining financial stability and profitability, ensuring responsible allocation of resources.

Shareholders

Providing financial resources to the company through purchasing shares
Selecting competent and qualified individuals to serve on the board of directors
Taking part in shareholder meetings and using one's voting rights on specific issues in accordance with the articles of association of the business
Sharing in the company's profits through dividend distributions (subject to board approval and financial performance)
Holding the board of directors accountable for their performance and ensuring responsible management of the company

Comparison Between Private Limited Company and Other Business Structures

Choosing the right company type is crucial for registration. Every company type has different characteristics and provides different benefits to the individuals. Here is a clear outline for the different types of companies:

Aspect	Proprietorship	Partnership	LLP	Private Limited Company
Registration	No formal registration required	Optional registration under the Partnership Act, 1932	Registered with the Ministry of Corporate Affairs under the LLP Act, 2008	Registered with the Ministry of Corporate Affairs under the Companies Act, 2013
Name of the Entity	Promoter’s choice; avoid trademarked names	Avoid trademarked names	The name has to end with ‘Limited Liability Partnership’ (LLP). Subject to approval by the Registrar.	The name ends with ‘Private Limited Company’. Subject to approval by the Registrar.
Legal Status of Entity	Not a separate legal entity; Promoter is personally liable	Not a separate legal entity; Promoters are personally liable	Separate legal entity; Partners not personally liable for LLP's liabilities	Separate legal entity. Directors and Shareholders not personally liable for Company's liabilities
Member(s) Liability	Unlimited liability for the Proprietor	Unlimited liability for the Partners	Limited liability for Partners, up to their contribution to the LLP	Limited liability for Shareholders, up to their share capital
Minimum Number of Members	Can have only one person as a member	A minimum of two persons are required	Minimum two members are required	Two persons are required to start a PVT Limited Company
Maximum Number of Members	Can have only one person as a member	Maximum of 20 partners	Unlimited number of Partners	Maximum of 200 shareholders or members
Foreign Ownership	Not allowed	Not for foreigners	Need RBI and FIPB approval	Permitted under the Automatic Approval route in most sectors for foreigners investing in Private Limited Company
Transferability	Not transferable	Not transferable	Ownership can be transferred	Ownership can be transferred through share transfer
Existence or Survivability	Dependent on the Proprietor's existence	Might dissolve due to death of a Partner	Not dependent on the Partners' existence; could be dissolved voluntarily or by an Order of the Company Law Board	Not dependent on Directors or Shareholders; could be dissolved voluntarily or by Regulatory Authorities
Taxation	Taxed as an individual based on total income	Partnership profits taxed at 30% plus surcharge and cess	LLP profits taxed at 30% plus surcharge and cess	Private Limited Company profits taxed at 30% plus surcharge and cess
Annual Statutory Meetings	No requirements	Not required	No annual statutory meeting required	Board and General Meetings must be conducted periodically
Annual Filings	No annual report filing requirements; file Income Tax Return based on income	No annual report filing requirements; file Income Tax Return for Partnership	LLP must file Annual Statement of Accounts & Solvency and Annual Return; file Income Tax Return	Private Limited Company must file Annual Accounts and Annual Return; file Income Tax Return

Proprietorship

No formal registration required

Partnership

Optional registration under the Partnership Act, 1932

LLP

Registered with the Ministry of Corporate Affairs under the LLP Act, 2008

Private Limited Company

Registered with the Ministry of Corporate Affairs under the Companies Act, 2013

Why Choose Vakilsearch for PVT Ltd Company Registration ?

Choosing Vakilsearch for PVT Ltd Company Registration offers a seamless and reliable experience. With a commitment to transparency, guidance through government fees and stamp duty complexities, and a user-friendly approach, our experts will ensure a stress-free registration process. Our dedicated team's efficiency and attention to detail make us the trusted partner for your company registration needs. Opt for a hassle-free PVT Ltd Company Registration with Vakilsearch, where expertise meets excellence.

Choosing Vakilsearch for our Private Limited Company Registration was a game-changer. Their seamless process, expert guidance, and commitment to customer satisfaction made the entire journey stress-free. From handling government fees to providing excellent professional services, Vakilsearch truly stands out. We're grateful for their support and highly recommend their services.

Ramya

We are delighted to share our positive experience with Vakilsearch for PVT Ltd Company Registration. Their team's efficiency and attention to detail were impressive. They navigated the complexities of government fees and stamp duty seamlessly. Vakilsearch's commitment to transparency and professionalism exceeded our expectations. We confidently recommend them to anyone seeking reliable registration services.

Ravishankar

Vakilsearch proved to be the perfect partner for our Private Limited Company Registration. To name a few team members, Harish and Vishnu helped me in managing professional fees and helped me register smoothly. We are extremely satisfied and grateful for the top-notch service.

Meera

Private Limited Company Registration FAQs

What is the minimum capital required to start a Private Limited Company?

There's no specific minimum capital requirement for a Private Limited Company in India. It can be started with any amount of capital deemed appropriate by the promoters.

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, at least one director should be an Indian citizen.

How long does the company registration process take?

The registration process duration varies. On average, it takes about 15 to 25 working days, subject to government processing times, document preparation, and other procedural factors.

Who is eligible to register a Private Limited Company in India?

Any individual or entity, including foreigners, can register a Private Limited Company in India. The company must have a minimum of two directors and can have up to 200 shareholders.

Which is more advantageous for a startup: One Person Company (OPC) or Private Limited Company?

Both have their own merits. OPC is the best choice for small firms, and Private Limited Companies are better for larger businesses with several founders.

Who can qualify to be a director in a Private Limited Company?

Any individual, Indian or foreign, who is above 18 years old and not disqualified under the Companies Act can qualify as a director in a Private Limited Company.

Are Private Limited Companies permitted to issue shares to the general public?

No, Private Limited Companies cannot issue shares to the general public. They are restricted to offering shares to a select group of individuals, typically existing shareholders or private investors.

Can the subscriber pages of the Memorandum of Association (MOA) and Articles of Association (AOA) be altered?

No, the subscriber pages of the MOA and AOA, once filed with the Registrar of Companies during incorporation, cannot be altered. Any changes to these documents require passing a special resolution and filing updated documents with regulatory authorities.

Authors

Written by Nithya, Reviewed by Vainavi. Last updated on May 28 2024, 11:21 AM

Vainavi Jalandhar excels 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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