The Private Limited Company is defined under Section 2 subsection (68) of the Companies Act 2013, as an organization which has the minimum paid-up capital of Rs One Lakh. Also, a Private Limited Company is owned by its members or shareholders. The minimum people required to start a Private Limited Company is two in number and may extend up to two hundred in number. However, affairs of the Private Company and acts of its members are governed by the Memorandum of Association (MOA) and Articles of Association (AOA).
Private Limited Company Registration
The Registration of a Private Company requires a minimum composition of two members and two directors. However, the count of maximum members can extend to two hundred, and maximum directors can extend up to fifteen for the incorporation of a private limited company. The Private Company also has the feature of limited liability for its members and does not allow issuance of its shares to the general public.
Further, in India, the Private Limited Company registration primarily requires the Digital Signature Certificate (DSC) and Director Identification Number (DIN) in favour of one director. Furthermore, one has to apply to the concerned Registrar of Company (ROC) regarding the availability of name in eForm1. Lastly, a prescribed fee of Rs. 500/- has to be paid together with the digital signature certificate (DSC) of the applicant proposing the company.
Thereafter, the concerned company needs to obtain name approval and also needs to identify that no existing company has a similar name at the time of incorporation. Once the approval is obtained, the applicant is required to file the prescribed forms that will be Form 1, 18 and 32. Moreover, such prescribed forms are to be filed within sixty days from the date of name approval and filing of necessary documents. Finally, after the completion of the verification process, the applicant is required to file a declaration in eForm 19 and eForm 20. Lastly, MCA (Ministry of Corporate Affairs) will issue a certificate for the commencement of the business of the Private Limited Company.
Examples of Private Ltd. Company
Following are the examples of the Private Limited Company –
Benefits of a Private Limited Company Registration
Following are the Benefits annexed with the concept of a Private Limited Company –
- Separate Legal Existence
- Limited Liability Partnership
- Perpetual Existence
- Business Growth is supported
- Reputation as a Corporate Entity
- Better Creditability
- Easy Transferability
- Right to Own Property
Minimum Requirements for the Registration of a Private Company
Following are the requirements which are to be fulfilled before the incorporation of a Private Limited Company –
- Directors –
- Minimum – 2
- Maximum – 15
- Out of all the proposed directors, one mandatorily needs to be an Indian Citizen
- Shareholders –
- Minimum – 2 shareholders
- Maximum – 200 shareholders
- No prescribed capital share requirement
- Mandatory Director Identification Number (DIN) for all the proposed directors
- Mandatory Digital Signature Certificate (DSC) for at least one proposed director
Documents Required for the Formation of a Private Ltd. Company
- From Directors and Shareholders
- Scanned copy of the PAN Card or Passport
- Passport-Sized Photograph
- Copy of the address proof in the form of Voter ID card, Driving License or Aadhar Card
- Notarized Rental Agreement in case the property used is a rented property
- For Foreign Nationals or NRI Directors
- Scanned copy of the Passport
- Residential proof (Apostille and Notarized)
- Attested copy of the VISA in case the Director is native of any foreign country
- Attested copy of the Resident Permit, in case the concerned director is currently living in India
- For the Proposed Registered Address
- No-Objection Certificate (NOC) from the owner of the property, in case the property used, is a rented property
- Utility Bill in the form of electricity bill, bank statement, or telephone bill that too not older than two months
Steps Involved in the Process of Registration of a Private Limited Company
Following are the steps involved in the process of Private Limited Company Incorporation –
- Selection of the Company’s name – First and Foremost step is to finalize concerned company’s legal name. It is noteworthy to note that the proposed name should be new, unique and non-offensive to the provisions of the Companies Act, 2013. The applicant can check the name availability by accessing the MCA (Ministry of Corporate Affairs) portal.
Following are the steps involved in the name approval
- Reserve Unique Name (RUN) application is used for the company’s name approval.
- Minimum two names are proposed at the time of Incorporation
- The prescribed fee for the Reserve Unique Name (RUN) application is Rs 1000/-
- Name after obtaining approval shall be valid for a period of twenty days from the date of approval.
- But, the name approval (Change of name) for an existing company shall be valid for a period of sixty days.
- Lastly, in order to protect the company’s name, logo, it is highly advised to go for trademark registration
- Obtaining Digital Signature Certificate (DSC) – It is a compulsory document required to sign all the documents such as the ROC (Registrar of Companies) compliance e-forms, e-income tax returns, etc. in an electronic format. Also, all the directors must obtain their DSC (Digital Signature Certificate) that would be used while signing the registration application
- Obtaining Director Identification Number (DIN) – DIN is an acronym used for the Director Identification Number. Just like, DSC (Digital Signature Certificate) it is also mandatory for all the proposed directors to obtain their Director Identification Number.
- Company’s Incorporation Form –
- The application for the company’s incorporation shall be filed in e-form SPICE 32.
- The newly proposed directors can now acquire DIN together with e-form SPICE 32.
- Now, the e-Form SPICE 32 also facilitates the application for TAN and PAN together with the form for incorporation.
- Further, the subscriber’s details are required to be filed together with the incorporation form. However, a maximum of seven subscriber’s details can be filled in.
- According to the recent amendment, a new form called AGILE (INC-35) needs to be accompanied together with the SPICe.
- Submission of AGILE (INC-5) will offer GST (Goods and Service Tax) registration, EPFO (Employees Provident Fund Organization) registration, and ESIC (Employee State Insurance Corporation) registration.
- Verification of Documents and Issuance of Certificate of Registration – On the successful submission of the incorporation form, the ROC (Registrar of Companies) will carefully verify and examine the application and documents submitted. If it finds that every fact is true and valid, then it will issue the certificate of incorporation for the concerned company together with the CIN (Corporate Identity Number), PAN (Permanent Account Number) and TAN (Tax Identification Number).
- Opening of a Bank Account – After receiving the certificate for Incorporation, the company is required to open a current bank account in its name.
How to Check the registration status of a Pvt. Ltd. Company
Once the applicant has applied for the company registration, he or she can check the status regarding the same on the MCA’s (Ministry of Corporate Affairs) web portal. In order to check the status of the Company Registration, follow the steps given below –
- Visit the official MCA (Ministry of Corporate Affairs) portal at www.mca.gov.in
- Click on MCA services
- Then click on “LLP Master Data or View Company.”
- Then fill the required details and submit the concerned form
- ROC (Registrar of Companies) will display the company details
- Now the applicant can check the registration as well as the compliance status
Exemptions of a Private Limited Company
In India, a lot of start-ups are established as private limited companies. In the budget every year, several relaxations are announced for start-ups. It is crystal clear that the government has huge expectations from the startup community and is willing to make changes and alterations to accommodate them. Following listed are the exemptions available for a private company –
- Related party transactions
- Share capital
- Public deposits
- Meeting Requirements
- Agreements and resolutions
- The auditor eligibility
- Power of the board
- Senior Management Appointment