Private Limited Company Registration

A private limited company is the most common and popular type of corporate legal entity in India and which comes into existence by the process of incorporation. After a company is incorporated, it becomes a distinct entity from those who invest their capital and labour to run the company. The registration/ Incorporation of a Private Limited company is governed by the Ministry of Corporate Affairs (“MCA”). Companies are incorporated & regulated under the Companies Act, 2013 and the Companies Incorporation Rules, 2014.

The minimum requirement for a Private Limited Company

1.Minimum Two Directors and two shareholders are required. Further directors and shareholders can be the same persons.

2.The requirement of One Resident Director: As per Section 149(3) Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two (182) days in the previous calendar year.

3.The requirement of the Woman Director and Independent director: Not applicable to a private company.

4.Private companies can have a minimum paid-up capital of any amount without any minimum limit

5.Director Identification Number (DIN) and DSC for all the Directors

6.Director Identification Number (DIN) and DSC for all the Directors. PAN, ID Proof and Address Proof of all the Promoters and all the Directors.

7.Application for Name Approval in R.U.N and Approval of the Same [Note that Name desired should not resemble the name of existing registered company and shall not violate the provisions of emblems and names (Prevention of Improper Use Act, 1950)

8.Drafting of Documents and Filing of e-Forms namely MOA/AOA/ Spice Form/ AGILE e-form

9.Proof of office/registered address and latest copies of utility bills

10.Brief Writeup on the nature of business to be carried on in the proposed company

PROCEDURE OR STEPS IN INCORPORATION

1.Application for Name Availability

2.Preparation of Memorandum and Articles of Association

3.Filing of documents, E- forms, etc.

4.Issue of Certificate of Incorporation and Allotment of Corporate identity number by Registrar

5.Applying and Obtaining Other Post Registrations required.

6.Opening Current Account with the Bank and remittance of share capital amount to the bank.

7.Filing of Declaration for the commencement of business

8.Issue of Share Certificate and Appointment of Auditors

Types of Private Limited Companies:

•Company Limited by Shares: 

Shareholders’ liability is limited to the nominal share amount mentioned in the Memorandum of Association.

•Company Limited by Guarantee: 

Member liability is limited to the amount of guarantee specified in the Memorandum of Association. This guarantee is invoked only during winding up.

•Unlimited Companies: 

Members of unlimited companies have unlimited personal liability for the company’s debts and liabilities. However, they are still considered a separate legal entity, and individual members cannot be sued.

Advantages of a Private Limited Company

A Private Limited Company is one of India’s most popular business structures. It offers several advantages and some disadvantages, let us explain.

•Limited Liability:

 Shareholders’ responsibility is restricted to the extent of their capital contribution, safeguarding personal assets from the company’s financial obligations and liabilities.

•Distinct Legal Identity: 

A Private Limited Company possesses an independent legal entity distinct from its proprietors. It has the capacity to own assets, engage in contractual agreements, and initiate or defend legal actions under its own name.

•Continuous Existence: 

The company’s existence persists irrespective of shifts in shareholders or directors. Its existence is not contingent upon the lifespan of its associates.

•Ease of Funding:

Raising capital by issuing shares to investors, venture capitalists, or angel investors is easier. This structure attracts external investment.

•Tax Benefits: 

Private Limited Companies may qualify for various tax benefits and exemptions, making them tax-efficient entities.

•Credibility and Trust: 

Having “Pvt. Ltd.” in your company name often instil more confidence and trust in customers, suppliers, and partners.

Disadvantages of a  Private Limited Company

•Compliance Burden:

 Face regulatory demands, including financial reporting, filings, and audits.

•Complex Setup: 

Process and cost for managing are higher than more superficial structures.

•Share Limits:

 Restricted share transfers; max 200 shareholders in India.

•Public Disclosure: 

Financial info is publicly viewable, impacting privacy.

•Exit Complexity: 

Selling or leaving is more complicated than with other structures.

•Slower Decisions: 

The involvement of shareholders and directors may slow choices.

Taj and Associates offers a wide range of services beyond private limited services, assisting Indian owners (OPC, Proprietary concern, LLP, Partnership, Trusts/Societies), foreign owners (Subsidiary Company, Branch/Liaison Office), and special entities (Section 8 Company, AOP) in ensuring compliance and efficiency.