What is a Private limited Company?
A privately owned company (limited) is privately owned, which is utilized by small companies. This form of business entity restricts the amount of liability an owner has only to the extent of his or her shareholding, the maximum number of shareholders that can be involved to 200 and disallows the shareholders the option to trade their shares publicly
What are the benefits of Company registration in India as a Private Limited Company?
1. The liability of the shareholders is limited, the shareholders are liable to the extent of their assets in a limited company. This implies that you as a shareholder will be liable to contribute money towards liability of the company just to the extent of the input that you have shared as a stakeholder. The shareholders incur no personal liability and so they do not have to settle the liability of the company out of their own pocket.
2. Legal Entity- A personal limited company is a separate legal entity to its directors and the shareholders. This implies that the business will see to it that assets and liabilities, its debtors and creditors are managed. The losses incurred in the company will not coincide with the shareholders. Therefore, the creditors are unable to pursue the directors or shareholders to get back the money.
3. Capital Raising Even though the registration of a private limited company is associated with compliance costs, it is more desirable by entrepreneurs because it assists them to raise funds in the form of equity, grow and at the same time restrict the liability.
4. Credibility would be-Indian companies are registered with Registrar of companies (ROC) according to the Companies Act 2013. The information of the company is available through the Ministry of Corporate Affairs (MCA) portal in which anyone can check the details. Even the information of all the directors is given when the formation of the company is carried out. Therefore a business structure in the form of a limited liability company is more believable.
5. Continue Existence- A company is said to have a perpetual succession i.e not interrupted existence until otherwise lawfully dissolved. Its continuous existence is not dependent on the membership because a firm is distinct legal person that is not affected by the demise or resignation of a member.
6.Various types of registration of companies
Other company registration can be made with other forms such as
Registration of Partnership Firm
Regarding the proprietorship firm registration, it is a firm comprising of an individual with the management of that firm.
Registration as Limited Liability Partnership (LLP)
OPC Registration by one person company
Section 8 Company registration (NGO Registration )
Step-by-Step of how to Register Private Limited Company:
Want to incorporate your business as a private limited? And the following is the procedure of registering your company as a company of limited liability:
Step 1: Getting Digital Signature Certificate (DSC)
Step 2: Get DIN
Step 3: Naming Availability
Step 4: SPICe+ INC- 32
Step 5: AOA and MOA
Step 6 PAN and TAN Application
The RUN Web service previously accessible in checking the availability of name will only be accessible in change of name of a pre-existing company. This will take effect as at 23 February 2020.
Step 1: Get DSC (Digital Signature): To submit the forms to form the company, one requires digital signatures. The registration is even done online and the forms need a digital signature. DSC is compulsory to every person in the Memorandum of Association (MOA) and Articles of Association (AOA).
The digital signature certificates have to be handed over by the government recognized certifying authorities. The names of those authorities which are included in the list approved by the government can be found here. Or, you will get your DSC online in merely 2 days RIGHT HERE. The acquisition of DSC depends on the certifying authority and therefore it varies. It is essential, that you should acquire the category of DSC at class 3.
Step 2: DIN: Director Identification Number DIN is a number given to a director. Anybody who desires to be a director in a company must acquire it. A director in any of the numbers of companies is one DIN.
Step 3 Name Approval
Step 4: Prepare SPICe+ (INC- 32) Form SPICe+ intends to simplify the process of registering a new company and thus the MCA has established Form SPICe+ starting 23 February 2020. The web based incorporation of the companies also comes under the Part-B of the SPICe+ form, which facilitates streamlining of the incorporation of companies.
Step 5: e-MoA(INC -33) and e-AoA (INC- 34) e-MoA means an electronic Memorandum of Association and AoA means an electronic Articles of Association. These forms have been presented to make the company registration process easy in India.
Memorandum is a charters of that company whereas the articles of association have internal rules and regulations of that company.
Step 6: Application of PAN and TAN You can also apply of PAN and TAN of the company using the same form SPICe+. These forms will be auto-generated once SPICe+ form is submitted. When the SPICe + Form is approved then the Certificate of Incorporation of the PLC is issued with the PAN assigned to them by the Income Tax Department. The MCA will send an email with Certificate of Incorporation, PAN and TAN. PAN card will be issued by the Income Tax Department.
The list of Documents needed to proceed with SPICe+ ( INC -32)
A private limited company registration requires the following documents to be submitted before the SPICe (INC- 32):
An Affidavit on a Stamp Paper is to be given by all the subscribers of the Company to state their willingness to become the shareholders of the Company Proof of office address – Rental Agreement or Ownership Deed such as Sale Deed
Copies of utility bills such as electricity bill, water bill or gas bill not older than two months
Copies of utility bills that are not older than two months
Copy of approval in case the proposed name of the company contains any word(s) or expression(s) that require approval from central government
If the proposed name is based on a registered trademark or is subject matter of an application pending for registration under the Trade Marks Act, then it is mandatory to attach the trademark registration certificate or trademark application copy
NOC from the owner of the property, if the registered office is on a rented/leased property.
In case of subscribers/ Director does not have a DIN, it is mandatory to attach, proof of identity and address proof of the subscribers
All the subscribers of the Company have to give an Affidavit on a Stamp Paper stating that they will be the shareholders of the Company
Evidence of Office address -Rental Agreement document or Ownership document like sale Deed
Duplicates of utility bills like electricity bill, water bill or gas bill that are not more than two months old
Photocopies of utility bills which are not more than two months old
In case the proposed name is on the basis of a registered trademark or is a subject matter of an application that is awaiting registration in terms of the Trade Marks Act, then such a document as the certificate of trademark registration or copy of the application should be obligatory appended.
NOC by the property owner, in case the property is on rented/leased property where the address is registered.
When subscribers/ Director has no DIN, then there are certain requirement to enforce to attach, proof of identity as also address proof of subscribers.
How much Time is consumed when registering a Private Limited company?
The entire process of DIN, Name and Incorporation Approval process would require about 10 working days. But now-a-days, the process of registering Company has become quicker because the documents are dragged in one application form with MCA. It will be a major advance towards e- governance as well as among the businesses seeking expansion of activities.
Frequently asked questions:-
What are the prerequisites to incorporate a Private Limited Company?
The prerequisites for the incorporation of a private limited company are that:
The number of members must be between 2-200.
There must be at least two directors and two shareholders
Each director must have a Directors Identification Number (DIN)
PAN card copy of directors/shareholders and Passport copy for NRI subscribers
What are the requirements to include a Private limited Company?
The conditions that must be fulfilled before the incorporation of a private limited firm are that:
The size should be between 2-200.
It should have not less than 2 directors and 2 shareholders
Every director is expected to possess Directors Identification Number (DIN)
PAN card copies of directors / shareholders and Passport copies of NRI subscribers
Can a residence address use the private business firm?
Yes. The business must come up with address proof of incorporation. However, Ministry of Corporate Affairs (MCA) permits an address of the resident as the registered address of the company. Therefore any address may be given as registered address.