What is a Private Limited Company?
A private limited company is a type of business entity privately held, ideal for small businesses. It restricts owner liability to their shareholdings, limits the number of shareholders to 200, and prohibits the public trading of shares. We provide the best private limited company registration services.
Advantages of Private Limited Company Registration in India
- Limited Liability: Shareholders of a private limited company have limited liability, meaning they are only responsible for the company’s debts to the extent of their shareholdings. This ensures personal assets are not at risk.
- Separate Legal Entity: A private limited company is a distinct legal entity from its directors and shareholders. This separation means the company is accountable for its own assets and liabilities, and shareholders are not personally liable for company debts.
- Capital Raising: Private limited companies, despite compliance requirements, are preferred by entrepreneurs as they facilitate raising funds through equity while limiting liability.
- Credibility: Registered with the Registrar of Companies (ROC) under the Companies Act 2013, the details of a private limited company and its directors are accessible via the Ministry of Corporate Affairs (MCA) portal, enhancing trustworthiness.
- Continue Existence: A private limited company enjoys uninterrupted existence, continuing beyond the death or resignation of any member, until legally dissolved.
How to Register a Private Limited Company
Step-by-Step Guide:
- Obtain Digital Signature Certificate (DSC): Required for filing company formation forms online. Obtain DSCs from government-recognized certifying authorities.
- Obtain DIN (Director Identification Number): Necessary for anyone intending to be a director in a company. DIN can be obtained via Form DIR-3 or within the SPICe+ form for up to three directors.
- Name Approval: Choose a unique name for the company through Part-A of the SPICe+ Form. If the name is approved, it will be reserved for 20 days for incorporation.
- Form SPICe+ (INC-32): This integrated web-based form streamlines company incorporation. It covers DIN allotment, name reservation, PAN and TAN application, and more.
- e-MoA (INC-33) and e-AoA (INC-34): Electronic forms for the Memorandum of Association and Articles of Association, digitally signed by the subscribers.
- PAN and TAN Application: Apply for the company’s PAN and TAN through the SPICe+ form. Upon approval, a Certificate of Incorporation, PAN, and TAN will be issued by the MCA.
Documents Required for Filing SPICe+ (INC-32)
For Indian Nationals:
- Affidavit from subscribers
- Proof of office address (Rental Agreement or Sale Deed)
- Recent utility bills
- NOC from property owner (if applicable)
- Proof of identity and address for subscribers/directors without a DIN
For Foreign Nationals:
- Passport
- Address proof (e.g., driving license, residence card, bank statement)
Registration Timeline
The registration process, including DIN, name approval, and incorporation, typically takes around 10 working days. The streamlined e-governance approach has significantly expedited the process, making it efficient for businesses looking to expand.
Conclusion
Registering a private limited company in India offers numerous advantages, from limited liability to increased credibility and easier capital raising. By following the streamlined registration process and providing the required documents, you can establish your private limited company efficiently.
FAQ’s
Can a Private Company be Incorporated with a Residential Address?
Yes, a private company can be incorporated using a residential address. The Ministry of Corporate Affairs (MCA) permits a residential address to be used as the company’s registered address. Thus, any valid address can serve as the registered address for the incorporation process.
How is SPICe INC-32 Different from SPICe+ INC-32?
SPICe INC-32 is an e-form used previously for company incorporation. In contrast, SPICe+ INC-32 is an integrated web form that offers 10 services from three Central Government Ministries and Departments (Ministry of Corporate Affairs, Ministry of Labour, and Department of Revenue in the Ministry of Finance) and one State Government (Maharashtra). This integration simplifies procedures, reduces time and cost, and supports the Government of India’s Ease of Doing Business (EODB) initiatives. As of February 15, 2020, SPICe+ is required for all new company incorporations via the MCA portal.
How are PAN and TAN Communicated to the User Once SPICe INC-32 is Accepted?
Upon acceptance of the SPICe forms, the Certificate of Incorporation (COI) is issued along with the PAN and TAN, as allotted by the Income Tax department. An email containing the COI, PAN, and TAN will be sent to the applicant. The PAN and TAN in this email are valid, and the physical laminated PAN card is no longer required.
Prerequisites to Incorporate a Private Limited Company
To incorporate a private limited company, the following prerequisites must be met:
- The number of members must be between 2-200.
- There must be at least two directors and two shareholders.
- Directors and Shareholders can be the same Persons.
- Each director must have a Director Identification Number (DIN).
- PAN card copies of directors/shareholders and Passport copies for NRI subscribers.
What is the Minimum Turnover for a Private Limited Company?
There is no minimum turnover requirement for a private limited company. A private limited company can have any level of turnover, from very low to very high, depending on its business activities.
What are MOA and AOA?
The Memorandum of Association (MOA), defined under section 2(56) of the Companies Act 2013, is the foundation document of a company. It outlines the constitution, powers, and objectives of the company. The Articles of Association (AOA) are the internal rules and regulations that govern the company’s operations and management.
Who is Eligible for a Private Limited Company?
Any individual or entity can become a shareholder in a private limited company. However, there must be a minimum of two shareholders and two directors to form a private limited company. Directors must have a valid Director Identification Number (DIN).
Can One Person Start a Private Limited Company?
No, a private limited company requires at least two shareholders and two directors. However, if you wish to start a company alone, you can opt for a One Person Company (OPC), which allows a single individual to operate a company with the benefits of limited liability.
What is the Minimum Capital for a Private Limited Company?
There is no minimum capital requirement for starting a private limited company in India. You can start a company with any amount of capital that suits your business needs. However, the authorized capital must be specified in the company’s Memorandum of Association (MOA).
What is the Age Limit for a Private Limited Company?
There is no age limit for owning or starting a private limited company. However, the directors must be at least 18 years old, as they need to be legally capable of entering into a contract.
Which is Better, Private Limited (Pvt Ltd) or Limited (Ltd)?
The choice between a Private Limited (Pvt Ltd) and a Public Limited (Ltd) company depends on your business goals. A Pvt Ltd company is suitable for small to medium-sized businesses with fewer shareholders and no requirement to publicly trade shares. A Public Ltd company is better for larger businesses that intend to raise capital from the public and have no restriction on the number of shareholders.
How Many Employees are Required for a Private Limited Company?
There is no minimum requirement for the number of employees in a private limited company. You can start with as few or as many employees as needed for your business operations.
Who is More Powerful in a Private Limited Company?
In a private limited company, the power structure is defined by the shareholding and the roles assigned. The Board of Directors holds significant power in decision-making and management of the company. However, shareholders also have substantial influence, especially in major decisions, depending on their shareholding percentage. The managing director or CEO, if appointed, typically handles the day-to-day operations and holds significant executive power.