Private Limited Company Registration - An Overview
If you are looking for a closely held and well-organized form of existence for your business, then Private Limited is the most appropriate option available. Easily incorporated, a Private Limited is registered within a quick span of time, with minimum documentation and minimal number of promoters.
Reasons to choose a Private Limited Company
The Private Limited company is a widely chosen entity among the promoters due to the following reasons:
- Better Credibility among customers
- Limited liability of the Promoters
- Perpetual Succession
- No capital constraint
As compared to a sole proprietorship or a Partnership firm, the Private Limited holds better goodwill in the system, because of their accountability towards the Ministry. This also helps the promoters to raise funds from Banks and other Financial Institutions.
Due to their accountability towards the authorities, a Private Limited is more credible among their customers and hence contributes to create a larger customer base;
The liability of the promoters is only limited to the amount of capital contributed by them. It gives greater sense of independence to run the business.
The life of the company is for indefinite period of time and shall not be affected by the life and death of its promoters.
Being a closely held entity, the anytime business requirement of funds can be satisfied by further capital contribution by the shareholders.
Features of Private Limited Company Registration
The Private Limited Company have following striking features:
- Unique and Meaningful Name
- Minimum Capital
- Minimum Directors and Shareholders
- Registered Office
The name should not resemble to any of the existing entities and shall not contain any offensive words detrimental to the interest of the society at large. Also, the name should necessarily align with the objects of the company and must contain the word “Private Limited”;
The minimum capital contribution requirement by the promoters in case of a Private Limited Company has been removed and the company can be set-up with any amount of capital. It shall be contributed by all the shareholders in the proportion of the shares held by them;
There shall be present at least two Directors and Shareholders for the registration of a Private Limited. Both Directors and Shareholders can be similar person;
There shall be present, at the time of Company registration and at all times thereafter, a registered office address for the communication of the important matters by the authorities or otherwise. The registered office can be an owned property or a rented one.
Documents Required for Pvt Ltd Company Registration
A complete and correct documentation plays a pivotal role in the process of Private Company registration. Let's have a look on the Documents requirement:
The following documents serve as ID proofs for the purpose of application:
- Pan Card (For Indian Nationals);
- Passport (For Foreign Nationals).
Below documents can be submitted as the proof of address:
- Voter ID;
- Driving License;
- Latest Bank Statement (Not older than two months)
- Latest Electricity Bill or Water Bill or Gas Bill.
Registered Office Address Proof
If the premises is owned by Director or Shareholder or any of the related entity, then following documents are must:
- Latest Electricity Bill in the name of Director or Shareholder or related entity;
- NOC (No-Objection Certificate).
If the premises is taken on rent:
- Rent Agreement;
- Latest Electricity Bill in the name of the owner;
- NOC (No-Objection Certificate).
- Scanned Passport size photograph of all the Directors and Shareholders;
- Specimen Signatures for all the Directors and Shareholders for the purpose of verification.
Procedure for Private Limited Company Registration
The registration process of a Private Limited Company is completely online. The Private Limited is also registered with the Ministry of Corporate Affairs, where all other companies of the land are registered. The process consists of the following steps:
- Digital Signatures (DSCs)
Since the registration process is online, hence there is the requirement for Digital signatures of all the Directors and Shareholders. At Swarit Advisors, we provide two DSCs in our package of Private Company Registration.
- Name Application
Once the name is finalized, the application shall be made in Form SPICE-Part A. The form is a replacement of earlier Form RUN and provides the option to apply for two names.
- Drafting of MOA and AOA
The MOA is the constitution of the Company and defines various clauses mandatory to bring the company into existence such as Name clause, object clause, registered office clause, liability clause, subscription clause and capital clause. The AOA governs the internal rules and regulations for the functioning of the Company. Well drafted MOA and AOA are vital for the successful registration of the Private Limited and shall always be done by the experts.
- SPICE-Part B
This is the form for incorporation and shall contain all the details about the directors, shareholders, registered office and proposed objects of the Company. It shall be filed along with the necessary documents for the registration;
This is the newest form in the process of Private Company Registration and contains the details about GST, ESIC, EPF registration, Professional tax Registration (Only for Maharashtra) and details about Opening of Bank Account.
This Form is a declaration by the Directors and Shareholders regarding their non-convicted records as well as the solemn about the correctness of all the information and documents provided during the process of registration.
- Grant of Certificate of Incorporation
The Ministry, after being satisfied, that the documents and details submitted in the application are correct and gives a true and fair view of the intentions of the applicant, shall grant the Certificate of Incorporation (COI) along with PAN and TAN.
Points to remember before starting up a Pvt Ltd Company
Once you are convinced with the fact that it is the Private Limited form of entity required by your business, you must get prepared for the same. Following are the points to be kept in mind:
- The name of the company is the first and foremost thing to be decided as it may take time to get a company registered if the promoters do not come up with a unique and meaningful name;
- Second point to be kept in mind is about the objects which would be carried on in the private limited after its registration. The objects are contained in the memorandum of a Private Limited and are divided into two parts- main objects and other objects;
- Third point of interest is about the location of the company. It is very important to find a suitable registered office of the Private Limited from where all the operations of the company can be managed. A centralized and well-planned location for the Private Limited may attract more and more customers, thereby adding to the profitability of the business;
- The next comes the authorized share capital with which the Private Limited shall be registered. The authorized capital is the declaration by the shareholders about their contribution into the company. Before going for the company registration, one should know the complete checklist for Company Registration in India.
- The Private company may be either limited by shares or may be limited by the liability. Now, we have the provision in the Companies Act, under which a Private Limited can be registered without any capital.
- Then there shall be the finalization of the shareholders and the Board of Directors of the company. The Directors are the faces who run the company and the shareholders are the promoters who invest in the Private Limited. Both Directors and shareholders can be similar person.
- Last thing which the promoters of a Private Limited shall keep in mind is about the shareholding held by each one of them. It determines the control of each of the promoters over the income and affairs of the Company.
Post Incorporation Steps by a Pvt Ltd Company
After your Private Limited Company has come into the existence, you need to comply to the following in order to maintain a smooth flow of operations:
- Verification of the Registered Office Address
- Putting up of Company Name Board
- Filing of INC 20 A
- Appointment of Auditor
It shall be done through the Form INC 22 and must be files within 30 days of the incorporation of the Private Limited. The Form INC 22 shall be accompanied by necessary documents as mentioned under the Documents for Registered office;
A clear and complete Name Board of the company consisting of details such as CIN, Registered Office Aggress, GSTN, Phone numbers, Email, fax, website address etc., shall be put in English and Hindi or any other vernacular language of the state, where the registered office of the Private Limited is situated. Such name board shall be put outside every office of the Private Limited.
Within 180 days of incorporation of the Company, a declaration, attested by the Director of the Company, shall be filed with ROC that each subscriber to the memorandum has consented to the share value taken by them.
Soon after the Private Limited comes to the existence, there shall be appointed before the first Annual General meeting of the Company, the statutory auditor who shall hold office till sixth AGM until and unless ratified or a resignation is served.
Annual Compliances for a Pvt Ltd Company
Every Private Limited Company shall adhere to certain yearly compliances applicable to them from time to time. These can be enumerated as below:
- Board Meetings
- Annual General Meeting
- Appointment of Auditor
- Directors Disclosure
- Annual Returns
- Annual Financial Statements
- Income Tax Returns
- GST Returns
- Other Periodic Compliances
There shall be conducted, at least two Board meetings, by a Private Limited, in a financial year. Also, it is to be kept in mind that proper minutes of such meetings shall be maintained in the minute book of the Company. The Board meetings shall be attended by the Directors of the Private Limited.
Every Private Limited shall conduct an Annual General Meeting of its shareholders, once in a year to discuss the agenda’s such as auditor’ appointment, declaration of dividend, etc.
The first auditors of the company shall be appointed within 30 days of the incorporation or at the first Annual General Meeting of the company and soon after the appointment Form ADT 1 shall be furnished to the ROC;
It shall be made in Form MBP 1 by each director of the Private Limited before the first Board Meeting of the Company;
Form MGT-7 shall be filed in respect of Annual Returns within 60 days of the conclude of the Annual General Meeting;
It shall be filed in Form AOC 4 every year presenting the statement of Balance year and profit and loss account of the company for the preceding financial year. The form AOC 4 shall be filled within 30 days of the end of the Annual General Meeting.
Every Private Limited shall file the return of its Income Tax return by 30th September of each year for the income earned in the previous financial year.
To be filed on monthly basis.
Like change in directors, increase in capital, etc. shall be done as on date basis.
Restrictions upon a Private Limited Company
Every Private Limited Company shall adhere to the following restrictions as prescribed under the Act:
- There shall be restriction on the transfer of shares by the shareholders of the Private Limited Company;
- The total number of shareholders in a private company, shall at no point of time, increase beyond 200;
- There shall be prohibition on the subscription of shares by the general public in a private limited;
Timeline for Private Ltd Company Registration
- Total Timeline 8-10 Working Days;
- Name Approval 2 Working Days;
- Drafting MOA and AOA 2 Working Days;
- Drafting of SPICE- Part B 2 Working Days;
- Certification of Incorporation 3 Working Days.
Why Swarit Advisors?
- Assistance in Name Search;
- Trademark Search and Application drafting;
- MOA and AOA Drafting;
- Attractive Compliance and Auditing packages;
- 150 + company registration in a month;
- 100 + professionals including CA, CS and CWAs;
- Online process and any time on-call support.
Frequently Asked Questions
The process of PVT LTD Company registration needs around 8 to 12 business days. If all the details filled are correct and documents submitted are complete, then the time taken for registration can be minimised.
Yes, a Private Company must use the word “Private Limited” as a suffix.
A minimum of two directors and shareholders are needed for the process of private company registration. Moreover, the same individuals can act as Directors as well as Shareholders of the company.
No, an individual must be at least 18 years old to become a director in a Private Limited Company.
There is no need for the promoters to present themselves before the authority, since the process of private ltd company registration is done 100% online.
The documents needed for obtaining Private LTD Company Registration include ID and Address proofs of the Directors; Address proof and Utility Bills of the registered address; and Bank Statements of the company.
The minimum capital of Rs 1,00,000 is required for incorporating a private limited company in India.
Yes, at any point of time, the maximum number of members must not exceed 200. If it exceeds the prescribed number, then the Company must be converted into a Public Limited, and all the provisions governing a public limited are applicable to it.
No, a convicted person is not eligible to become a director or shareholder of the company.
DIN is the acronym for Director Identification Number. It is a unique number allotted by the MCA to every director. Further, a DIN is issued only once by the MCA (Ministry of Corporate Affairs) during the lifetime of the director. Therefore, no Director can ever be allocated two DINs. This also means a person can be a director in more than one companies with the same DIN.
Till the time a private company is in existence, its COI (Certificate of Incorporation) also remains valid. However, the same can get cancelled, or the company can be struck-off by Registrar of Companies in case of non-compliance with the regulations, non-filing of returns, default in updating the true and fair status of the Company or non-compliance by any of its Directors or Shareholders.
No, a Private Limited Company is not eligible to get its shares listed on the Recognised Stock Exchange. However, for listing its shares, a private company needs to convert into a public limited company after satisfying the financial parameters regarding capital, profitability, etc.
The Mandatory Annual Compliances include Filing of Audited Balance Sheet, Profit and Loss Statements, Annual Returns. A private company also needs to appoint a statutory auditor, conduct board meetings and maintain a book of accounts, minute book and company registers.
The process fees involved in company incorporation ranges from Rs 8000 to Rs 20,000. However, there is no uniform costing as fee applicable varies from one state to another.
A Private Company can appoint a minimum of two and a maximum of fifteen directors. However, it can also appoint a maximum of fifteen directors but after passing a special resolution.
No, there must be at least one director who is a resident in India, which the individual must have stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.
AOA refers to Articles of Association which defines the internal constitution, by-laws, rules and regulations of the company. In contrast, MOA stands for Memorandum of Association which represents the mission, vision and business goals of the company in the long run business.
Yes, an individual can use the residential address for Company registration and GST Registration.
No, you do not need to hire a full-time CA or CS as our team of experts can handle all the formalities required for annual compliance on your behalf.
DSC stands for Digital Signature Certificate, which is used by the directors for signing documents digitally. There is a Certifying Authority in India, which can issue DSC to directors.
Obtaining GST Registration is not mandatory for a private limited company until the annual turnover of the company reaches Rs 20 lakhs or Rs 10 lakh rupees in case of the north-eastern state. There are various other conditions relating to GST registration eligibility, and if a business falls under the ambit of any of these parameters, it needs to obtain GST registration in India.
Yes, you can apply for Start-up India Registration on the basis of your Private LTD Company Registration. We can also assist you with the process of registration on the Start-up India portal.
Yes, an individual is eligible to do multiple businesses with just one Private ltd Company Registration. However, to the business owner must mention the details of all the businesses in the MOA (Memorandum of Association) of the company while filing for registration.
If there is no employment contract, the person can become a director in a company even while working in some other country.
Yes, Angel Investors or Venture Capitalist Firms can make a foreign direct investment in a private limited company.
Yes, a Private limited company can easily be converted into a Limited Liability Partnership or One Person Company at any time by filing the appropriate forms together with the prescribed government authority.
The term Limited Liability means that the liability of the partners in a private limited company is limited up to the extent of the contribution made by them.