Setting up a business in India often involves
choosing a private limited company as a preferred option. This structure offers
shareholders limited liability protection while placing specific ownership
constraints. In contrast, in the case of an LLP, partners oversee the
management. Private limited company registration allows for a clear distinction
between directors and shareholders.
At DPVA, we offer a cost-effective
service to facilitate the seamless registration of your company in India. We
handle all legal formalities, ensuring strict compliance with the Ministry of
Corporate Affairs (MCA) regulations.
What is a private limited
company?
In India, a private limited company is a privately
held entity with limited liability, and it ranks among the nation's most
favored business structures. This popularity is primarily attributed to its
numerous advantages, including limited liability protection, ease of formation
and maintenance, and its status as a distinct legal entity. A private limited
company enjoys legal separation from its owners and necessitates a minimum of
two members and two directors for its operation. Here are the key
characteristics of a private limited company in India:
· Limited Liability
Protection: Shareholders of a private limited company are liable only to the
extent of their shareholding. Their assets remain safeguarded, even in cases of
financial setbacks incurred by the company.
· Separate Legal
Entity: A private company possesses its own distinct legal identity. It
can own property, engage in contracts, and initiate or defend legal actions
under its unique name.
· Minimum Number of
Shareholders: A private company must have a minimum of two shareholders and
cannot exceed 200 shareholders.
· Minimum Number of
Directors: A private limited company necessitates a minimum of two directors.
At least one of these directors must be an Indian citizen.
· Minimum Share
Capital: The company must maintain a minimum paid-up capital of Rs. 1 lakh
or a higher amount as specified.
· Name of the Firm: The private
limited company's name must conclude with the words "Private
Limited."
· Restrictions on
Share Transfer: The right to transfer shares within a private limited company is
restricted. Shares can only be transferred with the approval of the Board of
Directors or following the company's Articles of Association.
· Prohibition on
Public Invitation: Private limited companies are prohibited from inviting the public
to subscribe to their shares or debentures.
· Compliance
Requirements: Private limited companies are obligated to adhere to various legal
and regulatory obligations, including maintaining proper financial records,
conducting annual general meetings, and filing annual returns with the ROC.
In summary, the attributes of a private
limited company in India make it a favored choice among entrepreneurs, owing to
its advantageous features and relatively straightforward structure.
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 identity
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 instills
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.
Requirements for Registering a
Company in India:
Directors and Members:
A minimum of two directors and 200 members are
required for Private Limited Company Registration in India, as per the
Companies Act of 2013.
Directors must have a Director Identification
Number (DIN) issued by the Ministry of Corporate Affairs (MCA).
At least one director must be an
Indian resident, having spent 182 days in India in the previous calendar year.
Company Name:
When selecting a name for a private limited
company, two factors must be considered:
The name should reflect the principal
activity of the business.
Address of the Registered Office:
After the company registration
process, the company must provide the permanent address of its registered
office to the company registrar. Business operations occur in this office, and
all relevant company documentation is maintained.
Company Registration Process
Registering a company in India involves a
straightforward four-step process:
Step 1: Acquire a Digital Signature Certificate
(DSC)
Every director and shareholder must
secure a Digital Signature Certificate (DSC) issued by the Controller
of Certification Agencies (CCA). This involves providing essential details such
as passport-sized photos, PAN, Aadhaar Card, phone number, and email address.
Foreign nationals should also furnish notarized and apostilled documents if
applicable.
Step 2: Director Identification Number (DIN)
Obtain a Director Identification
Number (DIN) if you intend to be a director in the company. DIN is essential
for directors and needs to be provided in the registration form.
Step 3: Name Reservation for the Company (SPICe+
Part A)
Begin by completing the SPICe+ Part A
form to secure a unique company name. This entails selecting the company
type, class, category, and sub-category, specifying the primary division of
industrial activity and offering a comprehensive business description. You'll
need to propose two names for approval.
Step 4: Submission of Company Details (SPICe+ Part B)
Provide comprehensive information
concerning capital, registered office address, subscriber and directors' details,
stamp duty, PAN and TAN application, and necessary attachments. Ensure
compliance with the Companies Act 2013 and obtain digital signatures from
assisting professionals.
Step 5: Preparation and Submission of Incorporation
Forms (SPICe+ MOA and AOA)
Draft the Memorandum of Association (MOA) and
Articles of Association (AOA) containing crucial company details. Obtain
digital signatures from subscribers and professionals before submitting these
documents to the MCA for approval.
Additionally, file the AGILE-PRO-S form to register
for GST, EPFO, ESIC, a bank account, and a shop and establishment license
(which may be state-dependent).
Certificate of Incorporation
Upon successful document
verification, the MCA will issue the Certificate of Incorporation (COI) with
the Company Identification Number (CIN), PAN, and TAN.
Document Checklist:
For Indian Nationals: Self-attested PAN card copy,
passport-sized photo, Aadhaar Card, proof of identity, and address proof.
For Foreign Nationals: Notarized documents,
passport-sized photo, passport, and address proof.
Registered Office Documents: Proof of
business address, copy of the rent agreement (if applicable), and owner's no
objection certificate.
Post-Registration Compliance
Following incorporation, adhering to
post-registration company compliances is essential to streamline
company operations and define the roles and responsibilities of directors and
shareholders.
Register Your Company through DPVA
DPVA specializes in Company Registration services
in India, providing comprehensive guidance and support throughout the
registration process. Our team of professionals offers expert consultation
tailored to your specific requirements and business goals.
Selecting the appropriate name for your company is
critical, and DPVA' experts will aid you in choosing a unique and fitting name
that aligns with ROC guidelines. We'll conduct a name availability search and
facilitate the reservation of your chosen name, reflecting your business
identity.
Compiling the necessary documentation for company
registration can be overwhelming, but our experts will handle this task
efficiently. We will guide you in assembling all required documents, ensuring
accuracy and compliance.
To register a private limited company, directors
must obtain a Digital Signature Certificate and Director Identification Number
(DIN). We will guide this process to ensure you possess the certifications for
seamless registration.
By choosing DPVA for your Company Registration
needs, you can be confident that your private limited company registration will
be managed professionally and effectively. We aim to simplify the process,
allowing you to concentrate on your business objectives while we address the
legal requirements. Embark on your entrepreneurial journey with assurance by
registering your company through DPVA.
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