What is Company Registration?
Private Limited Company registration is governed by Companies Act 2013, it is one of the most popular structure for incorporation in India for conducting a scalable business. For incorporation at least 2 directors and shareholders are required..There are very advantages offered to Start-ups and growing businesses such as limited liability of shareholders, ability to raise funds outside easily and providing ESOP options to the motivated employees. Private limited company provide more creditability than the other options such as Limited liability company (LLP) One person company(OPC) as these entities must hold board meetings and file annual returns with the Ministry of Corporate Affairs (MCA).
6 Essential Facts on Company Registration
Can a single shareholder incorporate private limited company?
No, there should be at least 2 directors and 2 shareholders for incorporation. In case of single shareholder, any member of your family such as your mother, father or relative can be shareholder of company with holding for just one share.
Reasons for incorporation of private limited company?
There are various reasons to form private limited company such as it is easy to set up and begin private limited company with limited liability of shareholders and help in raising venture capital and offering ESOP to the employees. It provides more confidence and creditability to the banks and other lenders. It is less complicated to form and can be easily transferable.
What is process to get register private limited company?
For registration of private limited company, one is required to apply for a Digital Signature Certificate (also known as DSC), of directors which will take ordinary two days in registration online after getting necessary document. After that, DIN (Director Identification Number) will be apply. After that an appropriate name will be selected for the company as per govt regulations. MOA and AOA will be drafted to get the Certificate of Incorporation.
What is maximum limit of shareholders and directors in Private limited company?
For incorporating A private limited company there should be minimum 2 directors and 2 shareholders and maximum 15 directors and 50 shareholders.
How much do you need to invest?
Good news. You don't need to invest any money upfront. Most entrepreneurs do bring computers and other necessities at the very beginning. These can be the assets of the company. Private limited companies in India do not need to have any paid-up capital (that is, they do not need to introduce any money into the company).
What regulatory requirements are placed on private limited company?
As private limited companies are not traded publicly, regulatory requirements placed on them are fewer than on public companies. For example, they need not disclose their books of accounts. Because of this advantage, they need only worry about the long term rather than face the music from their shareholders in case their results in a particular quarter are poor.
How much minimum capital is required for incorporating private limited company?
A peer amendment in Companies Act 2015, there is no requirement to have any paid up capital invested in private limited company although authorized capital is required of amounting to Rs 1 lakhs.
What regulatory requirements are placed on private limited company? What are legal formalities a private limited company has to fulfill ?
As compared to Public company, there is less formalities has to comply to private limited company because there is no requirement to trade/offer shares to public and disclosing books of accounts.
Documents Required for Company Registration
TO BE SUBMITTED BY DIRECTORS & SHAREHOLDERS
Following document is required to be submitted by Directors & Shareholders in scanned form.
- PAN Card or Passport (Foreign Nationals & NRIs)
- Voter's ID/Passport/Driver's License
- Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
- Latest passport-sized photograph
- Specimen signature (blank document with signature [directors only])
Following documents are required to be submitted for the Registered Office in scanned form
- Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
- Notarized Rental Agreement in English
- In case of rented property, No-objection Certificate from property owner
- In case of owned property, Sale Deed/Property Deed in English
Note: Any residence place can be used as commercial place for carry on business.
Note: Any one of the directors must self-attest the first three documents. In case of foreign nationals and NRIs, all the documents must be notarised (if currently in India or a non-Commonwealth country) or apostilled (if in a Commonwealth country).
Benefits of Private Limited Company
Limited Liability of directors
In case of private limited company there is limited liability of directors against debt and loss of company. There will not be personal liability of directors to the creditors of a company or against company’s debts. It is more favorable than General Partnership, where partners are personally liable for all the debt raised.
Less investment requirement
As there is clear distinction between shareholders and directors and their limited liability, Private limited company can easily collect equity funding. Thus it is more favored by venture capitalist and private equity fund investors. There is no minimum requirement to capital investment.
Debt can be easily accessed.
There are lots of debts options available to private limited company as compared to LLPs. For raising debts bank loan, debentures and convertible debentures etc are available.
FAQs on Private Limited Company
No, there are no such requirements for registration as now registration can be done through online. All documents can be submitted online through scanned copy.
It will take minimum 15 days to get register private company if you have all the documents in order. However, this is dependent on the workload of the registrar.
The Registrar of Companies (ROC) defines guidelines for selecting appropriate name for company approval can depend on the opinion of the officer handling your application. Following points should be considered while selecting name
Name should be Unique: Proposed name should not be identical to the existing company’s name. The use of different tense or number of the same word does not make name unique. Addition of internet related designation words such as .com, .net, . Edu, .gov, .org does not make it unique name.
Blacklist: Proposed name should not be containing any word which is offensive or inappropriate to any section or class of people. Abbreviations, adjectives and generic words are rejected. These words, such as bank, stock exchange and exchange will be allowed only after approved by SEBI or RBI.
No Common Trademark: The consent of owner or NOC from trade mark owner should be obtained in case of name of company includes any trade mark, otherwise approval will not be granted.
Descriptive Component: While selecting name, descriptive words such as research etc are not allowed for using it name of the company.
For incorporation, directors are required to submit Pan Card No in case of Indian resident and passport copy in case of NRI and foreign residents. Aadhar card copy /voter Id/ driving license of directors and In case of rented property, No-objection Certificate (NOC) must be submitted by the owner of the registered office premises.
DSC is digital signature in electronic format which is equivalent to driving license to identify any person. DSC provides additional level of safety and security while making transaction online.
If the requirements of annual compliance not comply on time then the company will become dormant company, until its name is struck off from register altogether. So long as the annual compliances are met, the private limited company will continue to exist.
There is very minimum cost incurred around Rs 40,000 for running private limited company. Expenditure is incurred mainly for incorporating private limited company, cost of compliances, cost of accounting and auditing and miscellaneous expenses.
Yes, it is mandatory to hire an auditor within 30 days of incorporation of a private limited company. Non compliance of Audit requirement would result in large penalties and blacklisting of company. Audit of books is necessary irrespective of amount of revenue earned during the year
MOA is a document that contains all information that is required to register a company and altered from time to time. AOA is document that contain objectives and rules and regulations that are used to govern the company’s activities. Both documents are required for incorporation of company.
Company Registration Process
5 Working Days for registering DSC
For incorporation, every director should have Digital Signature Certificate (DSC). Few scanned documents and details are required for registering DSC online. Our representatives will fill the form and submit it online.
7 Working Days for selecting unique name and drafting MOA and AOA
2 Working Days for PAN and TAN No
After getting Certificate of Incorporation, we will be capable to register online Permanent Account Number (PAN) and Tax account number (TAN) application. Application can be made only after receiving documents in this regard. It will take around 21 days in finally couriered the Pan and TAN No.