How to Register a Private Limited Company?

With the startup ecosystem booming around, an increasing number of people wishing to establish their own business. The most popular question after having a definite idea for beginning a business is ‘How to Register a Company in India.’ It is critical to choose your business structure carefully when registering a company in India, as each business structure has varying degrees of compliance to meet.

A private company is specifically defined under Section 2 (68) of the Companies Act of 2013:

“A company with a minimum paid-up share capital as may be obligated by law, but whose articles.”—

(i) restrict the ability to transfer the company’s shares;

(ii) limits the number of its members to two hundred, except in the case of a One Person Company; and

 (iii) Forbids any public offer to subscribe for any of the company’s securities.”

In India, the most popular type of “legal structure” for all businesses is a private limited company. “Company Registration” is perhaps the most significant step in setting up a business. The procedure of forming a private limited company is crucial since it establishes the legitimacy of your planned business structure. One should however ensure that One has all of the necessary “Private limited company registration documents.”Registration will provide you with numerous advantages in the long run, including “quick and easy registration through simple dissolution.” “Start-ups and expanding companies” tend to favour “private limited companies.”

Features – Private Limited Company Registration in India:

  • Members- Before a company can be registered; a company must have at least two members and a maximum of 200 members or shareholders, as per the Companies Act 2013.
  • Directors– The private limited company must have at least two directors to be registered. Each director should be assigned a DIN, or director identification number, by the ministry of corporate affairs. One of the directors must be an Indian resident, which means she or he must have spent at least 182 days in India in the previous calendar year.
  • Name-One of the most important aspects of a private limited corporation is its name. The firm’s name is made up of three parts: activity, name, and private limited company. All private limited companies must include the phrase “private limited company” at the end of their company name. Every corporation must submit three to four names to the registrar for approval, and each name must be distinct and expressive. The approval name should not be similar to any other company’s name. As a result, selecting the proper company name is crucial because it will be associated with the company for the rest of its existence.
  • Certified office address– While applying for company certification, the owner should provide a temporary address for the company until it is registered. However, once the company has been registered, the registrar of the company should be notified of the company’s permanent address. The registered office is where the company’s main activities take place, as well as where all of the company’s records are preserved.
  • Obtaining a digital signature certificate– Everything in today’s world is done online. All certificates must be submitted online, and every company must obtain a digital signature certificate to validate the documents’ legitimacy. All the directors have a digital signature, which is imprinted on all the documents.
  • Professional certification- There is numerous professionals in a company that require certification for several reasons. These professionals are required to incorporate a private limited business. At the time of company establishment, many experts such as chartered accountants, company secretaries, and cost accountants are required to make their certifications.

In India, there is a Regulatory Authority for Company Registration-

The Ministry of Corporate Affairs is India’s major regulatory authority for the company registration procedure (MCA). When an individual wants to start up a business, he or she must submit all relevant information and documents to the MCA for processing. Specific documents should be filed with the Registrar of Companies after the company is incorporated. MCA also handles post-incorporation compliance.

The Pros of Starting a Private Company in India

The pros of incorporating a company are manifold:

  • It shall be considered a distinct legal entity.
  • The company’s directors are subject to tax benefits.
  • The company will be able to attract more clients; the company will build brand awareness, and the company will be more prosperous.
  • A global reach can be accomplished with the help of a company’s body structure.
  • In the name of a registered company, it is possible to sue or be sued. The entrepreneur’s name will not be revealed.
  • Entering a corporate world makes it easy to distinguish one apart from others.
  • Ensures enhanced capital contribution and stability;
  • Private restricted corporations seem to be untouched by the securities market; therefore we don’t have to be worried about investor expectations or interference as long as they follow the law. Shareholders in public companies are attracted by current profitability and exert pressure on management to enhance earnings.

What are the cons of Starting a Private Company?

  • It limits the transferability of shares,
  • Prohibits the quotation of stock exchange rates,
  • Limits the number of shareholders, and
  • Imposes a time-consuming compliance process.

Documents Required for the Formation of a Private Limited Company:

Directors/Shareholders Documents:

  • Shareholders’ PAN Card / Directors’
  • ID Proof – Voter’s ID / Passport / Driving License / Aadhaar
  • Address Proof – Most recent bank statement with transactions / Telephone bill / Mobile Bill not older than 60 days
  • Photograph of Passport Size.

Documents from the Registered Office:

  • Bank statement with the most recent 60-day entry Bank Passbook with entries page with the most recent 60-day entry
  • Electricity bill in Director’s name
  • Airtel/Vodafone/Idea/MTNL/BSNL bill in Director’s name
  • Gas bill in Director’s name.

Checklist to register your Private Limited Company:-

Step1: The first step is to obtain a DSC (Digital Signature Certificate)

Step 2: Fill out an application for a DIN number (Director Identification Number)

Step 3: Reservation of name.

Step 4: Create a SPICe (INC-32)

Step 5: E-MoA (INC-33) and E-AoA (INC-34)

Step 6: Obtaining a PAN and TAN

Step 1: Get a Digital Signature Certificate, often known as a DSC.

A genuine Digital Signature Certificate is required for all Directors, Shareholders, and Witnesses to the Memorandum and Articles of Association (DSC). The registration process is conducted online, and the forms must be electronically completed using a digital signature. Only government-approved certifying agencies are permitted to issue Digital Signature Certificates (DSC).

Step 2: Obtain a DIN (Director Identification Number).

A Director Identification Number (DIN) is a one-of-a-kind number assigned to a person who has been appointed (or wishes to be appointed) as a Director of a corporation. To apply for a DIN, go to the MCA website and fill out Form DIR-3 (Ministry Of Corporate Affairs).

Step 3: Approval / Reservation of a Name

The chosen business name should be approved by the MCA Authorities to be registered or incorporate a Private Limited Company in India. As a result, getting a Name Reservation is required before filing for incorporation.

A Few General Name Approval/Reservation Guidelines:

  • The proposed name should be simple to remember and spell.
  • The chosen name should provide the company with a distinct identity.
  • The recommended name should be as brief and straightforward as feasible.
  • The suggested name should not include any words that are against public policy or that are prohibited by law.
  • The proposed name should not infringe on any registered trademarks and should not be confusingly similar to or identical to the name of any existing company or limited liability partnership.

Step 4: Create a SPICe (INC-32)

Form SPICe has been introduced by the Ministry of Company Affairs (INC-32). It is a simple proforma for electronically forming a company. With the convenience of a single application, it accomplishes the following goals:

  • Application for DIN allotment (Director Identification Number)
  • Reservation of the company’s name
  • PAN and TAN applications
  • To file Form INC-32, one need a professional’s digital signature. The expert must attest that all of the information on the form is accurate. A Chartered Accountant, Company Secretary, Cost Accountant, or Advocate is an example of a professional.

Step 5: E-MoA (INC-33) and E-AoA (INC-34)

The terms e-MoA and eAoA stand for electronic Memorandum of Association and electronic Articles of Association, respectively. These forms were created to make the process of forming a corporation in India easier. The company’s charter is represented by the memorandum, while the articles of association include the company’s internal norms and regulations. Previously, memorandums of association and articles of the organisation had to be physically filed. However, these forms are now filed as a linked form with SPICe on the MCA portal (INC-32). Subscribers to the Memorandum and Articles of Association must digitally sign both of these papers.

Step 6: Obtaining a PAN and TAN

One can also apply for the company’s PAN and TAN using a single SPICE form.

What is the time frame for Incorporating a Private Limited Company in India?

Normally, registering  of a private limited company requires between 8 and 12 business days if everything is in order. The following is a breakdown of the approximate timeframe for forming a Private Limited Company in India:

  • 2 Days to get a DSC (Digital Signature Certificate)
  • Obtaining a DIN (Director Identification Number) takes one day, and name approval takes two to three days.
  • Obtaining an Incorporation Certificate – 3 to 5 Days
  • This schedule is also susceptible to delays in government processing, approval times, and public holidays, among other factors.

After Incorporation Compliances for a Private Limited Company:

  1. Appointment of Auditor– The board of directors must conduct a board meeting and designate an auditor for the company within 30 days of the firm’s registration date.
  2. Registrar of Companies-Within 30 days of its incorporation, the business must file Form INC-22 with the Registrar of Companies to verify its registered office.
  3. Delivery of Share Certificates to Subscribers-Within two months of incorporation, any firm shall deliver share certificates to its subscribers.
  4. Letterhead & Statutory Registers-Company identification number (CIN), registered office address, email address, website address (if any), and telephone number must all be included on the letterhead.
  5. PAN & TAN – In the name of the company, a Permanent Account Number (PAN) and Tax Account Number (TAN) must be obtained.
  6. Disclose Directors’ Interests – Under section 184(1) of the Companies Act 2013, all directors must disclose their financial interests to the company at the BODs meeting. When there is a change in disclosure, it will be discussed further. As a result, all of the directors individually and together achieve the company’s aim.
  7. 7. Hold Board of Directors (BODs) Meetings – Under Section 173(1) of the Companies Act 2013, a company must hold its first Board of Directors meeting within 30 days of its incorporation. The meeting’s agenda includes the selection of a chairman, the appointment of the first auditor, and other items such as Register the company’s address, the statutory register, and the directors’ conflicts of interest.
  8. File Form INC-20A – Within 180 days of the beginning of the business, directors must file an INC-20A Form with MCA after obtaining an incorporation certificate. It’s an official declaration of the commencement of the company. After that, a company needs a bank account to deposit the share capital pledged by each promoter in the MOA (Memorandum of Association).

Most Commonly Asked Questions:

Is the procedure of forming a business online or offline?

The process of forming a company is entirely conducted online. This process used to be both online and offline before the adoption of the Companies Act of 2013. However, to make India digital, the government has made this process more online.

Is the Company needed to have a physical location?

Yes, the company needs a physical location. This is needed as all types of interfacing with the company will occur with different government authorities. Apart from that, when the corporation is required to file tax returns, the same would be taken into account.

What are the regulations that a private limited company must adhere to?

The preceding are some of the regulations that a private limited company must follow:

  1. Appointment of an auditor.
  2. Hold an AGM.
  3. Submitting a tax return.
  4. Annual Returns and Financial Statements, among other things

Is a private company preferable to a public one?

In terms of long-term strategy investment, keeping the value of their shares and financial statistics hidden, freedom, and flexibility of operations, private enterprises have an advantage over public companies.

What are the requirements for establishing a Private Limited Company?

It must have at least two directors and two members. An annual general meeting of the company’s members shall be held.

How can the company’s name be safeguarded?

By filing a trademark and copyright application, the company’s name can be protected. This can be received from the Indian Intellectual Property Office.

If you need any help in company registration, reach out to us at info@ccoffice.in or 9988424211

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