Private Limited Company

Private Limited Company is the most preferred business structure for Startups and small businesses in India. It is relatively easier to register a private limited company. Ministry of Corporate Affairs is the registering authority & if registered, gives you rights for doing business anywhere in India & outside India.

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Overview of Private Limited Company

Private Limited Company is the most preferred business structure for Startups and small businesses in India. It is relatively easier to register a private limited company. Ministry of Corporate Affairs is the registering authority & if registered, gives you rights for doing business anywhere in India & outside India. The hallmark features of a private limited company are that it allows outside funding to be raised easily offering the possibility to grow big & expand, limiting the liabilities of its shareholders, and enabling them to offer employee stock options to pull in top talent.

As per company law, a Private Limited company is a limited liability company with a minimum of two and a maximum of 200 members. Although a Private limited company has limited liability and is a separate legal entity, at the same time it has all the advantages of partnership namely flexibility, the greater capital combination of different and diversified abilities, etc. Before opting for a private limited company, one must keep in mind:

• That Private limited company’s shares are not listed on stock exchanges & hence, cannot be freely traded.
• That the scope is limited due to restrictions in several shareholders but enjoys fewer legal restrictions.
• That the word “Pvt. Ltd.” must be suffixed in the name.
• That at least one designated partner should be an Indian Citizen.

Advantages of Private Limited Company

NO MINIMUM CAPITAL No requirement of minimum paid-up capital is required for starting a Private Limited Company.
EASE OF FORMATION A Private Limited Company can be easily registered and is easy to manage and run with less legal compliance.
BUILD A GREAT TEAM Today, in the business world it is important to have the option of providing stock ownership or ESOPs to employees which can be offered only by Limited companies.
SEPARATE LEGAL ENTITY The biggest advantage of a Private Limited Company is that its identity is distinct from that of its members which ultimately limits the liability of members. A company is a separate person having its rights & Obligations enabling it to enter into contracts in its name, right to sue & be sued.
PERPETUAL SUCCESSION In case of the death of the owner or transfer of shares, your business won’t get affected as the company is considered separate from its members.
LIMITED LIABILITY The greatest benefit of a Private Limited Company is limited liability. If any liability arises then its member’s assets remain unaffected; members are only liable for unpaid shares held by them and not more than that. Stakeholders are not liable for corporate debts and liabilities.
GREATER FLEXIBILITY A Private Limited Company is required to perform lesser legal formalities as compared to a Public Limited Company. It enjoys special exemptions and privileges under the company law. Therefore, in a Private Limited Company, less compliance is required.
SECRECY A Private Limited Company is not required to publish its accounts or file several documents. Therefore, it is in a better position than a public company to maintain business secrets.
ATTRACT INVESTMENT Private limited companies easily accommodate equity funding as there is a clear distinction between shareholders and directors as well as limited liability. Venture capitalists and private equity funds prefer to invest in this structure.
TRANSPARENCY & CREDIBILITY Private Limited Company enjoys enhanced transparency as the information relating to a company is available in a publicly searchable database. Thus, able to win the trust of the general public & improve business credibility.
EXIT PLAN It offers the best type of exit plan for all promoters. Only the shares of a company can be sold or transferred to another entity without any hassles, while the business remains a going concern.
GOING INTERNATIONAL A private limited company allows FDI up to 100% through an automatic route without any prior government approval.

Registration Process

Step 1: OBTAINING DSC AND DIN Digital Signature Certificate(DSC) and Director Identification Number(DIN) is required for the proposed Directors of the Private Limited Company which is necessary to file the company registration documents. For this, you will only need to provide a few scanned documents and details; our representatives will fill out the form and submit it online. DIN and DSC can be obtained for the proposed Directors within 1 to 2 days.

Step 2: NAME APPROVAL A minimum of one and a maximum of six proposed names must be submitted to the MCA. Subject to availability, naming guidelines and MCA processing time, Name Approval can be obtained in 2 to 3 working days.

Step 3: DRAFTING MOA AND AOA ELECTRONICALLY It takes 2 to 3 days to draft MOA and AOA Electronically in Spice MOA (INC-33) and Spice AOA (INC-34).

Step 4: COMPANY REGISTRATION After drafting the e-MOA and e-AOA, the incorporation Spice Form INC-32 is submitted along with a link form Spice MOA (INC-33) and Spice AOA (INC-34) to the MCA. MCA will usually approve the application for incorporation in 5 to 7 days, subject to their processing time. Please note that forms 49A and 49B have to be mandatorily applied with SPICe. If the same is not filed within 2 days of submitting SPICe (INC-32), the application for incorporation will be marked as ‘Invalid’.

Required Documents

For Directors & Shareholders

1. Self Attested PAN Card copy

2. Self Attested copy of any one of the Identity Proof(Voter’s ID/Passport/Driver’s License)

3. Self Attested copy of Address Proof in the name of the director (Any utility bill i.e., mobile bill/water bill/ electricity bill, or bank statement which should not be older than two months)

4. Passport-sized photograph

For Registered Office

1. Rent Agreement (Notarised: For rented property)

2. Sale Deed/Property Deed in English (in case of owned property)

3. No-objection Certificate from the property owner

4. Latest Electricity Bill / Mobile or Telephone Bill / Latest Bank Statement/Gas Bill

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FAQ's Private Limited Company :-

No, commercial office space is not required. You can show your own residential or rented home address as the registered office address of the Company. This office address can be changed at any time after the incorporation of the company. Once your startup is set up, stable and ready to move on to a nice corporate space you can change the registered office address by informing to the ROC office.
ROC is a Government office with whom companies get registered. Every State has one ROC office except Maharashtra and Tamil Nadu where there are two ROC offices. In Maharashtra, companies are registered with Mumbai & Pune ROC. In Tamil Nadu companies are incorporated at Chennai and Coimbatore ROCs. In all other States like Delhi, there is only one ROC office, like at Bangalore, Hyderabad and so on.
No. Legal Suvidha Providers provides a complete online Company Incorporation process. All legal documentation with ROC and visits are done by Legal Suvidha Providers. As all documents are filed electronically, you would not need to be physically present at all. You would need to send us scanned copies of all the required documents & forms.
No. Once the company is formed, it will be valid until it is officially closed down by the owners. No renewal or fees is required. However, every year companies have to file very basic returns with ROC office.
Director Identification Number (DIN) is a unique identification number required for a person to become a director of a company. DIN is issued by the ROC office (Ministry of Corporate Affairs). It is similar to a PAN Card number.DIN is to be mentioned in documents while appointing a person as a director of a company.
A digital signature is an electronic signature, which is in the form of codes. It is used for signing the electronic forms, filed with ROC for the incorporation of Company. Digital Signature cannot be used in physical documents.
Firstly we just need to find a unique name as prefix and promoters need to provide the name of the proposed company along with the significance of the word. Secondly, the name needs to include a word about company business activity. Finally, before selecting Names it will be advisable to check on Google, MCA Portal, MCA Guidelines and Trade Mark site the availability of Name.
MOA means Memorandum of Association and AOA means the Articles of Association. These are the byelaw’s or rules based on which important matters like the main business of the company or meetings are decided. These are standard legal documents prepared by Company Secretaries during the registration of the Company.
Yes, the company office address can be changed anytime after incorporation.
Capital means investment made by shareholders into the company. The authorized capital is an amount up to which the company can issue shares. This capital is mentioned during the incorporation of the company based on which ROC registration fees and stamp duty is paid. Paid up capital is an actual investment that goes from shareholders into the company bank account, against which share certificate is issued by the company.
This is not true, a Private limited company is one of the modes of doing business, which means it can be started from scratch. For that matter, even after incorporating a private limited there is no obligation that the company must have sales or turnover.
There is no automatic applicability. Provident Fund (PF), Service Tax or VAT (now GST) law applicability is the same for all types of businesses as a sole proprietorship, partnership firms, and companies. These laws are applicable only after crossing certain threshold limits.
There is a minimum of two shareholders required to start a Private Limited Company and the number can extend maximum from fifty to two hundred beyond which is not permitted.
A minimum of two directors are required to establish a private limited company and the maximum amount cannot exceed beyond fifteen.
No minimum Capital is required to start a Private Limited Company.
Yes, a salaried person becomes the director in private limited company, there are no legal bondage’s in this, but you have to go through with your employment agreement if it contains any restrictions on doing so.
Yes, an NRI or Foreign National can be a Director in a Private Limited Company after obtaining Director Identification Number. However, at least, one Director on the Board of Directors must be a Resident of India.
No, LLP cannot be converted to a Private Limited Company as it is not permissible by the government of India. However, if you want to expand your business you can register a Private Limited Company which has simplified the process of registration.
The Director required to be above 18 years of age and must be a natural person. He may or may not be a citizen or residence of India. We can say that even a foreign national can be Directors in Indian Private Limited Company.
The Common Seal is the official signature of the company. Any documents on which the Common seal is affixed is deemed to be signed by the company.
A Company can own and enjoy the property in its name, neither the members are not owners of the company’s property and nor the members have an insurable interest in the property of the company.
A Private Limited Company must appoint an Auditor and get its statutory audit done by a Chartered Accountant at the financial year end and it also required to file Income Tax Return to Income Tax Department. Besides, that, a company also required to file its Annual Filling Forms with Registrar of Companies. Further, the Private Limited Company must conduct Board Meeting at least once in every 3 months and an Annual General Meeting, at least once in every year and also maintain Minutes of every Board Meetings and General Meetings and Statutory Registers.
Yes, a private limited company must appoint an auditor, no matter what its revenues. An auditor must be appointed within 30 days of incorporation. Compliance is important with a private limited company to avoid the penalties and fines.
Once a Company is incorporated, it will be active and in-existence as long as the annual compliance are met with regularly. In case, annual compliance’s are not complied with, the Company will become a Dormant Company and may be struck off from the register after some time.
Yes, it is possible without your physical presence. We will help you in registering your company.
After getting an incorporation certificate, apply for PAN, TAN & Bank Account.

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