As the startup ecosystem is widely spreading in India, more individuals are joining this revolution of becoming self-reliant and creating employment opportunities for others. Such aspiring & innovative individuals must be aware of various Company types, their registration processes & time consumption, and their advantages. If you are well aware, it would help you in finding the best & expert company registration in India.
In this post, you will get to know all about one of such types of companies, Private Limited Company registration, its process, documents required in registering a private limited company, and other related aspects.
What is a Private Limited Company?
In India, the most commonly found business structure is a Private Limited company. It is a privately owned business entity formed in adherence with the provisions of the Companies Act, 2013. As the name implies, this type of company structure has private ownership with a security of limited liability.
It can be formed with limited people; as low as 2 members and the number can go up to a maximum of 200 members. Due to such leniency features, most of the startups in India prefer to get themselves registered as a Pvt Ltd Company.
What are the characteristics of a Pvt Ltd Company?
Now, after taking an insight into the introduction of a Private Limited Company, you will be eager to know more about it. Let's discuss the characteristics of a Pvt Ltd Company. The characteristics of a Pvt limited company are as below;
Membership: As mentioned above, in order to register a pvt ltd company, a minimum of two shareholders are required and the maximum number of shareholders can’t exceed 200. Additionally, it also must have at least two directors to operate properly.
Separate Legal Entity: Registering a Private Limited Company gives a separate legal entity to the business. It means it's a different entity from its directors or members so the lifespan of the directors/members won't affect the company's life. It will be perpetual and remain legal even if its members die or it becomes insolvent or bankrupt.
Limited Liability: The most attractive characteristic of a pvt limited company is that each member or shareholder's accountability is limited. For instance, if the company faces any event of loss, the shareholders' personal/individual assets can't be sold or used to make up those losses.
Minimum Capital Investment: The Companies Amendment Act 2015 has set free pvt ltd businesses from a minimum paid-up capital obligation. Though there is no obligatory requirement of ‘minimum paid-up capital’ in such business entities, one should maintain a minimum capital of at least 1 lakh to ensure the smooth execution of business operations.
There are numerous other advantages associated with registering a Private Limited Company in India that you can experience while running your pvt limited company.
What are the types of a Pvt Ltd Company?
Private Limited companies are classified into three different categories as per their nature. Those are;
Shared Private Limited Company
In this type of Pvt Ltd company, the members' liability is limited to the amount of shares they own within the company. The liability of the members is restricted by the MOA (Memorandum of Association) to the number of their unpaid shares/amount.
Guaranteed Private Limited Company or Private Limited Company by Guarantee
In this type, the liability of members is limited to the amount guaranteed under the MoA. In the future, the members can only be held liable for the said amount. The Guaranteed Pvt Ltd Company or Private Limited Company by guarantee is often adopted by companies where a business entity requires minimum capital or funds.
Unlimited or Numerous Liability Company
This type of Pvt limited company doesn't limit members' liability to the company. In other words, such companies have no restrictions on the liability of their members. As a result, members' assets can be taken into use to pay the company's loan or debts.
What are the documents Required to Register a Private Limited Company?
The documents required to register your pvt limited company in India are listed below:
PAN Card of the proposed Indian Directors & Passports of Foreign Directors
Address Proof of the Directors/Shareholders any one of the following:
Latest Electricity bill
Telephone bill
Bank Account Statement
Identity Proof of the Directors/Shareholders any one of the following:
Ration Card
Voter's ID Card
Aadhaar Card
Driver's License
Address Proof of the company
Rent Agreement & NOC from the Property Owner (if rented)
Property or Sale Deed (if owned or registered office address is residential or home of the director/shareholder)
Two Passport-Sized Photographs
What Procedure should be followed for a Private Limited Company Registration?
If a business entity fulfills all the aforementioned prerequisites, it is all-set to get its private limited company registration done. Let’s explore further the procedure to register a Private Limited Company in India. In order to register a Private Limited Company, all you need to do is just follow a few simple steps mentioned below;
Step 1- Apply for Digital Signature Certificate (DSC)
The first step to registering a private limited company is to apply for a Digital Signature Certificate. It includes filling out a form given on the Online Portal of the Ministry of Corporate Affairs (MCA). It is issued by the certifying authority with a validity of up to 6 months.
Step 2- Obtain a Director Identification Number (DIN)
This is a kind of unique number that an applicant obtains from the Ministry of Corporate Affairs (MCA). It is mandatory to get DIN as it enables a business to appoint directors. As a result, you can say that it is obtained for the directors of the organization.
Step 3- Registered Company Name
The name of the company must be decided already and registered too. One can do so by filling out an e-form INC. In this process, an applicant is instructed to mention 6 names of the company as per the nature of their business. After submission, the registrar of the concerned authority will approve any one name after checking the availability and other aspects. The name approved by the registrar will remain fixed for 60 days.
Step 4- Obtain an Incorporation Certificate
In this process, the next step is to obtain the certificate of Incorporation which can be done by filing a Memorandum of Association (MoA) and Article of Association (AOA). This certificate will consist of the Incorporation date and PAN number of the company.
Step 5- Obtain PAN & TAN for the Company
Once the applicant gets an incorporation certificate, the Ministry of Corporate Affairs (MCA) will provide the PAN and TAN numbers of the organization.
Step 6- Open a Corporate Bank Account
An applicant must get a current account registered in the name of the company. This account will be used for the company's future financial transactions.
Upon completion of these processes, your private limited company gets registered successfully. Taking the assistance of an expert legal Company Registration solution provider in India is the most feasible way to get your company registration done professionally.
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