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A private limited company is an organisation that's privately held for small businesses. This type of company limits the number of shareholders to 200 and restricts shareholders from publicly buying and selling shares. They are registered under the Companies Act of 2013, and they need to file annual compliances with the Ministry of Corporate Affairs. Private limited company registration is one of the most popular forms of business registration in India.
Limited liability:
One of the best benefits of private company registration is that the private belongings of shareholders will not be used to pay the debts of the company as the liability of the shareholders is limited up to the unpaid amount of shares held by them.
Separate Legal Entity:
Private limited companies have the benefit of being a separate legal entity. It means that in the eyes of the law, the company and its shareholders or members are different persons, and the company can sue and be sued in its own name without mentioning the names of its shareholders or directors.
Easy Fund Raising:
A private limited company is one of the most compliant business structures, so banks and other lending institutions prefer to issue loans to them. The private limited company may additionally raise funds from venture capitalists, angel investors, and private equity firms.
Perpetual Succession:
In the case of a proprietorship, if the proprietor/owner dies, the firm ceases to exist. In the case of a private company, however, this is not the case. A private limited company may continue even after the deaths of all shareholders and directors.
Easy exit and transferability:
The other most important benefit of a private limited company is that if all or any of the shareholders wish to exit from the company, they can do so by simply transferring their shares. It is very easy to transfer shares to another person by way of a share transfer agreement.
Global expansion:
A private limited company is the best option for global expansion. Private limited companies are the most trusted and suitable business structure, so they can go global very easily. Private limited companies are permitted to accept FDI. This means any foreign entity or foreign person can invest in a private limited company.
Professional Image:
A private limited company is seen as more professional and credible than a sole proprietorship or partnership.
Tax Benefits:
Private limited companies may be eligible for certain tax benefits, such as lower corporate tax rates.
Potential for growth:
A private limited company can grow and expand more easily than a sole proprietorship or partnership, as it can issue shares and raise capital.
Minimum two shareholders and directors are required for private limited company registration.
A minimum capital is not required for Private Limited Registration.
For registered offices, commercial space is not mandatory. Rented homes can also be used as the registered office of the company.
The name of the company should be unique, and it shall not contain any offensive words. The name must not contain any registered trademarks and must include the phrase "Private Limited."
While choosing a name for a private limited company, the following points should be kept in mind:
Check if the name is available for use and not already registered by another company.
The name should be relevant to the business activities and should reflect the nature of the company.
The name should be easy to remember and pronounce for potential customers and stakeholders.
The name should be unique and not too similar to existing company names or trademarks.
The name should comply with the guidelines set by the Ministry of Corporate Affairs (MCA) and the Companies Act, 2013.
The name should not contain any sensitive or prohibited words as specified by the MCA.
It is advisable to conduct a trademark search to ensure that the name does not infringe on any existing trademarks.
Consider if the name can be used for future branding and marketing purposes.
Auditor Appointment (within 30 days):
Under the Companies Act 2013, every registered company must appoint a statutory auditor within 30 days of its incorporation. The auditor's role is to conduct an independent examination of the company's financial records and to report on its financial health and compliance with accounting standards.
Commencement of business (within 180 days):
According to the Companies Act 2013, a company must begin operations within 180 days of its incorporation.This means that within 180 days of being registered as a legal entity, a company must start actively conducting its business operations. If a company fails to do so, the Registrar of Companies may strike off its name from the register.
Hold Board Meetings:
Under the Companies Act, 2013 in India, every company must hold a minimum of four board meetings in a financial year, with a maximum gap of 120 days between two meetings. The meetings are usually held at the company's registered office or any other place decided by the board.
Organize the annual general meeting:
For a private limited company, it is mandatory to hold an annual general meeting once a year. Companies are required to hold their AGM within six months of closing the financial year.
Preparation of Financial Statements:
After the end of the financial year The preparation of the financial statements is required under the provisions of the Companies Act of 2013.
Filling out Form MGT-7:
This form is used to file annual returns by companies with the Ministry of Corporate Affairs (MCA). Every company is required to file the E-form MGT 7 within 60 days from the date of the annual general meeting. This form contains information about the company's share capital, details of members, and other relevant financial information.
Filling of Form AOC-4:
This form is used to file the financial statements of a company with the Ministry of Corporate Affairs (MCA). The form must be filed annually within 30 days of the annual general meeting (AGM) and contains a balance sheet, a profit and loss account, a cash flow statement, and other relevant financial information. The form is a declaration by the company that the financial statements submitted are in compliance with the accounting standards prescribed by the Institute of Chartered Accountants of India (ICAI) and give a true and fair view of the financial position of the company. Filing an accurate and timely AOC-4 form is mandatory for all companies incorporated in India.
DIN KYC:
Every director who has a DIN on March 31 and whose DIN is in approved status will have to submit his KYC details to the MCA. In case a director who is supposed to file the e-Form DIR-3 KYC does not file it by September 30 on the MCA 21 portal, the Ministry of Corporate Affairs will mark the DIN of such a director as ‘Deactivated due to Non-filing of DIR-3 KYC." After that, if at any stage that director wishes to reactivate his DIN in the future by filing the eForm DIR-3 KYC, he can do so after paying a late fee of Rs 5,000.
Income Tax Return:
It is mandatory for every company to file an ITR every year. A late filing of an ITR may result in penalties and interest charges. Filing an accurate and timely ITR is mandatory for all taxpayers in India.
From Both Shareholders and Directors
Passport-size photographs
Copy of the PAN card
A copy of an AADHAAR card, a voter card, a driver's license, or a passport is required.
Copy of the latest bank statement or any utility bill.
Educational Qualification
Percentage of Sareholding
For registered office proof
Copy of any utility bill
Copy of Rent Agreement/NOC from the owner.
For the registration of a private limited company, the following steps are involved:
The first step in the registration of a private limited company is the application of a digital signature. A digital signature is a secure electronic signature used to verify the authenticity of digital documents. A digital signature certificate, commonly known as a DSC, is issued by the Certifying Authority (CA) in token form and is valid for one or two years.
Before filling out the application for incorporation, it is very important to choose a unique name for the company. The name's availability can be checked at the MCA portal. Spice+ Part A form is used for the reservation of the name of the company.
After the reservation of the name, we will draft the documents required for company registration. We will draft the Memorandum of Agreement (MOA), as well as all other legal documents required for company registration.
Once the name of the company is reserved and the required documents are drafted and signed, the next step is to complete the Spice+ Part B form. In this form, we can apply for:
After the incorporation forms are filled out, the registrar will verify all the documents filed. Following his satisfaction, the registrar issues the Certificate of Incorporation by providing his electronic signature.
A private limited company is a type of business structure in which the company is privately owned, and the shareholders have limited liability for the company's debts. This means that the shareholders' personal assets are protected, and they are only responsible for the amount they have invested in the company. A private limited company typically has fewer regulations and restrictions compared to other business structures, such as a public limited company.
A private limited company can be formed with a minimum of two shareholders. At least two directors are required to manage the company, and at least one of them must be a resident of India.
There is no minimum capital requirement for registering a private limited company in India. However, it is advisable to have a sufficient amount of capital to cover the costs of starting and running the business, such as operational expenses, salaries, rent, and marketing. The specific amount of capital required will depend on the nature and scale of the business.
According to the 2013 Companies Act of India, an individual can become a director of a company if they meet the following criteria:
DSC stands for "Digital Signature Certificate," which is an electronic security certificate used to secure digital transactions in India. A DSC is a secure digital key that is issued by a certifying authority (CA) and is used to digitally sign and authenticate online transactions, such as the filing of returns, applications, and documents with the Government of India.
Memorandum of Association (MOA): The MOA is a document that outlines the relationship between the company and the outside world, including its shareholders and the government. It defines the scope of the company's operations, its objectives, and its powers.
Articles of Association (AOA): An AOA is a document that sets out the internal rules and regulations for the functioning of a company. It includes details such as the rights and duties of shareholders, the appointment of directors, and the management of the company's affairs.
Post-incorporation compliances for a private limited company are very easy and manageable. MCA provides various exemptions to private limited companies, which is why it is the most preferred business structure nowadays.
Yes, it is allowed to change the registered office of a company after its incorporation. The company must file a notice of change of registered office with the ROC along with the required fee and the required proof of the new address.
Yes, a director can resign from his office by submitting a written notice to the Board of Directors of the company.
We have a team of qualified professionals who are experts in company registration and compliance. We can help with the registration of a private limited company in very easy steps.