Private Limited Company Registartion

What is Private Limited Company ?

​Private Limited Company is one of the most popular legal entity in India. In simplified terms, its a proper company registration in India with the ministry of corporate affairs and gives you rights doing business anywhere in India or outside. MCA register your pvt ltd company and provide to you CIN Number with Certificate of Incorporation. At the end of the process, you have to simply open a current bank account on the basis of Certificate and Start your Company Operations.

Documents Required For Company Registration

  • Copy of PAN Card of directors.
  • Passport size photograph of directors
  • Copy of Aadhaar Card/ Voter identity card of directors.
  • Copy of Rent agreement (If rented property).
  • Electricity/ Water bill (Business Place).
  • Copy of Property papers(If owned property).
  • Landlord NOC (Format will be provided)

Characteristics of Private Limited Company

  • Members - To start a company, a minimum number of 2 members are required and a maximum number of 200 members as per the provisions of the Companies Act, 2013.
  • Limited Liability – The liability of each member or shareholders is limited. It means that if a company faces loss under any circumstances then its shareholders are liable to sell their own assets for payment. The personal, individual assets of the shareholders are not at risk.
  • Perpetual succession– The company keeps on existing in the eyes of law even in the case of death, insolvency, the bankruptcy of any of its members. This leads to perpetual succession of the company. The life of the company keeps on existing forever.
  • Index of members– A private company has a privilege over the public company as they don’t have to keep an index of its members whereas the public company is required to maintain an index of its members.
  • A number of directors– When it comes to directors a private company needs to have only two directors. With the existence of 2 directors, a private company can come into operations.
  • Paid up capital– It must have a minimum paid-up capital of Rs 1 lakh or such higher amount which may be prescribed from time to time.
  • Prospectus– Prospectus is a detailed statement of the company affairs which is issued by a company for its public. However, in the case of private limited company, there is no such need to issue a prospectus because in this public is not invited to subscribe for the shares of the company.
  • Minimum subscription– It is the amount receive by the company which is 90% of the shares issued within a certain period of time. If the company is not able to receive 90% of the amount then they cannot commence further business. In case of private limited company shares can be allotted to the public without receiving the minimum subscription.
  • Name – It is mandatory for all the private companies to use the word private limited after its name.

Benefits of Private Limited Company

Attract Funding

Today small businesses are being out-competed by larger businesses. Hence, it is essential for all businesses to grow quickly, and have the ability to attract funding from any source. Thus, a private limited company is the ideal type of business entity for growing businesses.

Limit the Risk to Personal Assets

Profit and loss are a part of a business. Therefore, it is important to be protected against losses, to protect our near and dear ones in case of financial difficulties. If a business owner has "limited liability" protection, it means that only the assets of the business are at risk, and not the promoter’s personal assets such as personal bank accounts, cars and houses.

Improve Business Credibility

In starting a private limited company, the information relating to the company, such as name of the company, date of incorporation, registered office address, status of the company, and other information are made available in a publicly searchable database. This feature makes it easy to authenticate the existence of the business, improving business credibility.

Pursue Multiple Opportunities

Businesses started as a proprietorship or partnership would have trouble pursuing many opportunities that come their way, as they are not considered separate legal entities and are tied to the promoter. Starting a private limited company, on the other hand, would allow the promoter to pursue multiple opportunities as the business evolves over time.

An Exit Plan

Private limited companies offer the best type of exit strategy for all promoters. Only shares of a company can be sold or transferred in part or whole to another entity easily without any hassles, while the business remains a going concern. Therefore, starting a private limited company provides a tremendous edge in planning and executing a business exit plan.

Going International

Private limited companies and limited companies are the only types of entities that allow for Foreign Direct Investment of upto 100% through the automatic route, meaning, any foreign entity or foreign person can invest in a company without any prior government approval. Entities like proprietorship, partnership and limited liability partnership require prior approval from the Government to accept investments from foreign entities. Therefore, if your business has aspirations for going international, then it is best to start a private limited company.

Steps for Private Limited Company Registration

  • 1
    Application of DSC & DPIN
  • 2
    Name approval
  • 3
    MOA & AOA submission
  • 4
    Get incorporation certificate
  • 5
    Apply for PAN, TAN and Bank account

Application of DSC & DPIN

First of all, the partners have to apply for Digital signature and DPIN. Digital signature is an online signature used for filing and DPIN refer to Directors PIN number issued by MCA. If the directors already have DSC and DPIN, then this step can be skipped.

Name approval

You need to provide 3 different options for your company name to MCA of which one will be selected. Names provided should ideally be unique and suggestive of company business.

MOA & AOA submission

Once name is approved, one needs to draft Memorandum of association and Articles of Associate. Both MOA and AOA are filed with the MCA with the subscription statement and

Get incorporation certificate

It typically takes 15- 25 days to form a Private limited company and get the incorporation certificate. Incorporation certification is a proof that company has been created. It also includes your CIN number.

Apply for PAN, TAN and Bank account

Then you need to apply for PAN and TAN. PAN and TAN are received in 7 working days. Post this, you can submit the Incorporation certificate, MOA, AOA and PAN with a bank to open your bank account.