Setting up a private limited company is one of the highly recommended ways to start a business in India. Private Limited Company Registration should be done well before on time through OnlineFilings. A private limited company can be registered online with in 7-10 days at very reasonable price.
A private limited company is a privately held business entity held by private stakeholders. The liability arrangement, in this case, is that of a limited partnership, wherein the liability of a shareholder extends only up to the number of shares held by them. Whereas in private limited company registration, directors may be different from shareholders.
With the startup ecosystem booming across the country and more and more people looking to do something on their own, there is a need to be well-acquainted with different business registration types i.e. sole proprietorship, partnership, and private limited company.
In legal terms, Section 2 (68) of the Companies Act, 2013 defines a private company as:
“A Company having a minimum paid-up share capital as may be prescribed, and which by its articles:
Now that you know what a private limited company is, the next step is to know the characteristics of such a company:
► Membership: Like any other company, a minimum of two shareholders are required in order to start such a company. But since it remains a small entity, there is also a maximum cap on the number of members fixed at 200. There is also a requirement of two directors to run the company.
► Limited liability structure: In a private limited company, the liability of each member or shareholder is limited. Therefore, even in the case of loss under any circumstances, the shareholders are liable to sell their own assets for repayment. However, the personal and individual assets of the shareholders are not at risk.
► Separate legal entity: This is a separate legal entity and continues in perpetual succession. This means that even if all the members die, or the company becomes insolvent or bankrupt, the company still exists in the eyes of the law. The life of the company will be perpetual, not affected by the lives of its shareholders or members unless dissolved by way of resolution.
► Minimum paid-up capital: A private limited company requires to have and maintain a minimum paid-up capital of Rs. 1 lakh. It could go higher, as prescribed by MCA from time to time.
► Ownership: As the company’s shares are owned by investors, founders, and management, the owners are at the liberty of transferring and selling their shares to others.
► Less number of shareholders: Unlike a public company that requires seven shareholders, a private limited company can be started with just two shareholders.
► Uninterrupted existence: As mentioned earlier, the company stays a legal entity until it is legally shut down, the company runs even after the death or departure of any member.
In India, Private Limited company registration cannot be done without proper identity proof and address proof. Identity and address proof will be needed for all the directors and the shareholders of the company to be incorporated. Listed below are the documents that are accepted by MCA for the online company registration process acceptable.
► PAN Card & Aadhar card of the Promoters/Directors
► Address Proof – Bank Statement/Electricity Bill/Telephone Bill of the Promoters / Directors
► Photo Identity Proof – Voter ID/Driving License/Passport of the Promoter/Directors
► Passport of Foreign Nationals & NRIs if any
► Passport-sized photo of Directors
► Latest utility bill such as gas, electricity, mobile, telephone, Internet clearly depicting the address of the proposed premises
► NOC From the owner of the property in case property is owned by 3rd party or copy of rent agreement in case of rented property
► Your registered office need not be a commercial space; it can be your residence too.
► For the foreign nationals, apostilled or notarized copy of the passport has to be submitted mandatorily.
After you finalize a name for the company, follow the below-mentioned steps:
► Apply for DSC (Digital Signature Certificate)
► Apply for the DIN (Director Identification Number)
► Apply for the name availability
► File the MOA and AOA to register the private limited company
► Apply for the PAN and TAN of the company
► Certificate of incorporation will be issued by ROC with PAN and TAN
► Open a current bank account on the company name