All you need to know about Private Limited Company Registration

When we talk about starting our own business, forming a Private Limited Company quickly seems to grab our attention. It is one of the best option which comes into mind of many start-ups and businesses who has high growth aspirations. In India, a Private Limited Company is incorporated under the Companies Act, 2013 and is governed by the Ministry of Corporate Affairs (MCA).

Forming a Private Limited Company requires some legal steps and a defined process. Before you plan to incorporate your company online, you must be well aware about what is a private limited company, process to form a private limited company and advantages to form it.

So, in the below article we will explain the entire journey of a Private Limited Company.

What is a Private Limited Company?

A Private Limited Company is a privately held business entity which is held by private shareholders. Such type of company is one of the highly recommended for small and medium scale businesses in India as the procedure of forming a Private Limited Company is smoother and the cost are quite reasonable.

• It is incorporated under Companies Act, 2013 governed by the Ministry of Corporate Affairs.
• It is formed by at least two directors and two shareholders. A person can act as both the shareholder and the director.
• A Private Limited Company is preferred as it ensures limited liability and provides a separate legal entity to the business. The company incorporation results in clear ownership of the company as defined by the share capital.

According to Section 2(68) of the Companies Act, 2013 defines a Private Company as:

Advantages of Private Limited Company

Some of the advantages of Private Limited Company are:

• It protects owners from any personal liability and from other risks and losses.
• Company, if registered, is generally genuine which ultimately increases the authenticity of the business.
• An owner can take loans in the name of a company and can make investment in different companies
• The directors of a Private limited Company has limited liabilities and are not personally responsible for any default in company affairs.
• Private Limited Company attracts more customers
• Various tax benefits are provided to the directors of a company
• An owner can build goodwill for its brand and can have a worldwide reach
• A registered company has the power to sue and be sued in its own name.

Checklist for Private Company Registration

Before you plan to register a Private Limited Company, make a note of the following checklist:

• Minimum Two Directors
  To form a Private Limited Company, a minimum of two directors is compulsorily required and maximum it can be 15. Out of all the directors, at least 1 must be a resident of India.

• Requirement of Capital
  There is no minimum  amount of capital requirement while forming a Private Limited Company. However, a company must have an authorized share capital of at least Rs. 1 lakh.

• Unique Name
  The name of your proposed Public Limited Company must not be similar to an already existing company. Make sure that you also verify that the name does not have an existing trademark on it.
  Facing difficulty in deciding a unique name for your company, contact the team of experts at Legal Window.

• Registered Office
  The registered office of a company is not compulsorily required to be on a Commercial land.The registered office can be your own home or a rented one, however Rent Agreement and NoC from the landlord is must.

Documents Required for Private Company Registration

In India, Private Limited company registration is formed with genuine and proper identity proof and address proof. Such documents are needed from all the directors and the shareholders of the proposed company.
Following are the documents that are accepted by MCA for the Private Limited company registration:

• Identity and Address Proof of Directors and Shareholders
• Scanned copy of PAN Card (Passport in case of Foreign Nationals & NRIs)
• Scanned copy of Voter’s ID/Passport/Driver’s License (Any one)
• A Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill of the individual (Any one, not older than two months)

Note: For the foreign nationals, apostilled or notarized copy of the passport has to be submitted compulsorily. All documents submitted should be valid and genuine.

• Registered Office Proof
  For online company registration in India, the company must have a registered office in India. Following documents needs to be mandatorily provided while giving Registered Office details:
  • Scanned copy of the latest bank statement/telephone or mobile bill/electricity or gas bill in case you own property
  • Scanned copy of Notarized rental agreement
  • A Scanned copy of No-objection certificate from the property owner

Important to Note: Your registered office can be a commercial premises or it can be your residence also.

Registration Process of Private Company Registration

Effective from 23^rd February 2020, the Ministry of Corporate Affairs has provided new web service SPICe+ along with other amended forms for incorporation of various companies. The new integrated form consists of two parts i.e. PART A and Part B.

Though the process of registering a Private Limited Company has now become simple, but still assistance from a professional is advised to complete the various complex forms and filing them within time. Moreover, the government portals and language are a bit on the difficult side, too.The process of registration of Private Limited Company is as follows:

Step 1: Apply for Digital Signature Certificate (DSC)
Since the process is completely online, hence all those authorized signatories/directors who needs to sign the online incorporation documents must apply for Digital Signature Certificate.

Step 2: Apply for Director Identification Number (DIN)
DIN can be applied along with the company registration application form i.e. SPICe+. However, maximum 3 Directors can obtain DIN along with SPICE+.
In case the subscriber is already holding a valid active DIN, the proof of identity and residence need not be attached.

Step 3: Apply for Name Approval through SPICe Plus Form – Part A
For the name approval step, now you need to apply it through SPICe Plus form only with the Ministry of Corporate Affairs. Please note that a minimum of 2 names at the time of incorporation are proposed.

Step 4: Submitting Final Incorporation Documents
The Part B of SPICe Plus needs to be filled up and all the required information has to be given. Apart from that Memorandum of Association (MOA) and Articles of association (AOA) of the Company in prescribed format needs to be submitted. Moreover, declaration of all the subscribers and first directors in Form INC-9 needs to be provided.
In addition to the SPICe+ form, a person can now also apply for GSTIN, EPFO, ESIC, Professional Tax etc. through a web form called AGILE-PRO (INC-35) Once you are done with all this, convert the form into pdf format and upload on the MCA website.

Step 5: Receiving Certificate of Incorporation and opening of Bank Account
After approval of incorporation documents, you will receive your Certificate of Incorporation, Company Identification Number (CIN) along with PAN and TAN of your company.

Takeaway

One of the most sought after legal structure options for businesses in India is a Private Limited Company Registration. Normally, Startups and growing companies prefer to have online Company Registration as a private Limited company as it allows funding from outside in an efficient manner. Further, it limits the liabilities of the shareholders and also enables them to offer Employee Stock Options (ESOP).If you wish to have your own company, make sure you register a Private Limited Company from our professionals at Legal Window