A Private Limited Company is a kind of business structure owned and operated by a group of people. Owners of the company have shares but they can’t sell or buy these shares. Today, the Indian government is promoting the culture of start-ups and entrepreneurship, and for this government is providing various kinds of financial assistance to young entrepreneurship who have private limited company registration. However, running a business requires a proper legal structure. There are many business structures in India for running a business, but Private Limited Company is the most appropriate business entity to run a business in India.
One of the main advantages of Private Limited Company is, it has a separate legal identity. As an independent legal entity, the company can enter into any deal and file suits in its own name. Private ltd company registration in India provides better transparency in the operation of the business, like transparency in data and financial information. All these things make it a perfect legal business framework for any entrepreneur, because such kinds of business structures attract more investors and customers due to their very transparent nature. After reading this blog, you will develop complete understanding about a private ltd company registration in India, registration process, fees required for it and benefits of registering a private limited company.
What is a Private Limited Company?
Private Limited Company is a kind of business structure provided under the Companies Act of 2013. Under Section 2(68) of the companies act, a private limited company is defined as private company means a company having a minimum paid-up share capital as may be prescribed, and which by its articles,—
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two hundred:
Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:
Provided further that—
(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased,
shall not be included in the number of members; and
(iii) prohibits any invitation to the public to subscribe for any securities of the company.
Eligibility Criteria for Private Limited Company Registration
The prerequisite to register a Private Limited Company in India are given below
Number of Directors and Shareholders: A private limited company must have minimum 2 and maximum of 15 directors. It is required that company has minimum one director a resident of India. A company must have minimum 2 and maximum 200 shareholders.
Name of the Company: The name of the company must be unique and in accordance with the guidelines prescribed by the Ministry of Corporate Affairs (MCA) in online company registration.
Address of the company: It is required for every company to have a valid correspondence address. Proof of address is needed in order to register a company in India.
Minimum Capital: There is no minimum capital prescribed for the registration of company in India.
The Step-by-Step Process for Private Limited Company Registration
Obtain DIN & DSC of Directors: It is mandatory for all directors of the company to have DIN (Director Identification Number) before registering a company. In order to get DIN, you need to submit form DIR-3 on the official portal of the ministry of corporate affair along with the essential documents, like PAN, Address ID Proof and Photograph. Digital Signature of the directors is also required for online company registration in India.
Name Selection of Company: For getting a unique company name, SPICE Plus PART A form needs to be filed to the Registrar of companies. ROC can reserve the proposed name of the company after examining the papers submitted by you. After this, company will get a letter approving the name of the company valid only for the next 20 days. You need to make sure that the pvt ltd company registration online process gets completed within the given time.
A Memorandum of Association (MOA) and Articles of Association (AOA): MOA and AOA of the Company are two crucial documents that you need to submit to the ROC for registering a company. MOA and AOA must be signed by all the directors of the company. MOA contains all the information about the proposed company for online company registration. All the rules and regulations of the company are mentioned in AOA.
Apply for SPICE Plus: SPICE Plus or INC-32 is an application to facilitate the online company registration process. By using this application, you can file for company registration online in India. You will find this application on the website of the ministry of corporate affairs.
Obtain Registration Certificate: ROC will examine all the documents filed by you. If he satisfies with the documents filed then he will further proceed the process of private limited company registration. ROC registers a company and a certificate of incorporation will be issued in the name of the company. This Certificate will have CIN or Corporate Identification Number which serves as the unique identifier of the company. PAN and TAN will also be issued in the name of the company.
Benefits of private ltd company registration in India
A Private Limited Company is one of the best business structures in India. Several advantages of a Private Limited Company are mentioned below:
Limited Liability: In case of any legal and financial obligation, the directors of the company are not responsible in person, hence their no financial or legal proceeding will be taken against the stakeholders in personal capacity.
Separate Legal Identity: A private ltd company registration in India is regarded as a distinct legal entity. It has all the legal rights to sigh ant contract, own assets, and involve in any legal proceedings.
Continuous Existence: It is very unique feature of the private limited company. Directors and shareholders may change, but it will not have any impact on the very existence of the company.
Tax Benefits: A private limited company registration enjoys various kinds of tax benefits and exemptions provided by the government.
Credibility: Private Limited Companies attract more customers, and shareholders since people have more trust in such kinds of business entities.
Cost of online company registration in India:
The cost of Pvt Ltd Company Registration depends on many factors, like government registration charges, charges of company registration professionals, stamp duty levied by the state government, and the expenditure of preparing other documents.
Name Approval Fees of ROC: The ROC fees for the name approval of the company is fixed at Rs.1,000 for private limited company registration.
ROC Registration Fee: It completely depends on the authorised capital of the company. You don’t have to pay any fees up to Rs.15 lakhs authorised capital. Above this limit, Rs. 500 registration fee is prescribed for the companies.
Stamp Duty: You will need to pay stamp duty while obtaining the documents, like MOA and AOA for the private limited company registration. Stamp duty is decided by the state governments.
Cost of obtaining Class 3 DSC: The cost of obtaining DSC depends on several factors. The charges for DSC depends upon the certified agency for issuing DSCs. Moreover, DSCs having long time validity are more costly.
Fees of DIN for Directors: You have to pay a fixed amount of Rs.500 for DIN Application.
Documents needed for Pvt Ltd Company Registration
SPICe (Simplified Proforma for Incorporating a Company Electronically) facility is offered by the government of India, it is a unified portal for company incorporation in India. It facilitates issuing various documents, like Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN) for the newly incorporated company. We have discussed a list of important documents required in the process of private ltd company registration in India. Below is the list-
Proof of Identity: Permanent Account number (PAN) and any one address proof, like Aadhar card, passport, driving license, or voter ID
Proof of Address: Promoters of the company required to submit address proof, such as Electricity or water bill, and passport size photos for private limited company registration.
Conclusion: Online company registration is one of the simplest and best ways to set up a business in India. In online registration of companies, one can sail through legal formalities without wasting time or effort. It is also very simple in nature, where many platforms help in the process of pvt ltd company registration online.
There are many benefits to registering a Private Limited (Pvt Ltd) company in India. This helps the limitations of personal liability, meaning if a business incurs debts, personal assets are not open to repayment. It also increases the legibility and trust of investors, clients, suppliers, etc. A Pvt Ltd company can also raise the capital by equity crowd funding.
If you are about to start your Entrepreneurship journey, then online company registration in India makes it more hassle free and beneficial for you. Build a strong foundation for your business in India by registering a private limited company with Lawgical India.