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Required Details & Deliverables
Share holders/Directors Details
- Pan card
- Aadhar card
- Passport or Voter ID or Valid Driving License
- Recent Bank statements (not older than 1 month)
- Mobile number & email id
- passport size photo
- Electricity bill or Telephone bill or gas bill of your office address (not older than 1 month)
- Property owner - Name & Address (to draft rental agreement)
- Two Proposed company names (To apply for name reservation)
- Digital signature for 2 directors
- MoA & AoA preparation
- PAN & TAN for the company
- DIN for 2 directors
- Incorporation certificate
- Name reservation fees
- Current Account Opening Support
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2. Call to discuss
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Private Limited Company Registration in India: A Detailed Guide - Overview
When it comes to giving a formal structure to a business for unmatched growth, the proprietor or partner turns director. Private Limited Company is one of the most preferred corporate structures. Going by the statistics, the Ministry of Corporate Affairs, the apex regulatory body for companies, stated that a total of 12,59,992 private limited companies were registered and active as of 31st January 2021. This is particularly because private limited company registration is a relatively simple process. Here is a complete guide covering all the important aspects of private limited company registration in India.
What is a Private Limited Company?
- As per Section 2(68) of the Companies Act, 2013, a private company means a company having a minimum paid-up share capital as may be prescribed, and which by its articles, --
- restricts the right to transfer its shares;
- 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 this clause, be treated as a single member:
Provided further that --
- 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
- prohibits any invitation to the public to subscribe for any securities of the company;
- The companies act lays down an explicit definition for private limited companies. Particular restrictions have been placed on the transfer of shares, the number of members, and public involvement as shareholders in order to maintain its status quo.
Benefits of Private Limited Company Registration
Private limited company registration in India comes with the following benefits:
Separate Legal Identity: Private Limited Company is an entirely separate legal entity. It has its own independent legal existence separate from its directors and shareholders.
Limited Liability: A private limited company has limited liability. It means the owner's liability is limited to the amount that they have invested in the company. This protects the shareholders' assets from the liabilities of the company.
Power to sue and be sued: The company, because of its separate legal existence, has the power to sue and be sued in its own name by any person.
Transferability of shares: The shares in a private limited company can be transferred easily by the shareholders.
Tax benefit: Private limited companies have a lower tax rate as compared to the other forms of businesses like a partnership or Limited Liability Partnerships. Even the sole proprietors with slab benefits fall under the 30% tax rate for income above Rs. 10 lakhs. Partnership firms and LLPs come under a flat tax bracket of 30% while private limited companies have multiple taxation rates of 15%, 22%, 25%, and 30% as per the applicable sections of the Income Tax Act, 1961.
Perpetual Succession: A private limited company has a perpetual succession. The company remains in existence until its objects are fulfilled or are dissolved voluntarily or by compulsion of law.
Facilitates funding: Company is the most preferred structure for fundraising from prospective investors and financial institutions. Even in the case of startups, a company is the preferred constitution format for the investors.
Ownership and Obligations: The company has the right to own the assets and owe the liabilities in its own name.
Eligibility for Private Limited Company
While there are no specific eligibility criteria for private limited companies, certain thresholds have been set with respect to certain parameters. These are:
Shareholders: There shall be a minimum of 2 shareholders and a maximum of 200.
Directors: A private limited company shall have a minimum of 2 directors and a maximum of 15 directors.
Capital: There is no minimum paid-up capital prescribed so far. Earlier, the minimum paid-up share capital requirement was Rs. 1,00,000 which has been omitted in 2015.
DIN:Each person undertaking to be appointed as director of the private limited company shall have a valid Director Identification Number (DIN).
Private Limited Company Registration Documents
Following documents are required for private limited company registration in India:
- Passport size photos of all the directors
- PAN Card and Aadhaar Card of all the directors
- Identity proofs of all the directors [Voter ID Card / Driving License / Passport (Any one of the following)]
- Address proof of the registered office of the company (Electricity Bill / Any other utility bill). In case the premises are not owned, a NOC or legal agreement to use the premises shall be obtained from the landlord.
- Residential address proof of all the directors (self-attested) (Mobile bill / Bank Statement / Electricity Bill) (Bills shall not be older than 2 months)
If any of the shareholders is not an individual, then the following additional documents of the subscriber shall be provided:
- Certificate of Incorporation
- Resolution to subscribe to the shares of the company
Private Limited Company Registration Process - An Overview
Apply for Digital Signature Certificates
- Obtain DIN
- Check for name availability in MCA.
- Approval of Name
- File the SPICe+ form
- Obtain the Certificate of Incorporation
Step-by-Step Guide to Private Limited Company Registration
Here's a detailed step-by-step guide for registration of a private limited company:
A. Pre-Incorporation Task
1. Apply for DSC: This is the foremost task for company incorporation. All the directors shall be required to have a Class-3 Digital Signature Certificate in order to apply for DIN and company incorporation.
2. Obtain DIN: The director shall have a valid DIN in order to become a director in a company. DIN is an 8-digit unique identification number with lifetime validity. The following forms are relevant for DIN:
Provided further that --
- Form DIR-3: A person willing to become a director in a new or an existing company may apply for DIN using this form.
- SPICe+ Form: This form is filed for incorporation of the company. Instead of DIR-3, the proposed first directors can also apply for DIN through SPICe+ Form at the time of company incorporation.
- Form DIR-6: This form is filed for changes in any particulars of the directors.
3. Check for name availability in MCA: Visit the MCA portal and go to the MCA Services tab. Under the company services tab, select the Check Company name option. Just enter your desired name and click on search. This will give you a brief idea of whether the name has already been used by any other company or not.
B. Incorporation of the Company
4. Approval of name: The name can be approved through two alternatives:
Alternative-1: Here, you can apply for a reservation of the name. The Part-A of the SPICe+ form allows the reservation of two desired names and one resubmission (RSUB) for reserving the name of the company. Two names can be applied for reservation at a single time. If your desired name is not available, then the applicant shall refile the SPICe+ form. Once the name gets approval, it is reserved for a period of 20 days within which, Part-B of the SPICe+ form shall be filed by the applicant.
Alternative-2: Here, you can directly file Part-A and Part-B of the SPICe+ form together. Part-B is for the incorporation of the company. However, through this alternative, you can apply for only one name. In case of non-approval of the name, the SPICe+ form can be filed a second time without any changes but with a new name. This means that the applicant can file the same form twice. In case of non-approval for the second time as well, the applicant shall file the SPICe+ form again from scratch. This alternative is cheaper than the first alternative.
5.File the SPICe+ (INC-32) form: This is specifically Part-B of the SPICe+ form. SPICe+ form enables the entire web-based incorporation of the company. SPICe+ form serves the following purposes:
- Director Identification Number allotment
- Reservation of the name
- Incorporation of the company
- EPFO Registration (Mandatory)
- ESIC Registration (Mandatory)
- PAN and TAN Application (Mandatory)
- Professional Tax Registration (Maharashtra only)
- Opening of a bank account of the company (Mandatory)
- Registration under Goods and Services Tax Act, 20179 (Optional)
The SPICe+ form has made private limited company registration online. The details provided in SPICe+ are automatically filled in other linked forms viz. AGILE-PRO, eMOA, eAOA, URC-1, and INC-9 (if applicable).
The form shall be downloaded and signed using the digital signatures of the applicants. A professional, whether a Chartered Accountant, Company Secretary, Advocate, or a Cost Accountant must also certify the correctness of the particulars submitted.
eMOA and eAOA: Memorandum of Association is the charter of the company while Articles of Association prescribes the rules and regulations for the company. Earlier, these were filed manually for the purpose of company incorporation. However, these have been linked with the SPICe+ form and can be filed online. Subscribers to the Memorandum and Articles of Association shall digitally sign both the forms.
6. Obtain the Certificate of Incorporation: Once approved, a certificate of incorporation will be issued to the company along with the allotment of Corporate Identification Number (CIN).
why eAuditor office
Simplified Performa for Incorporating Company Electronically, also known as SPICe, was introduced in the year 2016 for the purpose of incorporation of the companies. Under the Ease of Doing Business (EODB) initiative, the MCA released the new form SPICe+ to further ease the company incorporation process. The new SPICe+ form encompasses more features than the earlier SPICe form. Name approval is integrated as part of the SPICe+ form. The AGILE form has been converted to AGILE Pro to provide GSTIN / ESIC / EPFO / Bank account as well along with company incorporation. Apart from that, even after affixing DSC in the form, information can be modified in the SPICe+ form.
After the introduction of the SPICe+ form, the name approval has been integrated with SPICe+. Part-A of SPICe+ is for name approval. Therefore, from 15th February 2020, the RUN form can only be used for a change of name.
Company Limited by Shares: The liability of the shareholders is limited only to the amount that is unpaid on the shares held by them. Company Limited by Guarantee: A company having no share capital where the liability of the shareholders is limited up to the amount undertaken to be contributed by them in the event of liquidation of the company.
Yes. private limited companies are eligible for attracting foreign direct investments in compliance with the relevant laws and regulations.
DIN, also known as Director Identification Number, is an identification number of a person intending or has become a director in a company. DPIN, also known as Designated Partner Identification Number, is an identification number for a designated partner in LLP. It is similar to DIN in the case of companies. DIN and DPIN are issued by the Ministry of Corporate Affairs.
Yes. Even a foreign national can become a director in a private limited company.
As per the Companies Act, 2013, only an individual natural person can become a director in a company. Therefore, neither a company, firm, or association can become a director in any company. This is to ensure the fixation of duties and responsibilities that would be difficult in the case of companies and firms becoming directors.
The private limited company registration cost depends upon various factors like authorized capital, number of directors, etc. Initiate your Pvt. Ltd. Company Registration with eAuditor Office as your partner in corporate compliance! Reach out to us for any professional assistance.