A private Limited company is a privately owned business entity formed for lawful purpose under the provisions of companies Act, 2013. Having minimum of two and maximum of two-hundred members and the name of the company sub-fixed with the word ‘private limited’. Identified/Highlighting key factors of Private Limited Company are greater stability, better credit worthiness, easy bank loan accessibility, continuity in existence, restrictions on acceptance of public deposits and protection of personal assets etc.
An Individual seeking interest to start their operations in India as a start-up structure can incorporate a private limited company with substantially relaxed and lesser compliance regime as compared to public limited Company. A private Limited Company is a structure popular throughout the world. The Minimum of 2 and Maximum of 15 directors can be appointed by any private limited company. Being the most popular and preferred form of business in India as it combines the features of both company and LLP firm. Highlighting key factors of Private Limited Company are greater stability, better credit worthiness, easy bank loan accessibility, continuity in existence, restrictions on acceptance of public deposits and protection of personal assets etc. A Private Limited Company has a separate legal structure and can sell/purchase properties or shares on its own name with lesser formalities. In event of winding up, the personal assets of the members shall not be held liable for debts and losses of the company.
Private company does not have to comply with any minimum capital requirement, although payment of fees to be made directly to the Government for issuing a minimum of shares worth Rs.1 lakh [Authorized Capital Fee] during the incorporation of the Company.
As a juristic legal person, both company and members have separate legal identity that is distinct from each other. Unlike members/shareholders, company is not a natural person but though it can purchase or sell properties in its own name, can sue or be sued by/from parties without any restrictions.
A company existence is uninterrupted, even the death or insolvency of shareholder(s) does not affect the continuity of business. A member may come or go but the company continues to exist for long, until it is legally dissolved.
The liability of shareholders is limited to the proportion of unpaid portion on allotted shares and which can only be demanded from the shareholders in case where company’s assets are not sufficient to meet the outstanding liabilities at the time of winding up. So, the personal assets of the shareholders are fully protected with the above exception.
Private Limited Companies are the companies incorporated under the Companies Act, 2013 which have minimum of two shareholders and can be extended up to two hundred. Minimum 2 and Maximum 15 directors can be appointed by any private limited company.
Private Limited Company is not allowed to borrow capital from public however its growth is not restricted hereby as it can attract finance from PE Investors, banks and other financial institutions to meet its requirement/obligations without any restrictions.
Obtaining DSC is the first and foremost step while incorporating private limited company and now it can easily be applied online by approaching any of the authorised dealers. Application for DIN is prepared through online mode in prescribed Form DIR-3 based on the information of the applicant and is to be submitted before the Ministry of Corporate Affairs website i.e. www.mca.gov.in along with the requisite documents of the applicant and prescribed fees.
Application for reservation of the name for the proposed company is required to be filed online in prescribed Form INC-1 along with minimum one and maximum six proposed name in order of preference and is to be submitted before the Ministry of Corporate Affairs website i.e. www.mca.gov.in by paying the prescribed fees.
Drafting and filling of certain documents relating to Incorporation such as Memorandum of Association (MOA) and Articles of Association (AOA) along with various declaration obtained from directors/members (INC-9,DIR-2,MBP-1) to be submitted before the registrar in Form- INC-7,INC-22 and DIR-12 along with the prescribe fees and stamp duty as prescribe rates of Government.
Once all the forms are duly approved by ROC and no objection is being raised, the digitally signed “certificate of Incorporation” is emailed to the directors. The time period in receiving Certificate of Incorporation may vary and depending on the location and other factors. After receiving COI, the company can start its operation.
For setting up a private limited company, minimum of 2 and maximum of 200 shareholders are required and minimum of 2 and maximum of 15 directors can be appointed by any private limited company.
The maximum amount of share capital the company can issue in its lifetimes to its shareholder, as stated in its Article of Association or by virtue of shareholders vote.
No, physical presence is not mandatory for the incorporation of a private limited company. All you need to prepare scanned document and send it through mail.
Once the Certificate of Incorporation is issued by the MCA, it is valid for life time of the company until it is voluntary or legally dissolved as per the provisions of the Companies Act, 2013.
A company existence is uninterrupted and it is a under way process, even the death or insolvency of shareholder(s) does not affect the continuity of business. A member may come or go but the company continues to exist for long, until it is legally dissolved.
No, Audit for a private limited company is not compulsorily, until the turnover of any person carrying on business exceed or exceeds Rs.1 crore and for the persons carrying on profession exceed Rs. 25 Lacs.
You must be careful while choosing a name of the private limited company, make sure it is unique and not similar with any other already existing company name or not resemble with any other registered trademark. Therefore, you have option to pen down 6 proposed names in order of preference at the time of filling Form Inc-1.
The minor shall not be appointed as director of the company he needs to be over 18 years of age and must be a natural person. Foreign nationals are also eligible to be a director in an Indian Private Limited Company.
Any commercial/industrial/residential premises can be used as a registered office of the company in India where communication from the MCA will be received for the purpose of smooth functioning of the business.
Private company does not have to comply with any minimum capital requirement, although fee must be paid to the Government for issuing a minimum of shares worth Rs.1 lakh [Authorized Capital Fee] during the incorporation of the Company.
Private Limited Company are beneficial in many ways such as greater stability, better credit worthiness, easy bank loan accessibility, continuity in existence and protection of personal assets etc. A Private Limited Company has a separate legal structure and can sell/purchase properties or shares on its own name with lesser formalities.
DIN is a unique identification number containing personal information about all the existing or proposed directors of the company issued by the Ministry of Corporate Affairs. Once DIN is issued against 1 director and is valid for lifetime and never get expires. It is mandatory to obtain DIN for all the existing or proposed directors.
Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued by Income tax department of India as a proof of identification for tax purposes. It is mandatory for obtaining Digital Signature Certificate, Director Identification Number, opening bank account, various statutory registrations, pay taxes and filing tax returns and many other transactions as prescribed by government time to time.
Documents required from Directors/Promoters/Shareholders
Documents for Registered Office of Company