Private Limited Company Registration- What one should know?

ezybizadviser · 09 Mar 2022, 13:07

Private Limited Company Registration

Private limited company registration is the most common form of company registration in India. It is a type of company which has limited share capital and maximum number of shareholders. The main benefit of registering a private limited company is that it offers a high degree of legal security to the owners. The owners are protected against personal liability, which means that they are not personally liable for the debts and obligations of the company.

While a private limited company can be set up in few days, however, you need to be aware of the legal requirements to set one up. That’s why it’s a good idea to talk to a professional before you go ahead with the process. The following sections will guide you through how to register a private limited company in India in the simplest manner.

Basic Features of a Private Limited Company

Some of the features of the private limited companies in India are as under:

1. It has Separate legal entity

2. It can have at Least 2 minimum shareholders and maximum 20 shareholders

3. Not more than 200 members allowed

4. It is compulsory to have minimum of 2 directors and out of which at least 1 director shall be Indian resident and Indian citizen.

5. Compulsory use of Pvt. Limited in the company name

6. No minimum capital restriction. Can be registered with even Rs 50,000.

Complete Process of Private Limited Company Registration

Looking to form a private limited company? Incorporating a private limited company is difficult because the process is complicated and involves a number of steps. In order to register a private limited company, the following steps must be followed:

Digital Signature

A company must apply for a digital signature before it can be incorporated. A digital signature is a unique code, which is associated with a company's applications and documents. The digital signature is mandatory for all companies, whether they are applying to register a new company name or to change their registered name.

Name approval-

The next step in the company registration process is to obtain approval of the company name. When you submit your application, you have to provide a list of at least 2 proposed names, under which your company prefers to be incorporated. You can provide the maximum of 2 names with your preference order under the ‘RUN’ form.

Director Identification number (DIN)

The next step is to obtain a director identification number. A director identification number is a unique 8-digit code assigned to each individual director of a private limited company.

Form SPICE INC-32

Upon receipt of the approval of the name, the applicant is now eligible to file the SPICE INC-32 form to avail the incorporation certificate. The documents, required to be submitted along with the form, include the Memorandum of Association (MOA) and the Articles of association (AOA). Now, there is a facility to apply for PAN, TAN, ESI, PF and GST number at the time of filing SPICE form for final incorporation. Also, nowadays, the applicant has to also provide the details of proposed bank where the current account of the company need to be opened once company registration process in completed.

Certificate of Incorporation-

The company is now officially incorporated. The company is eligible to receive its Certificate of Incorporation, once all the applications and documents have been received and verified by the authorities. The company will also receive its CIN (Corporate Identification Number) and the Date of Incorporation. The certificate of incorporation includes the PAN and TAN of the company which is allotted at the time of incorporation.

Certificate of Commencement of Business-

Within 180 days of registration of company in India, every company needs to also apply for certificate of commencement of business. This is granted when bank account is opened and share subscription money is deposited by all the shareholders.

Documents required for Private Company Registration in India

Without proper identification and proof of address, a Private Company cannot be registered in India. Following documents are required for private limited company registration in India:

1. The PAN cards of the shareholders and directors. Foreign nationals must provide a valid passport.

2. Recent telephone bills/electricity bills/bank statements for shareholders and directors.

3. Passport-sized photos of proposed directors

4. Current Electricity Bill/Telephone Bill of the registered office

5. The owner(s) of the registered office should provide the No Objection Certificate

6. If applicable, a lease agreement for the registered office should be provided

In above write up, we have provided an overview of private limited company registration in India. It may be noted that although the procedure is quite similar in case of other types of business set up in India , however, there may be some changes in the documentation part as well as post registration compliance.