Private Limited Company Registration - Procedure

ezybizadviser · 16 Mar 2022, 08:18

Private Limited Company Registration

There are many forms of company registration in India like sole proprietorship firms, partnership firms, public limited companies, private limited companies, One Person companies and limited liability partnership firm.

However, private limited company registration is one of the most popular forms of entity registration in India.

Some characteristics of private limited company in India are as under:

a) It has minimum 2 members and can have maximum 200 members

b) It shall have minimum 2 directors and shareholders, out of which at least one director must be an Indian Resident and Citizen.

c) It has limited liability i.e. the liability of the shareholders are limited to maximum number of shares held by them

d) It has separate legal identity from its members and shareholders; therefore, it can sue and can also be sued by outside parties.

e) It restricts the right to transfer the shares; it means that the shares of the private limited companies are not freely transferrable.

f) It prohibits any invitation to the public to subscribe to any securities of the company.

g) Every year, at least 4 board meetings shall be held by the private limited company and one annual general meeting must also be held.

Procedure for private limited company registration in India

First of all, digital signature of all the directors needs to be prepared.

Secondly, the name of the company shall be applied for approval by ROC by filling the relevant form RUN wherein 2-3 proposed names of the company are mentioned and any one name as per the discretion of the ROC/MCA gets approved.

Once name of the company is approved, the company needs to draft memorandum and article of association of the company, director consent letter is signed and director identification number is applied. Simultaneously, relevant forms are filled for applying final incorporation of the company. At this stage, the company also applies for PAN, TAN, ESI, PF, IEC and GST number. Also, proposed name of the banker is also provided.

Finally, the certificate of incorporation of company is granted and company gets registered.

Once the company gets registered, it has to immediately apply for GST registration and open current account in the bank and all the shareholders need to bring share subscription money in the bank account in proportion of their shareholding.

At this stage, company may also apply for other types of registrations like Import Export code, factory license, shop and establishment license etc. as per the requirement and nature of business of the company.

Also, within 2 months of incorporation of the company, the company needs to issue share certificate to its shareholders.

Further, within 60 days of incorporation, the company needs to apply for certificate of commencement of business failing which the company and every director of the company are liable for penalty upto Rs 50,000 and also per day penalty of Rs 5000 for each day of continuing default.

Lastly, within 30 days of incorporation, the company needs to hold its first board meeting and appoint the first auditors of the company.

In case of subsidiary company registration in India, besides above procedure, once the share subscription money is received from foreign shareholders, the company has to do some compliance with the RBI relating to intimating the RBI about receipt of such FDI from foreign shareholders.

With above the procedure of private limited company registration in India is completed.