Private Limited Company Registration Procedure in India

Private Limited Company Registration Procedure in India. In the previous article, we have given What are the basic requirements to start a Sole-proprietorship Firm in India. Today we are providing the complete details of How to start a private limited (PVT Ltd) company in India. Private Limited Company Registration is the most popular legal structure option for businesses in India. A private limited company can have a minimum of two members and a maximum of fifty members. The directors of a private limited company have limited liability to creditors. In a case of default, banks/creditors can only sell company’s assets but not personal assets of directors.

Start-ups and growing companies prefer private limited company as it allows outside funding to be raised easily, limits the liabilities of its shareholders and enables them to offer employee stock options to pull in top talent. Private Limited Company Registration can be done through Legalraasta in Delhi NCR, Mumbai, Bengaluru, Chennai and other Indian cities.

Documents Required for Company Registration

To be Submitted by Directors and Shareholders

Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
Scanned copy of Voter’s ID/Passport/Driver’s License
Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
Scanned passport-sized photograph
Specimen signature (blank document with signature [directors only])

For the Registered Office

Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
Scanned copy of Notarised Rental Agreement in English
Scanned copy of No-objection Certificate from property owner
Scanned copy of Sale Deed/Property Deed in English (in case of owned property)

Note: Your registered office need not be a commercial space; it can be your residence, too.

Features of Private Limited Company

Require 2 Person as Entrepreneur i.e Directors.
Easily Setup and recommend to Growing Startups.
Limited Liability for Members.
More Credibility as Compare to others.
Easily raise funds from Investors.
ESOP Option is available to motivated Employees.

Disadvantages of Private Limited Company:

Statutory Compliance is High.
High Setup Cost as Compare to Others.
Involvement of other Directors in Decision Makings.
Restricted to transfer the shares to others without agreements.
Not allow invite to public for deposits

Advantages of Private Limited Company:

Preferred by banks, VCs & investors
Easy to allocate and redistribute shares to investors or other directors
Separate legal entity which limits your liability
Offers the flexibility of a partnership firm and the advantages of a Public Ltd Company
Easy to register, manage & run
Easy to dissolve or wind-up.

Procedure and Steps taken to Register a Private Limited Company

1. Application of DSC & DPIN:

First of all, the partners have to apply for Digital signature and DPIN. Digital signature is an online signature used for filing and DPIN refer to Directors PIN number issued by MCA. If the directors already have DSC and DPIN, then this step can be skipped.

2. Name approval:

You need to provide 3 different options for your company name to MCA of which one will be selected. Names provided should ideally be unique and suggestive of company business

3. MOA & AOA submission:

Once name is approved, one needs to draft Memorandum of association and Articles of Associate. Both MOA and AOA are filed with the MCA with the subscription statement and

4. Get incorporation certificate:

It typically takes 15- 25 days to form a Private limited company and get the incorporation certificate. Incorporation certification is a proof that company has been created. It also includes your CIN number.

5. Apply for PAN, TAN and Bank account:

Then you need to apply for PAN and TAN. PAN and TAN are received in 7 working days. Post this, you can submit the Incorporation certificate, MOA, AOA and PAN with a bank to open your bank account.

Key Points:

1) The minimum authorized capital to start should be Rs. 100,000(US $2250 approx) and it can be increased to any amount(no upper limit). This money is deposited in your company bank account at your disposal.

2) LLP cannot be converted to a Private Limited Company as it is not permissible to the government of India. Both the LLP Act, 2008 and the Companies Act,2013 are silent about the matter and haven’t done any amendments on the same. However, if you want to expand your business you can register a Private Limited Company with INC-29 which has simplified the process of registration.

3) An NRI or Foreign National can be a Director in a Private Limited Company after obtaining Director Identification Number. However, at least, one Director on the Board of Directors must be a Resident India.

4) There is a minimum of two shareholders required to start a Private Limited Company and the number can extend maximum from fifty to two hundred beyond which is not permitted.

5) A minimum of two directors are required to establish a private limited company and the maximum amount cannot exceed beyond fifteen.

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