How Can You Register a Pvt. Ltd. Company in India

How Can You Register a Pvt. Ltd. Company in India?

One of India’s most popular business structures is the Private Limited Company (PLC). A PLC is a business structure where private ownership is allowed. These companies can issue the shares but not through an Initial Public Opening (IPO) and the shares cannot be traded publicly.

Pvt ltd company registration

A private limited company is responsible for the profits and losses and you are not personally responsible for them. It is a preferred business structure by entrepreneurs because it allows them to raise funds via equity and limit their liability.

The advantage of a private limited company is that the liability of the shareholder is limited to the share they own. This means the liability to compensate for a company’s losses is limited to their shares and their personal assets are safe. Once you complete the Pvt. Ltd. company registration as per the Company Act 2013, it gets a legal existence and hence is considered trustworthy.

Characteristics of a private limited company

The characteristics of a private limited company are as follows:

  • To establish a company a minimum of 2 members are required and the maximum count of members is 200.
  • As the number of shareholders is less, the decision-making process is quick and smooth.
  • The company can have a minimum of 2 directors and a maximum of 15 directors.
  • The minimum paid-up capital of the company is Rs. 1 lakh or higher. There is no minimum capital required.
  • Since the public cannot subscribe to the shares of a private limited company it need not have a prospectus.
  • The shares of the company can be restricted as per the Articles of the company.
  • The term ‘Private Limited’ should appear at the end of the name of the company.
  • The shares of the companies are owned by the founders and the investors who can transfer and sell shares as they wish.
  • The company gets varied tax benefits like a lower corporate tax rate on the profits made.
  • This is a favored business structure because of its transparency.

Why should you register a private limited company?

There are several reasons to register a private limited company in India. The reasons are as follows:

  • The liability of the owners of the company is limited to the shares of the company they own. The owners are not responsible for the company’s debt.
  • The company exists as a separate entity from its owners and a change in ownership does not affect the existence of the company. It does not exist only when it is legally dissolved.
  • The company can sign a contract and conduct business. It can sue and can be sued in the courts of law.
  • The company can be managed by a Board of Directors and you can employ a professional team to manage the company.
  • The company can own assets and in the case of a business loss an outsider can claim the assets of the company and not that of the shareholders. A loss in the company will not affect the shareholder’s assets.
  • By registering a private limited company you can make your company credible. Because it has a legal existence it will be trusted.

Registering a private limited company in India

To get a company registered in India then follow this process:

  1. The company registration process can be done online completely. You will have to fill and submit forms and for this, you will need to sign the documents electronically. You will need a Digital Signature Certificate (DSC). You should get a digital signature from the certified authorities in India. Every director of the company will need a DSC.
Digital Signature Certificates
  1. The Ministry of Corporate Affairs issues the Director Identification Number (DIN) and every director of the company should obtain a DIN.
  1. The name of the company should depict the trade name, brand name or activity. The name of the company should be unique ending with the words ‘Private Limited’. The name should be in line with the guidelines issued by the Ministry of Corporate Affairs (MCA). The MCA approves the name of the company if there is no existing/registered company by the same name.
  1. You will have to provide information about the proposed business activities to be undertaken by the company. Company objects refer to the proposed business activity of the company. The name of the company should be in line with the objects of the company. The company objects should be stated in the Memorandum of Association (MoA). The MoA has to be digitally signed by the subscribers.
  1. The Articles of Association (AoA) should detail the rules that will govern the functions of the company. You will need to draft this and get it digitally signed by the subscribers.
  1. The company should have a registered office which is the correspondence address for all the communications of the company. Within 15 days of Pvt Ltd company registration, it should have a registered office for future correspondence. Within 30 days of incorporation, you will have to provide the permanent registered office address to the Registrar of Companies (ROC) along with the proof of address and a No Objection letter from the owner of the premises.
  1. Apply for registration by filing the SPICe Form (INC- 32) and providing the documents required. You will also have to apply for PAN (Permanent Account Number) and TAN (Tax Deduction Account Number) of the company. For this, you will have to fill Form 49 A and Form 49 B.
  1. After you apply it is checked by the Registrar of Companies (ROC). If the application is approved then you will get the Certificate of Incorporation. This certificate is issued in an electronic format and no physical certificates are issued. The ROC will also allocate the Corporate Identification Number (CIN) to the company so registered.

The members and the proposed directors of the company have to submit the documents for company incorporation. The identity proof and address proof are required. For identity proof, you can submit a PAN card, passport, driver’s license, Aadhar card, or voter identity card. For address proof, you can submit a telephone bill, electricity bill, bank statement or mobile bill.

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