A Private Limited Company is a common type of legal entity or company that is owned and operated by a minimum of 2 directors and 2 shareholders and one of its directors should be an Indian citizen. It is a separate entity that is privately held and is not allowed to freely transfer its shares to the public like public companies. All the profits and liabilities belong to the company and stakeholders cannot be held responsible for the debts incurred by the company. All the partners of the private limited company are responsible for the company’s loss and they are subjected to the losses depending upon the number of shares held by them. Millions of Indian entrepreneurs and popular startups today prefer to register as private limited companies.
What is Private Limited Company Registration?
Private Limited Company registration is an essential step to start any new venture because it provides authenticity to the proposed business structure. Besides, private limited company registration in the long run also provides advantages like registering in a hassle-free manner and an easy dissolving process. Private Limited Company registration is a popular way to start a business in India and is registered with the Ministry of Corporate Affairs under the Companies Act 2013. Any company can register itself as a private limited company online in less than 10 days with the help of online legal assistance companies like UComply.
Benefits of Private Limited Company Registration
Companies registering themselves as a private limited company in India are going to enjoy a large number of benefits such as:
Separate Legal Entity in the Eyes of the Law
In a private limited company, members and shareholders are completely different entities according to the Indian constitution. None of the members or directors will be liable to pay the company liability and the company will only be responsible for its debtors, creditors, assets, and liabilities.
Raise Fund Easily
A private limited company can raise funds in multiple options like from shareholders, venture capital funds, investors, angels, private equity funds, foreign funds, banks, NBFCs, and other financial institutions. A company can only raise debt and equity funds from investors that allow them to expand and limits their personal liability.
Limited Liability of Shareholders
All the shareholders and partners of the private limited company have limited liabilities that basically depend upon their capital contribution commitment. The personal assets of the shareholders are protected from any major loss or debt in the businesses.
A private limited company will stay a legal entity until it is legally dissolved or shut down. As such, the company is a separate legal entity, its existence remains unaffected even after the death or departure of any member. There may be a change in the existence of the company but its existence will continue.
Starting a Private Limited Company Will Need Money
Starting a new private limited company in India is undoubtedly exciting but at the same time scary because of the huge investment. Investment in any business is a vital ingredient that decides the fate of the business. As per company law 2013, there is no minimum capital required for incorporating a private limited company, and a private limited company can be started with 0 paid-up capital. A private limited company in India can be started with a very minimum amount of capital, as there is no fixed amount. The shareholders of the incorporated company can determine the capital they wish to contribute to starting the company.
Essential Compliances for a Private Limited Company
A private limited company registered in India needs to comply with certain compliances from time to time to avoid penalties and prosecution. Following are some of the compliances that a private limited company has to comply with:
All persons holding a Director Identification Number that is allocated at the time of incorporation of a private limited company should every year complete KYC to validate the phone number and email address on file with the Ministry of Corporate Affairs.
Appointment of the Auditor
A company registered as a private limited company should appoint its first auditor within 30 days of the incorporation of the company. The first auditor should be appointed for five years and the appointment should be filed before RoC.
The company should have a registered office
All private limited companies in India should maintain a registered office in India and the office must have a board with the name of the company. The office should be in a place where notice or communication can be served if required, so the registered office cannot be vacant land or under construction premises.
Commencement of Business
The private limited company within 180 days of incorporation should open a bank current account and the shareholders must deposit the subscription amount mentioned in the MOA of the company. Thus, if the company was to be incorporated with a capital of 1 lakh, then shareholders must deposit Rs 1 lakh in the company’s bank account. The company must file the bank statement with the MCA to obtain the commencement certificate.
MCA Annual Filings
All Private Limited Companies registered in India should every year file a copy of the financial statements with the Ministry of Corporate Affairs. MCA annual return consists of Form MGT-7 and Form AOC-4 which should be digitally signed by the Directors and a practicing professional.
Income Tax Filing
All Private Limited Companies should every financial year file an income tax return using Form ITR-6 before the due date. The company’s tax return should be digitally signed by one of the directors.
For a private limited company, at least two board meetings should be conducted and the 2 directors should be present at the meeting and the agenda of the meeting should be intimated to them at least 7 days before the meeting.
How Do I Form an Indian Private Limited Company?
- The private limited company first has to submit a name approval application to the Ministry of Corporate Affairs to reserve the name of the company.
- Digital signature for the Directors should be obtained by a Certification Authority in India by submitting a copy of the Director’s identity proof and completing a video KYC process.
- The company needs to apply for a director identification number that is allotted by the Ministry of Corporate Affairs. It is an 8-digit number allotted to the company’s director and it is a unique digital identity assigned to a director.
- After getting the approval of the company’s name, all required documents for the company registration should be sent to the Registrar of Companies which issues an incorporation certificate and sends a physical copy of the same.
- Next, the company needs to file a memorandum of association (MOA) and an article of association (AOA, as it is mandatory for registering a private limited company.
- The incorporation certificate will be issued by the Registrar of Companies along with a PAN and TAN. To acquire PAN and TAN, the company needs to register for GST and provident funds.
- The final step of the private limited company registration process is to open a bank account with the company’s name to carry out the company’s major transactions.
Documents Required for Online Private Limited Company Registration
Private Limited Company will require the following documents while registering online:
- Memorandum of Association
- Articles of Association
- Declaration given by the first director(s) and subscriber(s)
- Office address proof
- Utility bills copy
- Copy of incorporation certificate of foreign body corporate (if any foreign body is involved)
- A resolution passed by promoter company
- The first director’s (or directors’) interest in other entities
- Nominee consent
- Subscribers’ identity as well as address proof
- Nominee’s identity and residential address proof
- Applicant I, II, III identity and address proof
- In the event of a Chapter XXI resolution, unregistered companies must be resolved (Part 1) Companies
- Declaration in Form No. INC – 14
- Declaration in Form No. INC – 15
- Any optional attachments if required
Why UComply for online private limited company registration services in India?
UComply is a leading company offering a wide array of legal and taxation services along with support for starting or incorporating a company in India. India’s leading platform is dedicated to helping companies easily start and grow their businesses at an affordable cost. If anyone is looking for online private limited company registration services in India, then UComply will help them to register as a private limited company without any hassle or inconvenience. Some of the reasons that have made UComply India’s largest business service platform include:
- Provides smooth and simple online private limited company registration services
- Guides through every step of registration to ensure that you apply with all the essential documents that are required for company registration
- Help you in picking a unique name for the company
- Legally guide you throughout the process so that your registration is not rejected
- Knowledgeable team of experts who are proficient in handling the company registration process
How long does it take to set up a private limited company in India?
Ministry of Corporate Affairs has now eased the process of online registration and now it has become easy for anyone to register a private limited company in India. However, one will need to have all essential documents in place and must select a unique name for the company, after this, it can take anywhere between 12-15 days to formally register a private limited company in India.
Is the physical presence of the Director required for a private limited company registration?
The government of India has now given the option to online register a private limited company without the need for the physical presence of the Directors. The entire process is carried out online and the scanned copy of the required documents needs to be provided after which the company will be successfully registered as a private limited company. The online application is made at the MCA portal and can be remotely applied.
What if your company name is already registered by some other person?
The list of the names of the registered company is maintained by the Ministry of Corporate Affairs. You will have to access that directory to check whether that name is already registered. If the company name is already there then you will have to choose a different name and make another application for a different name that is previously not registered.
Can foreign nationals register a private limited company in India?
Yes, NRIs or foreign nationals can register a private limited company in India as per the Foreign Direct Investment norms set by the RBI. However, as per incorporation rules, the private limited company requires to have one Indian national as the company’s Director.