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How to Incorporate Private Limited Company?

January 18, 2018

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Private Limited Company

What is Private Limited Company?

Private Limited Companies are those companies which are privately held by the people. Private company can be form by two persons. It has the various benefits limited liability, greater stability and a separate legal entity.

Characteristics:-

A number of directors– A private company needs to have only two directors. With the existence of 2 directors, a private company can come into operations.
Members– To start a company, a minimum number of 2 members are required and a maximum number of 200 members as per the provisions of the Companies Act, 2013.
Name– It is mandatory for all the private companies to use the word private limited after its name.
Limited Liability– The liability of each member or shareholders is limited. It means that if a company faces loss under any circumstances then its shareholders are liable to that extent for which they had already promised. The personal property or assets of the shareholders are not at risk.
Perpetual succession– Death, insolvency of any director or shareholder has no effect on the existence of the company. This leads to perpetual succession of the company. The life of the company keeps on existing forever.
Paid up share capital– THE COMPANIES (AMENDMENT) ACT, 2015 abolished the requirement of having a mandatory minimum paid-up capital of Rs 1 lakh.
Subscription of share- Private companies issued its shares through private placement.

Process of Registration of Private Limited Company:-

1. Obtain Digital Signature Certificate (DSC):The first and the foremost step is to obtain ‘Digital Signature’. The Companies Act, 2013 requires filing of certain documents along with the digital signature of Managing Director/ Director. Therefore, it has become necessary to obtain digital signature certificate (DSC) from an authorized authority.

2. Obtain Director’s Identification Number: Secondly, obtain a Director’s Identification Number (DIN). This is a mandatory requirement under section 153 of the Companies Act, 2013. All the persons proposed to be appointed as a Director should ensure that they have DIN No. as it has to be filed with the Central Government in the prescribed manner.

3.Name Approval: Thirdly, name of the company has to be decided. It should not be similar to any other company in the market and should not be of such a character so as to deceive customers. The name should not include words like ‘Bharat’, ‘Hindustan’ etc. as they represent government entity or a public entity. After deciding the name of the Company, the same should be approved by the Registrar of Company (ROC). If the ROC does not approve, then other name is to be decided; and if it is approved then, further move on to make Articles of Association.

4. Draft Memorandum of Understanding and Articles of Association: Fourth step is to prepare Memorandum of Association and Article of Association. They form the constitution and by-laws of the Company respectively. They are the most important documents required during registration of the Company. They are the Charter and the internal rules and regulations of the Company. It must be drafted with utmost care and with the advice of the experts for registration, and thereby to obtain a certificate of incorporation. After all the documents are approved by the ROC, the company is registered with Ministry of Corporate Affairs.

After complying with the above four requirements, one can apply for Certificate of Incorporation. The basic requirements of digital signature certificate, director’s identification number, approval of name by ROC and Memorandum of Understanding (MOU) and Articles of Association (AOA), must be fulfilled.

Advantages-:

The company has a separate legal entity.
You can open private company with two directors.
Private limited companies enjoy tax advantages.
A company being a separate legal person, is unaffected by the death or other departure of any member and continues to be in existence irrespective of the changes in ownership.
In a private company there are a lesser number of people to be consulted.
A private company is required to perform lesser legal formalities as compared to a public company.
A private company is not required to publish its accounts or file several documents.

Minimum requirement for private limited company registration:-

Minimum 2 Members and Maximum 200 members.
Minimum 2 Directors
DPIN for all Directors
At least one designated partner should be an Indian Resident

FAQ

What do we mean by separate legal entity?

A company has its own identity. It includes opening of a bank account, hiring of employees, obtaining licenses. The members of a company have no personal liability to the creditors of a company for company’s debts. The IBR plan considers your adjusted gross income, the size of your debt and the size of your family—and may lower your monthly loan payments, click here to learn more. And if you work in the public or nonprofit sectors, the Public Service Loan Forgiveness program may cancel your remaining debt (principal and interest) after 10 years and 120 qualifying payments.

How much time does it take to register a company?

It doesn’t take more than 15 days.

How many directors should be there to start a Private Limited Company?

There should be at least a minimum of 2 directors to start a Private Limited Company.

Do I need to physically appear before the registrar for processing my application?

No, You simply have to send us all the scanned copies of the required documents.

5. What are the documents required for incorporating a Private Limited Company?

Self-attested PAN Card,
identity and address proof of the directors,
copy of Passport [for foreign nationals or NRI],
NOC from the owner for doing business will be required.

6. What is the capital required to start a private limited company?

You can start a Private Limited Company with any amount of capital. However, fee must be paid to the Government. There is no requirement to show proof of capital invested during the registration process.

What are the requirements to be a Director?

There are following requirement-

Age of director must be more than 18 years.
Director may be resident or non-resident of India. But, one Director on the Board of Directors must be a Resident of India.
How do I need to make payment?

Payment will be made online through secured payment gateway. A proper invoice will be sent to you with complete bank details and payment gateway option.

8. What is a Digital Signature Certificate?

A Digital Signature establishes the identity of the sender or signee electronically while filing documents through the Internet. Digital Signature is required for atleast one Directors of a proposed Company.

9. What is Director Identification Number (DIN)?

Director Identification Number is a unique identification number assigned to all existing and proposed Directors of a Company. It is mandatory for all present or proposed Directors to have a Director Identification Number. Director Identification Number never expires and a person can have only one Director Identification Number.

10. What is Memorandum of Association (MOA)?

MOA is a document which contains the aims and objectives of the company. MOA has to be drafted very carefully because in case company does not work according to MOA its registration may be cancelled.

11. What is the Article of Association?

AOA is a document which shows how directors and other officers are supposed to perform their function in regard to management of the company.

TO INCORPORATE PRIVATE LIMITED COMPANY CLICK HERE

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