What is a Private Limited Company?

A private limited company is a business structure typically used by small businesses. In this format, ownership is restricted to a limited number of shareholders, capped at 200, and shareholders’ liability is confined to the value of their shares. Additionally, shareholders are prohibited from trading shares publicly.

What are the Advantages of Registering a Private Limited Company in India?

• Limited Liability to Personal Assets – 

In a private limited company, shareholders have limited liability. This means they are only responsible for the company’s liabilities up to the amount they invested. Their personal assets remain protected, as they are not required to use them to cover company debts.

• Separate Legal Entity – 

A private limited company is a distinct legal entity, separate from its owners and shareholders. As a result, the company manages its own assets, liabilities, and financial obligations. Creditors cannot pursue shareholders or directors to recover the company’s debts.

• Ability to Raise Capital – 

Despite additional compliance requirements, private limited companies are favored by entrepreneurs because they can raise funds through equity, which supports expansion while limiting personal liability.

• Credibility and Trustworthiness – 

Private limited companies in India are registered with the Registrar of Companies (ROC) under the Companies Act, 2013. Information about the company and its directors is accessible on the Ministry of Corporate Affairs (MCA) portal, enhancing the trustworthiness of this business structure.

• Continuity of Existence – 

A private limited company enjoys perpetual succession, meaning its existence is uninterrupted even if a shareholder or director exits or passes away. The company continues to operate regardless of membership changes.

Different Forms of Company Registration

Other types of company registrations include:

• Limited Liability Partnership (LLP) Registration
• One Person Company (OPC) Registration
• Partnership Firm Registration
• Proprietorship Firm Registration
• NGO Registration (Section 8 Company)

How to Register a Private Limited Company:

Here’s a step-by-step guide for registering your company as a private limited company:

Step 1: Obtain a Digital Signature Certificate (DSC)
A digital signature is required for filing online forms for company registration. All subscribers and witnesses of the Memorandum of Association (MoA) and Articles of Association (AoA) must have DSCs, which can be obtained from certified authorities.

Step 2: Apply for a Director Identification Number (DIN)
DIN is a unique number for individuals who wish to become directors. It can be acquired through either DIR-3 for existing companies or as part of the SPICe+ form during incorporation.

Step 3: Name Approval
You can reserve your company name through either Part-A of the SPICe+ form or by applying it along with the incorporation process. The name is reserved for 20 days, within which the company must be registered.

Step 4: File Form SPICe+ (INC-32)
This form is a comprehensive solution for company incorporation. It handles name reservation, DIN allotment, and incorporation, among other statutory requirements. Additional linked forms cover PAN, TAN, EPFO registration, and more.

Step 5: e-MoA (INC-33) and e-AoA (INC-34)
The e-MoA and e-AoA are electronically filed documents that outline the company’s charter and internal rules. Both must be signed digitally by the subscribers and are linked to the SPICe+ form.

Step 6: PAN and TAN Application
You can apply for the company’s PAN and TAN within the SPICe+ form. Once approved, the certificate of incorporation will be issued, along with PAN and TAN details.

Documents Required for Filing SPICe+ (INC-32):

For Indian Nationals:

• Affidavit from subscribers
• Proof of office address (rental agreement or ownership deed)
• Utility bills not older than two months
• Trademark documents (if applicable)
• NOC from the property owner (if applicable)
• Proof of identity and address (for subscribers without DIN)

For Foreign Nationals:

• Passport
• Address proof (e.g., driving license, residence card)

Time Required to Register a Private Limited Company

The registration process typically takes around 10 working days. With advancements in e-governance, company registration is now faster and more streamlined.

FAQ’s

What are MOA and AOA?

The Memorandum of Association (MOA), as defined under Section 2(56) of the Companies Act, 2013, serves as the foundation of a company. It outlines the company’s constitution, powers, and objectives.

The Articles of Association (AOA), defined under Section 2(5) of the Companies Act, specifies the rules and regulations governing the company’s management and operations.

Can a Private Company be Incorporated with a Residential Address?

Yes. The Ministry of Corporate Affairs (MCA) permits the use of a residential address as the registered office for a company. During incorporation, the company must provide proof of address, and this can indeed be a residential property.

Are PAN and Aadhaar Mandatory for Subscribers to the MOA and AOA?

No. According to the Companies (Incorporation) Third Amendment Rules, dated 27th July 2016, subscribers with a valid Director Identification Number (DIN) are not required to attach proof of identity and residence.

How Are PAN and TAN Communicated to the User Once SPICe INC-32 is Accepted?

Upon the acceptance of the SPICe forms, the Certificate of Incorporation (COI) is issued along with the PAN and TAN allocated by the Income Tax Department. The applicant receives an email containing the COI as an attachment, along with the PAN and TAN details. The PAN and TAN mentioned in the email are considered valid, as the requirement for a laminated PAN card has been discontinued.

 What is a Private Limited Company?
A Private Limited Company is a type of business entity in India that offers limited liability to its shareholders but restricts its ownership, making it ideal for small businesses and startups.

What are the prerequisites for registering a Private Limited Company?

• Minimum of two directors.
• At least two shareholders (can be the same as the directors).
• A registered office address in India.
• Unique name for the company.

What are the steps involved in registering a Private Limited Company?

• Obtain Digital Signature Certificate (DSC).
• Apply for Director Identification Number (DIN).
• Name approval through the RUN (Reserve Unique Name) service on the MCA portal.
• Drafting and submission of the Memorandum of Association (MoA) and Articles of Association (AoA).
• Filing of incorporation forms with the Registrar of Companies (RoC).
• Receipt of Certificate of Incorporation.

 How long does the registration process take?
The entire process typically takes 10 to 15 working days, depending on the availability of documents and the processing speed of the Registrar of Companies (RoC).

Can the company name be reserved before registration?
Yes, the company name can be reserved through the RUN (Reserve Unique Name) service before filing the incorporation forms.

What is a Digital Signature Certificate (DSC), and why is it needed?
A Digital Signature Certificate (DSC) is an electronic form of a signature used for signing documents online. It is required for signing the e-forms submitted to the Ministry of Corporate Affairs (MCA) during the company registration process.

What is the role of the Director Identification Number (DIN)?
The DIN is a unique identification number assigned to a director by the Ministry of Corporate Affairs (MCA). It is mandatory for anyone who wishes to become a director of a company.

Is it mandatory to have a physical office for registering a Private Limited Company?
Yes, a registered office address is required, but it doesn’t have to be a commercial space. A residential address can also be used as the registered office.

What are the compliance requirements after the company is registered?

• Appointment of an auditor within 30 days of incorporation.
• Holding the first board meeting within 30 days of incorporation.
• Annual filing of financial statements and annual returns with the RoC.
• Regular board meetings and maintaining minutes.

Disclaimer: The materials provided herein are for informational purposes only and do not constitute legal, financial, or professional advice. Consult relevant laws and experts before acting on this information. Neither the author nor K M GATECHA & CO LLP is liable for any inaccuracies or omissions. This material is purely educational and not an advertisement or solicitation.