Introduction to Private Limited Company and its Characteristics
Private Limited Company is incorporated under the Companies Act, 2013 and governed by the Ministry of Corporate Affairs in India.
A person can be both a director and shareholder in a Private Limited Company. It can be registered with minimum of two directors and subscribers/shareholders.
Section 2(68) of the Companies Act 2013 describes private company as a company having a minimum paid-up share capital as may be prescribed, and which by its articles,—
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two hundred: Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:
Provided further that—
(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased, shall not be included in the number of members; and
(iii) prohibits any invitation to the public to subscribe for any securities of the company
Benefits of Registering a Private Limited Company
Limited Liability: In the case of companies that have been incorporated, none of its members is legally bound to contribute to anything more than the nominal value of shares held by the member which still remain unpaid. The advantage of having limited liability for its members is one of the major reasons for setting up an incorporated company.
Perpetual Succession: An incorporated company has the characteristic of perpetual succession. As the Companies Act states, ‘Members may come and members may go, but the company can go on forever.’
Capacity to Sue: As a separate legal entity, an incorporated company has the right to sue other people in addition to companies. Also, it can be sued by other companies and people.
Flexibility: The Private Company incorporated has an autonomy and independence to form its own policies and further, implement them.
Shares Transferability: The shares or other interest of any member in a company shall be movable property, transferable in the manner provided by the articles of the company. It serves the purpose of providing liquidity to the investors, it can be sold easily in the market or stock exchange.
Corporate Personality: An incorporated company is a legally recognised entity that exists separately from its owners and shareholders, has all the functions of an incorporated company and having perpetual succession and a common seal.
Step-by-Step Process for Private Limited Company Registration
Step 1: Reservation of Company’s Name under Spice+ PART A
The first and foremost step in the company registration process is reserving the name of the company. The applicants must provide two names in preferential order and must fill all the needed details. Once a name is approved after paying a fees of Rs. 1000, it’s reserved for 20 days within which the applicant must complete all the remaining steps required for company registration.
Step 2: Procuring Digital Signature Certificate
Once the company name has been approved by MCA and registered, the next step is procuring a Digital Signature Certificate for your private limited company. For e-Filing, Digital Signature Certificate is a mandatory requirement.
Step 3:Applying for Director Identification Number or DIN
A maximum of 3 DINs can be applied while incorporating a new private limited company. Director Identification Number or DIN is the unique identification number for Directors of a registered company.
Step 4:Filling of Form Spice+ Part B
Once the name is approved mini dashboard enables the option of applying for Spice + Part B which needs details of all the directors of the company and its authorised signatories, their address, mobile number, email id etc.
Step 5: Filling of Form AGILE PRO
The time correct Part B is submitted successfully on the portal, it enables all the other incorporation forms. AGILE PRO being one of them.
Step 6: Filling of Form INC-34 – e-AOA
This form is filled with alterations in some articles being 1, 26, 48, 60 and 76. The rest form being filled with details of all the directors and the professional being a company secretary or chartered accountant or cost accountant.
Step 7: Filling of Form INC-33 – e-MOA
The form is filled by adding the main objects and the ancilliary objects, all the necessary information, details of the directors as well as the details of the authorised signatories /professionals.
Step 8: Filling of Form INC-9
This is prefilled form after all the above forms are made with all the details, then this form is just needs to be downloaded.
Once all the forms are made the forms needs to be uploaded after affixing the Digital Signature Certificate and the procedure is completed by paying the fees.
Checklist of Documents Required for Incorporation
List of documents required for Incorporation of a Private Limited Company:
|Digital Signature Certificate (DSC)|
|1.||List of documents required for application of DSC:|
|a||Copy of Aadhar Card of the applicants for address proof|
|b||Copy of the PAN Card of the applicants for identity proof|
|c||Scanned passport size photograph of the applicants|
|d||E-mail ID of the applicants|
|e||Personal mobile number of the applicants|
|SPICe+ Part-A (Informations Required)|
|2.1||Class of Company|
|2.2||Category of Company|
|2.3||Sub-category of the company|
|2.4||Two proposed names of the Company|
|2.5||Main business Objects of the Company|
|2.6||Ancilliary Objects of the Company|
|2.7||In case the proposed Company is a subsidiary of any Company, Board Resolution for incorporation of the subsidiary company along with KYC of the director/authorized person signing the Board Resolution|
|2.8||In case the proposed name is registered trademark, No-objection certificate from trademark owner for using the trademark in the proposed name|
|SPICe+ Part-B Directors (Informations Required)|
|3.1||Copy of identity proof of the first Directors (any one)|
|a.||PAN Card (Mandatory)|
|c.||Voters ID Card|
|3.2||Copy of residence proof of the first Directors (anyone)|
|a.||Electricity Bill, not older than 2 months|
|b.||Mobile Bill/Telephone Bill, not older than 2 months|
|c.||Bank Statement, not older than 2 months|
|3.3||Director Identification Number (DIN) for the first directors of the proposed company, if obtained|
|3.4||Place of birth of the directors|
|3.5||Occupation of the directors|
|3.6||Educational qualification of the directors|
|3.7||Permanent address of the directors|
|3.8||Present address of the directors|
|3.9||For how many years the director is staying at the present address|
|3.10||Whether the proposed directors will be appointed as executive director or non-executive director|
|3.11||Contact details of the proposed directors (Mobile No. & E-mail ID)|
|3.12||Authorised Share Capital and its Bifurcation|
|3.13||Paid-Up Share Capital and its Bifurcation|
|3.14||E-mail ID of the Company|
|3.15||Copy of documents with regard to the correspondence address / registered office address of the proposed company|
|3.16||Copy of utility bill of the address proposed to be the registered office of the Company. (Should not be older than two months)|
|3.17||The bank in which Company would like to open its current account|
|3.18||Passport size photographs of the first directors|
|3.19||Contact No. of the Company for any correspondence|
Compliance Timeline for Post-Incorporation Activities
Subsequent to the company being incorporated successfully by way of the aforesaid procedure, a set of other compliances are also required to be fulfilled by the company.
|Within 30 days from date of incorporation||1st Board Meeting (that must entail the disclosure of interests by every director)|
|Post meeting, file MGT-14|
|At the First Board Meeting in which the person participates as a Director||Disclose his concern or interest in any company by filing Form MBP-1, to give notice to the Company|
|Within 30 days||Appoint the 1st Auditor till the conclusion of first AGM|
|Within 15 days of appointment of every auditor||Fill ADT-1|
|Within 30 days of incorporation||File the form INC 22 with the MCA to establish a registered office|
|As provided under applicable Shops & Establishment Act||File Form as per applicable Shops & Establishment Act|
|Within 2 months from date of receipt of application money||Allotment of shares|
|Within 2 months from date of incorporation||Issuance of share certificates as per Form SH-1.|
|Within 30 days from date of allotment||Form PAS-3 required to be filed (return of allotment) including list of allottees|
|Within 180 days, post depositing share capital money in bank account.||Form 20A: Declaration of Commencement of Business|
|Within one financial year||Minimum of 4 board meetings (with maximum gap of 120 days between 2 such board meetings)|
|At any time, post obtaining a Digital Signature Certificate||Form DIR-3 to be filed for the allotment of DIN number along with DIR-4|
|Within 1 month of receiving DIN||Intimate DIN to the Company|
|Within 15 days of receipt of information by the Director regarding allotment of DIN||Inform Registrar under Form DIR-3C|
|Within 30 days of creation of charge on any property, asset or any of its undertakings, tangible or otherwise, situated in or outside India||Inform Registrar under Form CHG-1 (For other than Debentures)
Form CHG-9 (For Debentures)
|N/A||Every Company must affix a board outside the office stating its name and registered office address.|
|N/A||Letterheads of the company with registered office name & address, Corporate Identification Number (CIN), telephone number, fax number, if any, e-mail and website addresses, if any, are required to be printed.|
Additionally, a Private Limited Company is also required to maintain various registers in the Forms provided on MCA.
Frequently Asked Questions(FAQs)
Q.What is the meaning of a Private Limited Company?
Ans.A Private Limited Company is a small company that is handled by a group of people privately. The liability of the members of a Private Limited Company is limited to the number of shares respectively held by them. Shares of Private Limited Company cannot be publicly traded.
Q.Is it possible for a small firm to register as a private limited company?
Ans.Yes, a small firm can register with the Indian government as a private limited company.It gives them credibility and a positive image of their company in the eyes of suppliers, future customers, and financial institutions.
Q.When should I file the Annual returns of my Private Limited Company?
Ans.Private Limited Companies are required to file their Annual Accounts and Returns disclosing details of its shareholders, directors etc to the Registrar of Companies. Such compliances are required to be made once a year.
Q.What is the minimum turnover and capital required for Private Limited Company in India?
Ans.There exists no bar on turnover or capital in a private Limited Company, unlike One person Company.
Q.How can I close my Private Limited Company?
Ans.Closing a private limited company can be a painful procedure as the incorporation of this company structure.Here are some of the ways by which you can close down your Private Limited Company legally i.e; Selling the Company, Strike off the Company, Voluntary Winding Up.
Q.Is registration necessary for Private Limited Companies in India?
Ans.Yes, Registration for a Private Limited Company is necessary as, without registration, there can be no existence of a company.
Q. How many maximum directors can a Private Limited Company have?
Ans.The Indian companies Act, 2013 states that A Private Limited Company in India can have a minimum of 2 directors and a maximum of 15 directors.
Q.Is it mandatory to add a Private Limited after the company’s name ex. XYZ Private Limited?
Ans.Yes, If your company is incorporated as a Private Limited Company, it is mandatory to add a Private Limited Company after the company’s name.
For any consultancy in the Formation of Private Limited Company ||
Contact 7840071184/ 8505999955/ [email protected]