A private limited company is a type of privately held small business entity, in which owner’s liability is limited to their shares. The firm shall have a minimum of two members and may have a maximum of 50 members, and the shares of such entity are prohibited from being publicly traded. A company becomes an independent legal structure when it is incorporated.

Private Limited Company registration in India is conducted by the Ministry of Corporate Affairs under various provisions of the Companies Act, 2013. It is an independent corporate structure where the owner’s liability is limited to their shares in the company. The director of a Private Limited Company has limited liabilities to the creditors i.e; in case the director is unable to repay the debts, the banks/ creditors can only sell the company’s assets but not his personal property.

So if you wish to start your own company, then registering your company as a Private Limited Company should be your foremost priority. It is much preferable as it is easy to incorporate and easy to dissolve as well also it allows outside funding to be raised, there is Limited liability of the shareholder and allows them to offer ESOs to pull in great talent.

A natural person can be a director and as well as shareholder, whereas a corporate legal entity can only be a shareholder. In addition to that, foreigners/ NRIs are also allowed to be the Directors and/or Shareholders of a Company with Foreign Direct Investment, to help it in its expansion plans.
 

Why should you form Private Limited Company?

1. Separate Legal Entity: A Private Limited Company is an independent legal entity and is separate from all its juristic members (Shareholders/Directors) 

2. Unceasing existence: A Private Limited Company has 'perpetual succession' or uninterrupted existence until it is legally dissolved. A company is an individual entity, is not affected by the death or departure of any of its member and continues to exist irrespective of the changes in ownership.

3. Limited Liability: The partners in a Private Limited Company are not personally liable for all the debt raised.  In a company, the amount invested in starting the business would be lost and the personal assets of the directors would be safe.

4. Increased Borrowing Capacity: A Private Limited Company can issue equity shares, preference shares, debentures and accept the deposits with RBI permission. The Banks and Financial Institutions prefer to provide the funding to a company rather than the partnership firms or proprietary concerns.

5. Easy To Transfer: Ownership of a business can be easily transferred to a company by transferring its shares. The signing, filing and transfer of a share transfer form and a share certificate are sufficient to transfer ownership of a company. In a private limited company, the consent of other shareholders might be required to effect share transfers.

Procedure for Registration of Private Limited Company

Step 1
One director must apply for the Digital Signature Certificate (DSC), which is necessary to apply for the company registration documents. For this, you will only need to provide a few scanned documents and details;.

Step 2
As soon as we apply for the DSC, we will ask you to pick a name for your company and send us some scanned documents regarding it and its directors. These will be used to file SPICe i.e. INC-32 and the Memorandum of Association (MoA) and Articles of Association (AoA). The Certificate of Incorporation will be approved at the end of this process.

Step 3
Every company needs a registered Permanent Account Number (PAN) and Tax Account Number (TAN). We will make the application online ourselves, but you will need to courier hard copies of the required documents yourself. The PAN and TAN will be couriered to your registered office address within 21 working days
 

Documents Required for Registration of Private Limited Company

• Copy of PAN Card of directors & shareholders ( Notarised Passport Copy for Foreign Individuals )
• Passport size photograph of directors
• Copy of Address Proof of Directors & Shareholders (Aadhaar Card/ Voter identity card)
• Copy of Rent agreement (If rented property)
• Electricity/ Water bill (Business Place)
• Copy of Property papers(If owned property)
• Landlord NOC (Format will be provided)
• Signed Incorporation Documents ( Signed Digital Signature Application Documents in Hard Copy And Other Incorporation Documents Signed & Uploaded As Soft Copy )
 

What is included in our package?

1. DIN of 2 directors
2. DSC for 2 directors
3. Name search and approval
4. MOA/AOA
5. ROC fees and PAN card
6. Registration of the Company With The Relevant Authorities.

You May Also Want To Know

1. Who can be a member of Private Limited Company?
Any individual/organization can be a member of a Private Limited Company including foreigners/NRI’s. The individual must be over 18 years of age and must have a valid PAN card.

2. Is it necessary to have two directors for Private Limited Company registration?
Yes, a minimum of 2 directors for a Private Limited Company, the maximum number can be up to 200.

3. For incorporation of a Private Limited Company do I have to be present in person?
Since the procedure is entirely online, so you need not be present physically. You just need to send all the required documents via mail.

4. Can NRI’s/ Foreigners can become a director in a Private Limited Company?
Yes foreigner/NRI’s can become a director in a Private Limited Company. They can get a DPIN from Indian ROC. Also, they can be a majority shareholder in the company. But at least one director on the board of directors must be an Indian resident.

5. How much time is needed for setting up a private limited company in India? 
If you have all the documents in order, it will take no longer than a couple of days. However, this is dependent on the workload of the registrar.

6. What are the rules for selecting a name for a private limited company?
The Registrar of Companies (RoC) across India expects applicant to follow a few naming guidelines. Some of them are subjective, which means that approval can depend on the opinion of the officer handling your application. However, the more closely you follow the rules listed below, the better your chances of approval.
 
7. What documents are required to complete the process?
All directors must provide identity and address proof, as well as a copy of the PAN Card (for Indian Nationals) and Passport (for foreign nationals). No-objection Certificate must be submitted by the owner of the registered office premises.

8. What is a DSC?
The Digital Signature Certificate (DSC)  is an instrument issued by certifying authorities (TCS and n-Code are two of them) by which you can sign electronic documents. As all documents needed are electronic in nature and all partners are required to have a DSC.

9. What are the expenses that will be incurred to run a private limited company?
The cost of running a private limited company can be divided into four categories: 
1.    The cost of setting a private limited company, 
2.    The cost of accounting and auditing,
3.    The cost of compliance, and
4.    Miscellaneous expenses. 

10. Is it required to have a company's books audited?
Yes, a private limited company must hire an auditor, no matter what its revenues. In fact, an auditor must be appointed within 30 days of incorporation. Compliances are necessary for a private limited company, as non-compliance can incur penalties that may run into lakhs of rupees and even lead to the blacklisting of directors.

11. Are two directors necessary for a Private Limited Company Registration?
Yes, a minimum of two directors is needed for a private limited company. You can register as a One Person Company if you are the sole owner of Your Company.

12. What is the minimum capital needed to form a Private Limited Company?
One needs to start a company with a minimum capital of Rs. 100,000. However, you may show that the capital has been used as the pre-incorporation expenses of the start-ups instead of depositing the same at a bank.
For example private limited registration expenses, expenses incurred for furniture, computers, and other assets.

13. Can the director of a private limited company also be a salaried person?
Yes, a salaried person can become the director of private limited, LLP or OPC private limited company. One needs to check the employment agreement if that allows for such provisions.

14. Can the limited liability partnership (LLP) be converted to a Private Limited Company?
No, one cannot convert an LLP into a Private Limited Company as it is not governed by the provisions of MCA. As per the laws laid by the LLP Act, 2008 and the Companies Act, 2013, there are no provisions on conversion of the LLP into a private limited company. However, if one wants to expand their business they may register a new Private Limited Company with the same name. The LLP Company has to issue a no-objection certificate.

15. A Private Limited Company called a separate legal entity. Why?
A company is a separate legal entity and is treated as a distinct individual separate from its incorporators. It can own assets and have debts and can be treated as an individual in case of any legal action. The members (Directors/Shareholders/) of a company have no liability to the creditors in a case company is unable to pay the debts.

16. Can one register a Private limited Company on their home address?
Yes, one can register the company at their residential address. One requires submitting the utility bill copy of the same.

17. If there are no partners available, then can I register a family member as a partner in the company?
Yes, you can register a family member as a partner. At a later stage, one can change this or transfer the shares of the directors

18. Do you wish to convert an existing Private limited/unlisted public company into LLP?
Any private company that is willing to convert into an LLP needs to apply through Form 18 (Application and Statement for conversion of a private company/ unlisted public company into limited liability partnership (LLP). Form 17 needs to be filed along with the Form 2 (Incorporation document and Subscriber's statement). 

19. Other concerns regarding A Private Limited Company:
•    A Private Limited Company needs a few more ROC compliance translating into an additional cost of 5000 to 10000/annum.
•    The minimum capital required is Rs.100,000.
•    A Private limited company can have a maximum of 200 members.