Private Limited

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Private Limited
A Registration of Private Limited Company is one that has separate legal entities following the regular succession, with a benefit of limited liability for its shareholders.
How to register a Private Limited Company in India?
The basic process for registering a Private Limited Company in India is as follows:
1. Get Digital Signature Certificate (DSC)
2. Self-Attest the Documents for Private Limited Company Registration including AoA, MoA and utility bills.
3. File with form INC-32, this form has outlined for streamlining many processes including getting DIN, Name Reservation, Incorporation, PAN application, TAN number.
How much does it cost to get the private limited company registered?
The starting cost for private limited company registration is Rs.5,999/-. For more information contact our experts on 8750008881

Do Private limited Company benefits small business or startups?
Yes, small business and startups get benefits of getting themselves registered as a private company.
• The foremost advantage is of credibility and good reputation of the established business in the eyes of big finical institutions, clients and suppliers.
• The benefit is getting loans at least compliance from the clients or the banks while entering into the business.
What are the eligibility criteria to be a shareholder or director for a Private Limited Company?
The person should meet the conditions like the minimum age of the person should be 21 and resident or citizen of India to become a shareholder or director of the company.
Which documents are required for company registration?
Here is the list of documents you will require for the registration of private company:
• PAN card Address proof Identity proof of all the directors
• Rental Agreement (in case of rented place)
• NOC from the owner
• Copy of any utility bill Bank statement
• Photographs of all the directors
Which forms are required for Private Limited Company Registration?
Ministry of Corporate Affairs (MCA) has introduced :
• New SPICe INC- 32 Forms for faster company incorporation.
• Apart from this e-MoA(INC-33) and e-AoA (INC-34) are also to be filed.
DIN is Director Identification Number (DIN). Any person planning to become a director in a company must apply for a director identification number, issued by the Ministry of Corporate Affairs.
How much Capital is needed for a Private Limited Company Registration?
To start a private company, an amount reaches Rs 15,000 is spent on the ROC Compliances of the private limited company. It would hardly take Rs.40,000 to 50,000 to register a private limited company.
Is a foreign entity authorized to be the Director or shareholder of the private company?
Yes, every foreign nationals, entity or an NRI can become a director or shareholder of a private limited company in India.
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A private limited company is a company which is privately held for small businesses. The liability of the members of a Private Limited Company is limited to the amount of shares respectively held by them.Shares of Private Limited Company cannot be publically traded. Alll the aspects of Private Limited Company is discussed in the article.
Once a name for the company is decided, the following steps have to be taken by the applicant: 
Step 1: Apply for DSC (Digital Signature Certificate) and DIN (Director Identification Number)
Step 2: Apply for the name availability
Step 3: File the MOA and AOA to register the private limited company
Step 4: Apply for the PAN and TAN of the company
Step 5: Certificate of incorporation will be issued by RoC with PAN and TAN
Step 6: Open a current bank account on the company name
The requirements for private limited company registration are:
Members- A minimum number of two and a maximum number of 200 members or shareholders are required as per the companies’ act 2013 before registration of the company.
Directors- A minimum number of two directors is required for registering the private limited company. Each of the directors should have DIN i.e. director identification number which is given by the ministry of corporate affairs. One of the directors must be a resident of India which means he/she should have stayed in India for not less than 182 days in a previous calendar year.
Name- It is one of the major components of a private limited company. The name of the company contains three parts i.e. the name, the activity, and private limited company. It is necessary for all private companies to use the word private limited company at the end of its company name. Every company has to send 5-6 names for approval to the registrar of the company and all the names should be unique and expressive. The name for approval should not resemble with any other companies name. So choosing the right company name is an important component is it will stay with the company throughout its life.
Registered office address- While going for the registration of the company, the owner should provide the temporary address of the company until it does not get register. However when the company has been registered then the permanent address of its registered office should be suited with the registrar of the company. The Registered office of the company is where the company’s main affairs are been conducted and where all the documents are placed.
Obtaining a digital signature certificate- In today’s modern world everything is done online. All documents are submitted electronically and for that, every company must obtain a digital signature certificate which is used to verify the authenticity of the documents. A digital signature is obtained by all the directors which are marked on all the documents by every director.
Professional certification- In a company there are many professionals which have required for many purposes. For incorporating a private limited company certification by these professionals are necessary. Various professionals such as company secretary, chartered accountants, cost accountants, etc are required to make their certification at the time of company incorporation.
In a public company, regulation and ownership of shares can be sold to the public on an open market. On the other hand, in a private company, shares can be sold or transferred to other people by the choice of the owner. Shares of such companies are owned by founders, management, or a group of private investors. Shares here are not sold in the open market. Thus there will be less number of shareholders. This means less complexity and confusion in decision-making and management.
For a private company, a minimum number of required shareholders is 2, whereas, for a public company , you require a minimum of 7 shareholders.
Legal formalities are sometimes very expensive and time-consuming, aren’t they? If you’re planning to start a public company, you better be prepared because there is a long list of legal formalities for forming a public company. Private companies have a comparatively shorter list.
A public company is required to disclose their financial reports to the public every quarter, as it will affect public investment; private companies are not subjected to any such compulsion.
Management and decision-making become more complex and confusing in public companies as more number of shareholders is to be consulted. This complex procedure is eliminated in a private company as the number of shareholders is less.
Managers of Public companies are focused on increasing the value of shares, whereas managers of the private company are more flexible in the short term and long term business decisions.
Private companies are not pressurized by the stock market and you don’t have to worry about shareholder expectations and interference as long as they work within the law. Shareholders in public companies are focused on current earnings and they exert pressure on the company to increase earnings.
Managers of public companies are pressurized to increase earnings in the short term in order to increase the value of their stock. Private companies can focus on long-term earnings as such pressure is eliminated.
You will be needing a lot of money for a public company. A public company requires a minimum share capital of Rs. 5,00,000. For a private company, the earlier minimum number of the share capital was Rs. 1,00,000, but now there is no such minimum compulsion. Therefore there is no pressure of fund requirements.
It is obviously not appropriate, for competitors to know about your business secrets. Confidential information such as executive compensation, legal settlements, and other essential information cannot be kept reserved in public companies. Such information is more secure in a private company.
Therefore, a Private Limited Company is less complicated compared to a Public company. It is comparatively less expensive and less time-consuming.
For any further query about the company registration of Private Limited Company, feel free to contact us at LegalRaasta .
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By Ahmad Nasrudin · Updated on July 4, 2020
What’s it: A private limited company is a company whose shares are not listed on a stock exchange, have limited liability, and have a separate legal identity from the owners. Because they are not listed on a stock exchange, their shares are not traded to the general public.
A private limited company is common for a new company. They range from small to large-scale companies. Their initial capital may come from the owner’s money, the family, or from private equity.
When companies need additional capital to finance expansion, they can sell their shares to the public through the stock exchange. When done, the company turns into a public limited company. In addition, they can also raise funds by issuing debt securities such as bonds and medium-term notes.
Formally registered. Businesses are registered as formal legal entities and must have important documents such as articles of association and taxation.
Separate legal entity. This business organization has a separate legal identity from its owner. The company’s finances are separate from the owner’s personal finances. Likewise, legal disputes or corporate debt problems are not the responsibility of the owner as a person.
Owner. They are known as shareholders. The company has at least one shareholder. They may be individuals, trusts, associations, or other companies.
Limited liability. Shareholders have limited liability. The company’s debt is not their personal responsibility. Thus, when a company goes bankrupt or fails to pay its debts, shareholders have limited liability. Shareholders’ personal assets cannot be taken to pay off debts. They simply lost the capital they had invested in the business .
Ownership . The owner’s interest in the company is equal to the number of shares they own. If companies distribute dividends, they receive a percentage of their shareholding.
Operation. Shareholders appoint the Board of Directors to operate the business and act in their best interests. The Board of Directors is responsible for business operations and makes all business decisions. And, sometimes, shareholders also serve as directors.
Double tax. Shareholders pay taxes on their income. And, businesses also pay corporate taxes. So, there is double taxation.
Liability . Business organizations have limited liability. It allows protecting the owner’s wealth. In addition, the company’s debt is not their obligation as a person. So, they don’t have to sell their assets just to pay off the company’s debts.
Separate legal entity. Lawsuits against the company do not lead to lawsuits against shareholders because they are a separate legal entity from its owners.
Resource . Companies usually have a more organized business structure than a sole proprietorship.
Capital . In addition to capital injections from existing shareholders, companies can also sell shares or issue debt securities in the capital market. Thus, it is easier for companies to raise funds to support future growth. When a company sells its shares for the first time (called an initial public offering), it turns into a public limited company .
Continuity . The company continues to exist even when the shareholders change. Likewise, when a shareholder or director dies, it does not cause the company to die.
Control . The original owner can retain control. And their ownership is not diluted because the company does not sell its shares to the public through the stock exchange.
Confidentiality . The company has control over strategic and critical information such as financial statements. On the other hand, a public limited company must publish some such documents required by the regulator.
Establishment . These business organizations are more difficult to set up and require more paperwork and requirements. Thus, regulatory costs (legal and administrative) are also expensive. In addition, in some countries, obtaining legal formalities can be time-consuming due to acute bureaucratic problems.
Dividend . Shareholders may not earn income from dividends. The company may not distribute dividends and reinvest them into the business (known as retained earnings). So, no money goes to the owner.
Complexity . Business operations are more complex and involve a lot of documents, including standard financial statements and taxation.
Transparency. The public or regulators find it more difficult to obtain information about companies, such as their financial statements. Unlike a public limited company, a private limited company is not bound by rules to publish such information.
Conflict of interest. Directors may pursue their own interests and profits, ignoring the interests of the owners. That’s because the business decisions are under the directors, not the owners, in contrast to a sole proprietorship where the business decisions are in the owners’ hands. That can then give rise to agency problems.
Transfer of ownership . Old shareholders find it difficult to sell their shares because they are not publicly traded through the stock exchange. They can only sell their shares with the approval of other shareholders. Likewise, new shares issued cannot be sold on the open market.
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A Company is an association of persons who share common goals. Moreover, the owners of the company pool their resources to achieve their common goals. A private limited company is a closely held company with restrictions to issue shares to the public. Thus that it cannot go for an IPO or list their shares on the stock exchange for public trading of their shares.
Registration of a Pvt Ltd Company in India is regulated by the Companies Act, 2013, and administered by the Ministry of Corporate Affairs.
Private Limited Company has a minimum paid-up share capital of Rs. 100 thousand or such higher capital as may be prescribed under section 2 (68) of Companies Act, 2013; and by its Articles,-
1) restricts the right of transfer of its share;
2) except in the case of One Person Company , limits the number of its members to 200 not including:
a) persons who are employees of the company; and
b) persons, who have formerly been in the employment of the company, were members of the company and have continued to be members after the employment ceased
3) prohibits any invitation to the public to subscribe for any securities of the company.
A Private company becomes a “ small company “ in the following circumstances:
Note: None of the above is applied to a holding or subsidiary company.
A Private Company becomes a “small company” if the paid-up share capital does not exceed fifty lakh rupees and its average annual turnover during the relevant period does not exceed two crore rupees.
The main steps of incorporation are discussed below:
There must be at least two Promoters and at least two Directors . Promoters may be individual or body corporate who will promote/incorporate a company and Directors should be individuals. The individuals need to apply for DIN i.e. Director Identification Number in Form DIN 1 along with the prescribed documents.
Digital Signature is a must for any of the two Directors. There are a total of seven Certification Agencies authorized by the Controller of Certification Agencies to issue the Digital Signature Certificate.
The next step involves an application to the concerned Registrar of Companies (ROC) along with the prescribed documents and fees. The promoter can apply for six company names amongst which the ROC will approve only one. If the ROC rejects all the names, the applicant has another two chances to apply the name again with the same fees he has incurred.
After the name approval, the drafting of Memorandum of Association and Article of Association are drafted by the Directors/Promoters.
After the drafting of MoA and AoA , the Director will take the Professional Service i.e. from CA/ CS/ CWA to incorporate the company . E Forms 1, 18, and 32 are to be filed, Digitally signed by any One Director followed by Digital Signatures of Professional who certify that all the documents and information is correct one. Certificate of Incorporation will be generated, once the ROC approves the documents and Forms submitted. The Directors are to get the MOA and AOA printed and to comply with all the compliance after the company registration
Following are the documents that are generally required for Private Limited Company Registration
Passport size photograph of directors
Copy of Aadhaar Card/ Voter identity card of directors
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)
There are numerous benefits of a Private Limited Company Registration as compared to other forms of companies. A private limited company is the most preferred form of business entity for startups
Many start-ups register as a ‘Private Limite
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