Private Limited Company Registration
A private limited company is a type of business structure in which the liability of its members is limited to the amount of shares held by them. It is a separate legal entity distinct from its owners.
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A Private Limited Company (PLC) is a type of business entity that is privately held, meaning that its shares are not publicly traded. There are several benefits of forming a PLC:
Limited liability: The liability of the shareholders is limited to the amount of their investment in the company. In other words, the personal assets of the shareholders are protected in case of any financial losses or legal claims against the company.
Separate legal entity: A PLC is a separate legal entity from its shareholders. It can own assets, enter into contracts, sue and be sued in its own name.
Perpetual succession: The life of the PLC is not dependent on the life of its shareholders or directors. It can continue to exist even if the original members leave or die.
Ease of raising capital: A PLC can raise capital by issuing shares to its shareholders or by borrowing from financial institutions. This makes it easier for the company to expand its operations or invest in new projects.
Greater credibility: A PLC is seen as more credible and trustworthy than a sole proprietorship or a partnership. It is easier for a PLC to attract investors, customers, and suppliers, as they are more likely to have confidence in a company that is registered as a PLC.
Tax benefits: A PLC is subject to corporation tax on its profits, which is typically lower than the personal income tax rates that apply to sole traders or partnerships. Additionally, certain expenses and allowances can be claimed as deductions to reduce the amount of tax payable.
Limited compliance requirements: Compared to a publicly traded company, a PLC has fewer compliance requirements, such as fewer disclosure obligations and less frequent reporting requirements. This can save time and resources for the company.
Overall, a PLC offers several benefits, including limited liability, ease of raising capital, greater credibility, and tax benefits. However, it also has some drawbacks, such as higher compliance requirements compared to a sole trader or partnership.
Here are the steps to register a private limited company in India:
Obtain Digital Signature Certificate (DSC): The first step is to obtain a DSC for the proposed directors of the company. A DSC is an electronic signature that is used to sign digital documents.
Obtain Director Identification Number (DIN): The proposed directors must apply for a DIN from the Ministry of Corporate Affairs (MCA). A DIN is a unique identification number allotted to each director.
Choose a unique name: Choose a unique name for the company and check its availability on the MCA website. The name should not be identical or similar to any existing company name or trademark.
File for Incorporation: File an application for incorporation of the company along with the necessary documents such as the Memorandum of Association (MOA) and the Articles of Association (AOA). The MOA defines the scope and objectives of the company, while the AOA defines its internal regulations.
Pay the fees: Pay the required fees for registration of the company. The fees depend on the authorized capital of the company.
Obtain Certificate of Incorporation: Once the application is processed and approved by the Registrar of Companies (ROC), a Certificate of Incorporation will be issued. This certificate confirms the legal existence of the company.
Apply for PAN and TAN: Apply for Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.
Open a bank account: Open a bank account in the name of the company and deposit the minimum required capital.
After completing these steps, the private limited company will be registered and can commence business operations.
To register a private limited company in India, the following requirements must be met:
Minimum two directors: A minimum of two directors are required for the registration of a private limited company. One of the directors must be a resident of India.
Unique name: The name of the company must be unique and not similar to any existing company or trademark.
Minimum capital: There is no minimum capital requirement for a private limited company in India. However, it is recommended to have a minimum authorized capital of Rs. 1 lakh.
Registered office address: A registered office address must be provided, which can be a residential or commercial address. The address proof must be submitted at the time of registration.
Digital Signature Certificate (DSC): At least one of the directors must have a DSC for filing the registration application.
Director Identification Number (DIN): All the directors must have a DIN, which can be obtained by submitting an application to the Ministry of Corporate Affairs (MCA).
Memorandum of Association (MOA) and Articles of Association (AOA): The MOA defines the objectives and scope of the company, while the AOA defines its internal regulations.
PAN and TAN: The company must obtain a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.
Fees: The prescribed fees must be paid for the registration of the company, which depends on the authorized capital of the company.
These are the basic requirements to register a private limited company in India. However, there may be additional requirements depending on the nature of the business and the state in which the company is registered.
To register a private limited company in India, the following documents are required:
Identity proof: Identity proof of all the directors and shareholders such as PAN card, Aadhar card, Passport, or Voter ID.
Address proof: Address proof of all the directors and shareholders such as Aadhar card, Passport, Voter ID, Driving License, or Bank Statement.
Registered office proof: Proof of registered office such as rent agreement or ownership document, along with a No Objection Certificate (NOC) from the owner.
Memorandum of Association (MOA) and Articles of Association (AOA): The MOA and AOA documents must be prepared and signed by all the directors and shareholders. These documents define the objectives, scope, and internal regulations of the company.
Affidavit and declaration: An affidavit and declaration must be signed by all the directors and shareholders, stating that they have not been convicted of any criminal offense and that the documents submitted are true and correct.
Certificate of Incorporation (COI) of the parent company: If one of the shareholders is an existing company, the COI of the parent company must be submitted.
Digital Signature Certificate (DSC): The application for registration of the company must be digitally signed by one of the directors with a DSC.
Director Identification Number (DIN): The DIN of all the directors must be obtained by submitting an application to the Ministry of Corporate Affairs (MCA).
What is a Private Limited Company?
- A private limited company is a type of business structure in which the liability of its members is limited to the amount of shares held by them. It is a separate legal entity distinct from its owners.
What are the Minimum Requirements for Private Limited Company Registration?
- You need a minimum of two directors and two shareholders (who can be the same individuals) to register a private limited company in India. There is no minimum capital requirement.
How Long Does it Take to Register a Private Limited Company in India?
- The registration process typically takes 15 to 30 days, depending on various factors such as document preparation, government processing time, and compliance.
What Documents are Required for Registration?
- Common documents include identity and address proof of directors and shareholders, a registered office address proof, and the company’s Memorandum of Association (MoA) and Articles of Association (AoA).
Do I Need a Digital Signature Certificate (DSC) for Registration?
- Yes, directors must obtain a DSC to digitally sign the documents required for company registration.
What is the Minimum Paid-up Capital Requirement?
- There is no minimum paid-up capital requirement for a private limited company in India.
Is There a Maximum Number of Shareholders Allowed?
- A private limited company can have a maximum of 200 shareholders.
Can a Foreign National or Non-Resident Indian (NRI) be a Director or Shareholder?
- Yes, a foreign national or NRI can be a director or shareholder in a private limited company, subject to certain conditions and compliance with Foreign Exchange Management Act (FEMA) regulations.
What Are the Annual Compliance Requirements for Private Limited Companies?
- Private limited companies in India must file annual financial statements and an annual return with the Registrar of Companies (ROC). Additionally, they must conduct an annual general meeting (AGM).
What is the Process for Changing Directors or Shareholders in a Private Limited Company?
- Directors or shareholders can be changed by following the prescribed procedures and filing the necessary forms with the ROC.
Can a Private Limited Company Convert into a Public Limited Company?
- Yes, a private limited company can convert into a public limited company by complying with the Companies Act and obtaining the necessary approvals.
What Are the Tax Implications for Private Limited Companies in India?
- Private limited companies are subject to corporate income tax. They must also comply with Goods and Services Tax (GST) and other applicable tax laws.
What are the Penalties for Non-Compliance?
- Non-compliance with the Companies Act and other applicable laws can result in penalties, fines, and legal consequences for the directors and the company itself.
Can I Register a Private Limited Company Online?
- Yes, the Ministry of Corporate Affairs (MCA) allows online registration of private limited companies through the MCA portal.
Do I Need Professional Help for Company Registration?
- While it’s possible to register a private limited company on your own, many businesses prefer to seek professional help from chartered accountants or company secretaries to ensure compliance and avoid errors.