What is a Private Limited Company?
93% of the companies established in India are registered as Private Limited. Private Limited companies as the name suggests have private ownership which means the public like us cannot buy the shares of the company nor we can invest into the company. A Private Limited company is identified by its name, number of members, formation, meetings, director’s shares etc… The Ministry of Corporate Affairs is the governing body in India which regulates all Private Limited companies.
There should be at least two members and should not exceed more than 200 members as per Companies Act 2013. For a private limited company there must be at least two directors. Private Limited companies must have a minimum 1 lakh rupees as capital.
Now looking forward to the legal terms, Section 2 (68) of the Companies Act, 2013 defines a 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; (iii) prohibits any invitation to the public to subscribe for any securities of the company.”
The documents needed to be submitted are given below-
· PAN Application
· TAN Registration
· E-forms must be filed with the Registrar of Companies (ROC)
· Director Identification Numbers (2 nos.)
· Digital Signature Certificates (2 nos.)
· Name approval including one re-submission (INC- 1)
· Drafting of MOA (Memorandum of Association) & Articles of Association (AOA)
· Issue of Certificate of Incorporation
· Involves Government Fees & Stamp duty up to Rs. 1 Lakh Authorized Capital
Directives to begin a Private Limited Company
Before it is incorporated, every business type has its own set of directives.
1. Members and directors:
To get itself legally registered, a private limited company must possess a minimum number of two and a maximum number of 200 members as mentioned above. As mandated by the Companies Act 2013, this is a statutory requirement.
The directors should fulfill the following conditions:
· All the directors must have a DIN (director identification number), which is given by the Ministry of Corporate Affairs
· must be a resident of India, which means one of the directors should have stayed in India for not less than 182 days in the previous calendar year
2. Name of the company:
Finding a name for the company is always a technical task. The below mentioned three activities is required for a private limited company to decide a name for itself:
· Main name
· Activity to be carried out
· Mention of ‘Private Limited Company’ at the end.
3. Registered office address:
After registering the company, the permanent address of its registered office should be filed with the registrar of the company. The company’s main affairs being conducted and all the documents being placed are in the registered office of the company.
4. Obtaining other documents:
Every company must obtain a digital signature certificate that is used to verify the authenticity of the documents for electronic submission of documents. Likewise, in a company engaging professionals for varied activities like secretary, chartered accountant, cost accountant, etc… The certifications by these professionals is also necessary.
Steps to register a Private Limited Company
After choosing a name for the company, follow the below-mentioned steps:
STEP 1: Make application for DSC (Digital Signature Certificate)
STEP 2: Make application for the DIN (Director Identification Number)
STEP 3: Request for the name availability
STEP 4: Register the EMoa and EAOA to file the private limited company
STEP 5: Request for the PAN and TAN of the company
STEP 6: RoC will issue the Certificate of incorporation with PAN and TAN
STEP 7: Start a current bank account on the company name
It is daunting to start a business in India, especially when it comes to all the legal activities that you are required to follow. However, reading all the above mentioned details about them might give you confidence to start your business as well as make it a success. Sticking on legal formalities is very essential for any business; knowledge and adherence to applicable laws is the first step to ensure easy business operations.
With this, you will be all ready to start your own private limited company. It is always recommended to approach the right people and make the best choice for fruitful growth.
