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HOW TO START A PRIVATE LIMITED COMPANY IN INDIA

To start a Business in India, we need to form a legal entity and there are a lot of ways to create or form an entity like a sole proprietorship, partnership, limited liability partnership, one person company, private limited company, public limited company or many more ways. A Private Limited is the most common and popular way to start a Business because the Government of India provides a lot of benefits to these types of entities.

To start Business as a Private Limited Company, we need to register our entity with the Registrar of Companies, the Ministry of Corporate Affairs. As per the provision of section 2 (68) of the Companies Act, 2013 Private Company means having a minimum paid-up share capital and some restriction on its articles of association i.e.

  • Restricts the right to transfer its shares;
  • Except in the case of One Person Company, limits the number of its members to two hundred;
  • Prohibits any invitation to the public to subscribe for any securities of the company;

TYPES OF PRIVATE LIMITED COMPANY

On the basis of member’s liability, Private Limited Company has three types:-

  • Limited by shares: The liability of the members is limited to the amount unpaid to the Company with respect to the shares held by them.
  • Limited by guarantee: The liabilities are limited to the amount they guarantee to pay in the event of a wound-up. The liabilities are limited to the amount the members are guaranteed to pay in the event of a wound-up.
  • Unlimited liability: The liability of the members is unlimited which means the personal assets of members can be attached and sold in the event of a wound-up of a company.

FEATURES OF PRIVATE COMPANY

  • Separate legal entity: The company registered under the law is an artificial person and separate from its stakeholders. The company can buy assets, things and file sue with its own name.
  • Perpetual Succession: The company is born through law and will die through law. So, the company will continue its existence until it is legally dissolved.
  • Easy to Raise Funds: There are a lot of ways and schemes to raise funds via a loan, issue securities and other instruments for a company.
  • Limited Liability: The best benefit of company registration is limited liability. Due to the provisions of the law, the liability of the stakeholders is limited.
  • Other Government Benefits: In India, Central and State governments providing a lot of schemes and benefits to registered entities like Companies and LLP. By forming Company we can take benefits of the Startup India program easily.

PRIVILEGES OF PRIVATE LIMITED COMPANY

As of now following are the provisions of the Companies Act, 2013 that are not applicable to Private Limited Company:

  • Private Companies are not required to appoint Secretarial Auditor.
  • Private Companies are not required to appoint a Woman Director.
  • Private Companies are not required to appoint an Independent Director.
  • Provision regarding rotation of directors does not apply to Private Companies.
  • The maximum Ceiling limit of managerial remuneration does not apply to Private Companies.
  • Private Limited Companies are not required to form Audit Committee, Nomination and Remuneration Committee and Stakeholder committee.

CONSTRAINTS OF PRIVATE LIMITED COMPANY

  • Securities of private companies are not freely transferable.
  • In Private companies, the number of shareholders, in any case, does not exceed 200.
  • Private Companies cannot issue prospectus.
  • Securities of a Private company are not listed on the stock exchange.
  • The public has little confidence in a private company because its affairs are unknown and it is not subject to strict control under the law.

REQUIREMENTS TO REGISTER A PRIVATE LIMITED COMPANY

  • Minimum Two Directors
  • Digital Signatures
  • Director Identification Number
  • Proposed Company Name, Capital Structure and Object Details
  • Registered Office Address Proof, Email Address and Contact Details
  • KYC of proposed Directors, Subscribers, Email Address and Contact Number
  • Some Other Documents and Information vary from case to case

PROCESS OF START PRIVATE LIMITED COMPANY

Step One (Start Private Limited Company)

Apply for Name Reservation/Approval by filing Spice+ Part A on the website of the Ministry of Corporate Affairs.

(Approx Government Fees Rs. 1000 and Approval Time – 1 to 2 Days)

Step Two (Start Private Limited Company)

Obtain Digital Signature Certificate (DSC)
Following are the documents required for obtaining a Digital Signature Certificate (DSC)

  • Passport size photo of the Directors (JPEG)
  • Self-attested Aadhaar card of the Directors
  • Self-attested PAN card of the Directors
  • Phone Number
  • Active E-mail ID

(Approx Fees Rs. 799 to 999 and Approval Time – 1 to 2 Days)

Step Three (Start Private Limited Company)

Preparation of Documents and Filing Spice+ Part B along with INC-9 and Agile Pro

  • DIR-2 (Consent Letter)
  • If the proposed Director having DIN then Interest in other entities
  • Rent Agreement, NOC from landlord to use the premises along with latest utility bill  (If premises is on rent/lease) (If owned then Utility bill and NOC)
  • KYC of Proposed Director and Subscribers along with Passport Size Photo in JPG/JPEG
  • Email Address, Contact Number and Educational Qualifications
  • If Directors don’t have DIN then additional proofs are required (ID – Voter Card/ Driving Licence/Passport; Address Proof – Telephone Bill/ Utility Bill/ Bank Statement/ Gas Bill)
  • Preparation of MOA object clause and addition/deletion of AOA clause as per requirement

After this, you can file all e-from and pay the requested fees to MCA.

(Government Fees vary case to case and state to state;  Approval Time 1 to 2 days)

Step Four (Start Private Limited Company)

After getting approval from the Registrar of Companies, the Ministry of Corporate Affairs we need to complete post incorporation compliances. You can check post incorporation compliances via this link.

Post-Incorporation Compliances


For more information, you can contact us anytime +91-9311911005/06 or visit www.crspl.in 


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