A Private Limited means two or more person comes together to do business. It is a famous and recommended way to start a business in India. In this type of structure, a small number of members retains the ownership. The biggest advantage of this type of business is that the Liability of the members is limited to the extent of their contribution to the capital. There are a few more advantages which are described in the next segment.
As per Section 2(68) of the Companies Act, 2013, A Private Company means its Articles restrict its number of members to two hundred except One Person Company (OPC); restrict the right to transfer its shares, and prohibit invitation to the public to subscribe any securities of the Company.
Furthermore, a Private Company whose paid-up capital does not exceed 2 crores or turnover exceeds 20 crores are classified as a Small Company. For small companies, the cost of maintenance and compliances are less, moreover, the Companies Act has provided fewer advantages and exceptions to them.
- A Company continues its existence despite the Death, Bankruptcy, and Change in ownership of the Company;
- Separate identity from the owners or persons managing and controlling it;
- The Liability of the members is limited to the extent of their contribution to the share capital;
- The Company can quickly raise money through Bank loans or by further allotting shares;
- Fewer chances of a hostile takeover;
- Share is not freely transferrable to the Public;
- Lesser compliance than Public Limited Company; /li>
- Right to initiate any legal proceeding against the other party;
- The Liability of the members will not extend to their personal assets;
- Various tax advantages, such as a tax on the distribution of dividends, are less;
- No requirement for a minimum amount of investment to start the Company.
Documents and information required: -
- Passport size photograph of all the proposed Directors;
- Self-attested copy of pan card and aadhaar card of all the proposed Directors;
- Self-attested copy of bank statement/ telephone bill/ gas bill (anyone) of all the proposed Directors;
- Self-attested copy of passport/ driving licence/ voter card (anyone) of all the proposed Directors;
- Active email addresses and contact numbers of all the proposed Directors;
- Active email address and contact number of the proposed Company;
- Educational qualifications and staying period at the present address of all the proposed Directors;
- Unique name and objects of the proposed Private Limited;
- Total contribution and sharing ratio of the proposed Private Limited;
- Registered office address proof (If owned - Latest utility bill and NOC) (If rented - Rent agreement, Latest utility bill and NOC from landlord)
A Private Company needs a minimum of two directors and shareholders. Furthermore, there is no requirement for minimum authorized and paid-up capital to incorporate the Company. The procedure for incorporation of a company is mentioned below:
Step 1: Digital Signature Certificate (DSC)
The persons intending to incorporate the Company must have a DSC to file e-forms under the Companies Act. It can be applied by us if you do not possess the same.
Step 2: Director Identification Number (DIN)
As per the governing law, the persons proposing to form a Company must have a valid DIN. DIN can be applied while filing incorporation forms if the person doesn't have the same.
Step 3: Form Spice+ Part A for Name Availability of the Company
The Company's proposed name would be filed with the Ministry of Corporate Affairs (MCA) in the form Spice+ Part A along with a fee of ₹1000/-. The Spice+ Part A form can be filed either individually or with Spice+ Part B along with incorporation documents. The approved name will be reserved for 20 days from the approval date. Such period can extend by paying an additional fee before the expiry.
Step 4: Form Spice+ Part B for Incorporation
As per the new rule, the DIN for new directors, company registration, the appointment of directors, intimation of registered office, application of PAN/TAN/EPFO, professional tax and opening of bank account all should be filed together in a single form along with the prescribed fees. For filing the form, an attachment/ information’s of the E- AGILE Pro, E- INC-9, E-Memorandum of Association (MOA), E-Article of Association (AOA), and the Documents mentioned in the above segment are required.
E- AGILE Pro form is filed for applying PAN, TAN, EPFO, ESIC, GST, Professional Tax Registration (For Maharashtra only), and Opening of Bank Account of a proposed Company. All the registration is mandatory to be applied in Spice+ form except GST, which can be applied separately after the incorporation of a Company. Currently, Punjab National Bank, HDFC Bank, SBI Bank, Kotak Mahindra Bank, ICICI Bank and some other banks has been associated with Spice+ form for bank account opening.
Step 5: PAN/TAN
As per the new rule, the Certificate of Incorporation of the Company mentioned the PAN/TAN of the Company. PAN &TAN is mandatory to apply while filing incorporation documents with Ministry of Corporate Affairs (MCA).
Step 6: EPFO, ESIC & PROFESSIONAL TAX
As per the new rule, EPFO, ESIC and PROFESSIONAL TAX (Only applicable in Karnataka and Maharashtra) numbers are auto-generated by the respective department after the registration of the Company with the Ministry of Corporate Affairs (MCA). You will get registration certificates on registered email address.
Step 7: BANK ACCOUNT
The bank account number will be generated by the respective bank which was selected at the time of Incorporation after Company Registration. Bank will activate your account after completing the verification process.
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