A Private Limited Company is a privately maintained small business existence, which is one of the highly recommended means to start a business in India. The private limited company is governed by the companies act 2013. 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 public ally traded.
No Hidden Cost
Limited Liability:
The responsibility of the members of a private limited company is restricted to their share only as the private limited company is a separate legal entity.
Separate Legal Entity:
A private limited company is a separate legal entity which possesses all the rights to sue or to be sued. It acts an artificial person which can buy a property on its own name.
Creditability:
A registered private limited company increases the credibility of your business.
Raising of Funds:
A private limited company can obtain funds from various source such as the debentures, stockholders.
Expansion of Business:
Companies attract Foreign Direct Investment which can help the company to expand and diversify their business.
Existence of Company:
Private limited companies are considered as separate legal entities and are separate from the existence of their owners which means they cannot be dissolved or end because of the death, retirement or insanity of any of their member/ director/ shareholder.
Ownership:
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.
Minimum number of Shareholder:
For a private company, a minimum number of required shareholders is 2, whereas, for a public company, you require a minimum of 7 shareholders.
Confidential:
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.
Self-Attested documents required of Directors /Subcribers
1. Corporate Stationery:
The Company must obtain the corporate stuff to use in company compliance matters.
2. Name Board:
Companies are required to affix the name of the Company and location of its registered office outside each office.
3. Letterhead:
Companies must publish the name and registered office address of the Company on all letterhead, receipts, announcements and other official records of the Company.
4. Share Certificates:
Companies must address share certificates to all the contributors within two months from the date of establishment.
5. Statutory Register:
All companies need to maintain a statutory register for the Company containing information like a register of members, list of directors, charges, debentures and other matters about the shareholders and administration of the Company.
6. Commencement Certificate
Company needs to comply with form 20-A within 180 days from the date of incorporation.
7. Appointment Of Auditor:
Subsequent to company incorporation, it requires the Board of Directors to designate the first auditor of the Company, a Chartered Accountant within 30 days of incorporation
According to the Companies Act, 2013, a Company is an association of people which is formed and registered under this Act or any previous company laws. A company is a separate legal entity which is different from its shareholders. It is an important feature of Company that there is a difference between people who have control over the affairs of a Company and the people who actually own it.
Steps to be taken to get a new company incorporated:
Selection of a suitable name:
Select, in order of preference, at least one suitable name upto a maximum of six names, indicative of the main objects of the company.
Ensure that the name does not resemble the name of any other already registered company and also does not violate the provisions of emblems and names (Prevention of Improper Use Act, 1950) by availing the services of checking name availability on the portal.
Application to concerned ROC:
Apply to the concerned ROC to ascertain the availability of name in eForm1 A by logging in to the portal. A fee of Rs. 500/- has to be paid alongside and the digital signature of the applicant proposing the company has to be attached in the form. If proposed name is not available, the user has to apply for a fresh name on the same application.
After the name approval the applicant can apply for registration of the new company by filing the required forms (Form 1, 18 and 32) within 60 days of name approval
MOA & AOA:
Arrange for the drafting of the Memorandum and Articles of Association by the solicitors, vetting of the same by RoC and printing of the same.
Arrange for stamping of the memorandum and articles with the appropriate stamp duty.
Get the Memorandum and Articles signed by at least two subscribers in his/her own hand, his/her father’s name, occupation, address and the number of shares subscribed for and witnessed by at least one person.
Ensure that the Memorandum and Article is dated on a date after the date of stamping.
Filing of the Forms & Documents:
Login to the portal and fill the following forms and attach the mandatory documents listed in the eForm
Submit the E-Forms after attaching the digital signature pay the requisite filing and registration fees and send the physical copy of Memorandum and Article of Association to the RoC. After processing of the Form is complete and Corporate Identity is generated obtain Certificate of Incorporation from RoC.
Here are the various types of the companies you can register in India.
Follow the simple steps to register your Private Limited Company:-
Step 1: Obtain DSC (Digital Signature Certificate)
Step 2: Apply for DIN (Director Identification Number)
Step 3: Reserve your unique Name
Step 4: Form SPICe (INC-32)
Step 5: e-MoA (INC-33) and e-AoA (INC-34)
Step 6: PAN and TAN Application
Know in detail about the registration process
Registering a company under startup India movement as startup company is very Simple and online process. For that you need to follow the following procedure.
1. Incorporating the business
You must first incorporate the business as a Private Limited Company or a Partnership firm or a Limited Liability Partnership.
You have to follow all the normal procedures for registration of any business like obtaining certificate of Incorporation/Partnership registration, PAN and other required compliance.
2. Register with Startup India
Then the business must be registered as a startup. The entire process is simple and online. All you need to do is log on to the Startup India website and fill up the form with details of your business and upload certain documents.
Applying for Company’s name is an easy two-step process:
Selection of a suitable name:
Select, in order of preference, at least one suitable name upto a maximum of six names, indicative of the main objects of the company.
Ensure that the name does not resemble the name of any other already registered company and also does not violate the provisions of emblems and names (Prevention of Improper Use Act, 1950) by availing the services of checking name availability on the portal.
Application to concerned ROC:
Apply to the concerned RoC to ascertain the availability of name in eForm1 A by logging in to the portal. A fee of Rs. 500/- has to be paid alongside and the digital signature of the applicant proposing the company has to be attached in the form. If proposed name is not available, the user has to apply for a fresh name on the same application.
You need the following documents to register your Company.
Once you have these documents you are ready to roll your sleeves and get ready to be incorporated.
MOA stands for Memorandum of Association whereas AOA means Articles of Association. Both these documents act as an important source of information for various shareholders and other stakeholders associated with a Company.
MOA reveals the name, aims, objectives, registered office address, clause regarding limited liability, minimum paid up capital and share capital of the Company. In short, it explains the relationship of a Company with the outside world.
AOAs are the necessary documents to be submitted when the company is incorporated with the Registrar of Companies (ROC). When AOAs are in conjunction with the MOA, they are called the Constitution of the Company.
DSC stands for Digital Signature certificate. DSC is the digital equivalence of physical papers or certificates. It is needed to file the form electronically with the concerned department. For the purpose of Company Registration of a private company, DSC for one of the Directors is required.
DIN, Directors Identification Number, is actually an identification number issued to a Director or a prospective Director of a Company by the Ministry of Corporate Affairs, Government of India. The concept of DIN was introduced for the first time when Sections 266A and 266G were inserted in Companies Act.
To obtain a DIN, one needs to make an online application to the Ministry of Corporate Affairs and submit the required documents related to Identity and Address Proof. Once the Ministry verifies these documents, the DIN will be allotted to the person
The DPIN (Designated Partner Identification Number) used for identifying a designated partner in a Limited Liability Partnership (LLP) firm, is equivalent to the DIN (Director Identification Number) of a director of a private or public limited company. Both of these identifying numbers are issued by the Ministry of Corporate Affairs (MCA), Govt. of India.
Following the below given steps, you can check the status of the company registration.
Step 1: Go to the MCA website.
Step 2: Go to ‘MCA Services’ tab. In the drop-down click on ‘View Company/LLP Master Data’
Step 3: Enter the companies CIN. Enter the captcha code. Click on ‘Submit’
Now you will be able to view the exact status of your registration process
Let’s see how Company formation puts you at an advantageous position.
Yes, Company Registration process in India is completely online. Today, company registration and other regulatory filings are paperless; documents are filed electronically through the MCA website and are processed at the Central Registration Centre (CRC), a dedicated back office for Company and LLP Registration process.
Upon completing all registration formalities, the Registrar of Companies’ issues a digitally signed Certificate of Incorporation (COI). Electronic certificates issued by the ministry can be verified by all stakeholders on the MCA website itself.
Yes, Rule 27 of Companies (Management & Administration) Rules 2014 says that A Listed Company or a Company having more than 1000 Shareholders shall maintain Records in electronic Format. However all the other Companies are required to maintain statutory records in the form of registers, minutes etc. throughout its life
When you register a Private Limited Company, the promoters of your Company need to decide on the amount of authorized capital and the share value they will get in return if they invest in your Company.
Authorized Capital or Registered Capital is the maximum ceiling limit of the capital up to which a Company can issue shares and collect money from its shareholders. The authorized capital can also be enhanced by passing a resolution at a meeting of the shareholders.
The minimum Authorized Capital of a Private Limited Company is Rs. 1 lakh and the Ministry of Corporate Affairs charges an amount of Rs 5,000/- as fee for allotting this minimum authorized capital.
| Sr No. | Particular | Private Limited Company | Public Limited Company |
| 1 | Meaning | A private company is a company which is owned and traded privately. | Public Company is owned and traded publicly on the stock exchange. |
| 2 | Use of Suffix | Private Limited can be used after the private company name. (Example- ABC Private Limited). | Limited can use after the public company name (Example- ABC Limited). |
| 3 | Minimum Members | Minimum 2 members must be required to form a private company. | Minimum 7 members must be required to form a public company. |
| 4 | Maximum Members | The maximum limit of the member in a private company is 200. | There is no maximum limit of the member in public company |
| 5 | Minimum Directors | At least 2 directors are required in a Private company. | At least 3 directors are required in a public company. |
| 6 | Start of Business | The only certification of incorporation is required to start the business. | Certificate of incorporation and commencement of business is required to start the business. |
| 7 | Public Subscription of Shares | Public subscription of share is not allowed in private companies. | Public subscription of share is allowed in public companies. |
| 8 | Quorum at AGM | 2 members should be present personally at’ AGM. | 5 members should be present personally at AGM. |
| 9 | Statutory Meeting | The statutory meeting is Optional. | The statutory meeting is compulsory. |
| 10 | Issue of Prospectus | It is not required in a private company. | It is their mandate to issue the prospectus. |
| 11 | Shares Transferability | Transfer of share is restricted in private companies. | Share can be transferred freely in public companies. |
| 12 | Managerial Remuneration | Managerial remuneration can exceed 11% of the Net Profit. | There is no restriction is managerial remuneration. |
| 13 | Disclosure of Financial Report | There is no such obligation for a private company to disclose their financial results to the normal public. | A public company needs to disclose its financial reports quarterly and annual. |
| 14 | Size | Normally the size of a private company is small in comparison to the public company. But a private company also be a big company. | Generally, the size of the public company is very huge. |
| 15 | Funding | Private companies can raise funds through private investors | A public company can raise funds by issuing an IPO in the general public. |