Overview of Private Limited Company Registration in India.
Private Limited Company registration in India is a popular choice among entrepreneurs due to its benefits such as limited liability, separate legal entity, and ease of raising capital. This overview aims to provide a comprehensive guide to the process and requirements for registering a Private Limited Company in India.
A Private Limited Company is a type of business structure where the liability of the shareholders is limited to their shares’ value. It is governed by the Companies Act, 2013.
It must have a minimum of two shareholders and can have a maximum of 200 shareholders. The company’s shares cannot be publicly traded, and shares are not freely transferable without the consent of other shareholders. Key Requirements for Private Limited Company Registration:
- Directors: Minimum two directors are required, and one of them must be a resident of India.
- Shareholders: Minimum two shareholders are needed.
- Name Reservation: The proposed name must be unique and not similar to existing companies. It should comply with the naming guidelines prescribed by the Ministry of Corporate Affairs.
- Registered Office: A physical address in India must be provided as the registered office of the company.
Procedure for Private Limited Company Registration:
- Obtain Digital Signature Certificate (DSC): Directors must obtain DSC for filing forms electronically.
- Obtain Director Identification Number (DIN): Directors need to apply for DIN from the Ministry of Corporate Affairs.
- Name Approval: Apply for the company name reservation through the RUN (Reserve Unique Name) service.
- Drafting and Filing Documents: Prepare MoA, AoA, and other necessary documents, and file them with the Registrar of Companies (RoC).
Why is it necessary to choose the right business structure in India?
- Legal Compliance: Different business structures have different legal requirements. Selecting the appropriate structure ensures that you comply with all legal regulations, minimizing the risk of fines, penalties, or legal issues in the future.
- Tax Implications: Each business structure is taxed differently in India. For instance, sole proprietorships and partnerships are taxed based on the personal income tax rates of the owners, while companies are subject to corporate tax rates. Choosing the right structure can help optimize tax liabilities and maximize savings.
- Liability Protection: Some business structures, such as Limited Liability Partnerships (LLPs) and companies, offer limited liability protection to their owners. This means that the personal assets of the owners are protected from business debts and liabilities. Opting for such structures can safeguard personal finances in case the business faces financial difficulties or legal disputes.
Benefits of Private Limited Company Registration in India
Limited Liability Protection:
By registering a private limited company, the personal assets of the shareholders are protected from the company’s liabilities. This means that in case the company faces financial distress or legal proceedings, the shareholders’ personal assets are not at risk beyond their investment in the company.
Separate Legal Entity:
A private limited company is recognized as a separate legal entity distinct from its shareholders. This legal distinction allows the company to enter into contracts, own assets, incur liabilities, and sue or be sued in its own name. It provides a clear separation between the company’s affairs and those of its owners.
Perpetual Existence:
Unlike sole proprietorships or partnerships, a private limited company enjoys perpetual succession. This means that the company continues to exist even if the shareholders change or transfer their shares. The company’s existence is not affected by the death, bankruptcy, or departure of any of its members.
How Register Helps in the Private Limited Company Registration Process?
- Company Name Approval;
- Obtaining DSC & DIN for Directors;
- Filing SPICe+ Form;
- Issuance of COI (Certificate of Incorporation) along with PAN & TAN;
- Opening of current account for your Company;
Documents Required for Private Limited Company Registration in India
Identity Proof:
- Passport (for foreign nationals)
- Aadhar Card (for Indian nationals)
- Voter’s ID Card
- Driver’s License
- PAN Card
Address Proof:
- Utility bill (electricity, water, gas) of the registered office address
- Rent agreement along with a copy of the latest rent receipt (if the office is rented)
- Property tax receipt or ownership deed (if the office is owned)
- NOC (No Objection Certificate) from the landlord
Director Identification Number (DIN) Proof:
- DIN is a unique identification number for directors, and a proof of DIN allotment is required for all the directors.
Digital Signature Certificate (DSC):
- DSC is required for online submission of the registration application. It can be obtained from authorized agencies.