INTRODUCTION
Registering for a company in India is the first important step in your journey toward becoming an entrepreneur.
A private limited company is typically a small business establishment or entity that is owned privately. Since these private companies are owned by a stipulated number of investors are known to be ‘Limited Companies’. While private companies may be large or small, they are generally small businesses that are often owned by a closed group consisting of family, friends, or angel investors.
Private Limited Company incorporation is one of the recommended ways to start a business. Limited Liability of the directors is the key benefit of Private Limited Company Incorporation as the Personal assets of the directors won’t be attached in case the business is unable to repay the loan. It is an easier method to invite investments from a new investor/strategic partner and share the ownership with the new investor/strategic partner.
ELIGIBILITY OF PRIVATE LIMITED REGISTRATION:
The minimum age of the applicant should be 18 years.
The applicant should be an Indian citizen or resident.
The number of members should be between 2-200.
At least 2 directors and 2 shareholders should have their presence.
DIN ( Director Identification Number) must be available to each Director.
The minimum capital requirement for Pvt Ltd. is Rs. 1,00,000 (one lac).
The applicant should possess Company’s incorporation certificate.
BENEFITS OF PVT. LIMITED REGISTRATION:
A private company means an organization which is having a maximum paid up sharef capital of One lakh rupees or such higher paid up capital as might authorised under the companies act ,2013.
Minimum number of shareholder
There is minimum 2 numbers of shareholder needed in the private limited registration whereas there is minimum 7 numbers in case of public company registration.
Legal compliances
Legal compliance plays an important role in formation of an organization. If you are planning to form a public company then there is need of huge list of legal compliance where if you plan to form a private company then there is lesser number of legal compliances.
Protects Personal Assets
In the process of scaling up the business, the business might avail of loans from Financial Institutions, Creditors, etc. If the business is unable to repay the loan out of its earnings or after liquidating the assets then the personal assets of the directors or even the shareholders won’t be attached. In case of default banks/creditors can sell the company assets but they don’t have any right to sell the personal assets of the company’s directors.
Easy to Raise Funds and Loans
A Private Limited Company is a preferred constitution to raise funds from investors and Venture Capital Investors in comparison to a Proprietorship/ Partnership firm.
Credibility In The Market
Giant Corporates, Customers, and Government Agencies prefer to deal with Private
Limited companies.
Easy to Sell Ownership: It is easier to sell or dilute the ownership in a Private Limited
Company and even the cost involved in the transfer of ownership is less.
Foreign Customers and Investors: If you are looking for overseas investment or exporting
ADVANTAGES OF PRIVATE LIMITED COMPANY:
Name: The private company registration should PRIVATE LIMITED COMPANY at the end.
Prospectus: The prospectus is the detailed statement of affairs of the company which is
required in the public company whereas there is no such requirement in the private
company limited.
Perpetual succession: The organization exists even in the eye of the law even in case of
bankruptcy, death, or insolvency of any of its members.
Limited Liability: If the organization faces any losses under any situation the
shareholders are answerable to the share held by them.
Minimum subscription: There is no such subscription is needed in case of private
company as in the case of public company to form an organization.
LAW RELATED TO PRIVATE LIMITED REGISTRATION:
All the private limited companies must be incorporated under the Companies Act of
2013.
GST registration is mandatory for a private limited company.
ELIGIBILITY OF PRIVATE LIMITED REGISTRATION:
The minimum age of the applicant should be 18 years.
The applicant should be an Indian citizen or resident.
The number of members should be between 2-200.
At least 2 directors and 2 shareholders should have their presence.
DIN (Director Identification Number)must be available to each Director.
The minimum capital requirement for Pvt Ltd. is Rs. 1,00,000(one lac).
The applicant should possess the Company’s incorporation certificate.
DOCUMENTS REQUIRED:
Self-attested photocopy or scanned original copy of PAN Card/Passport (Foreign
Nationals & NRIs)
Scanned Original copy of the latest bank statement/telephone or mobile bill/electricity or
gas bill.
Scanned passport-size photograph and specimen signature (blank document with
signature [directors only])
A scanned Original copy of an electricity bill of any recent month/ Property tax receipt of
any recent month must be submitted.
In case the property is rented then the electricity bill in name of the Landlord and the
Consent Letter by the Landlord to use the premises for the purpose as mentioned in
MOA.
PRIVATE LIMITED REGISTRATION PROCESS:
Following are the basic steps required to process the registration of the private limited
are as follows:
Step 1: DSN and DPIN Application: The applicant needs to apply for a Digital Signature Certificate (DSC) and Director’s Pin (DPIN), where the DSC is essentially an online signature that can be used for form filling. DPIN is issued by the Ministry of Corporate Affairs (MCA).
Step 2: Approval of Name: To set up a private limited, the applicant will need to provide at least 3 optional names that are descriptive of the company’s business.
Step 3: MOA and AOA: One of the important steps toward creating one’s company is the drafting of a Memorandum of Association (MOA) and Articles of Associate (AOA).
Step 4: Incorporation Certificate: Private limited company is officially set up for business in about a month where the incorporation certificate confirms it and also includes the crucial Corporate Identity Number (CIN) number.
Step 5: Applying for the PAN and bank account: After receiving the incorporation certificate, the applicant will get his/her PAN and TAN card within a week, after which he/she can submit PAN, AOA, and MOA to the bank to open a bank account.
CONCLUSION:
When you’re aware of the advantages that come with registering your private limited firm, you’ll have an idea of how you can grow your business keeping in mind the various advantages.
