What is a Private Limited Company?
As the start-up culture grows in India, it is important to understand various business structures. In India, a private limited company is a privately owned entity with limited liability, and it is among the best and most favoured business structures in India. It is primarily because private ltd companies exhibit various features, like limited liability protection, ease of registration and maintenance, and a separate legal entity. All these features encourages a businessman to register a private limited company. It enjoys status of an independent legal entity different from its owners. It has a minimum of two members and two directors.
Benefits Of A Private Limited Company
The benefits of a private limited company are as follows:
Limited Liability: In a private limited company, the private assets of the owners are protected. They are liable only for their shares in the company during any financial problem.
Tax Efficient: Private limited companies enjoy many kinds of tax exemptions on their earnings.
Separate Legal Entity: Private limited company is considered as a distinct entity from its owners. Assets of the owners of the company are not used to cover debts of the company.
Easier Investment: It attract more investors. It can raise funds by issuing shares and getting loans from various financial institutions.
Flexible Management: In this business setup, owners of the company enjoy full control over management and can appoint anyone to the board of directors.
Professional Identity: Private limited company registration gives a professional identity to your business. It provides credibility, trust, and attract more customers and investors to the company.
Credibility and Trust: It enhances the trust of the customers, partners, and investors in your business.
Types of Private Limited Companies
Company Limited by Shares: In this type of company, the liability of shareholders is only limited to the shares mentioned in the Memorandum of Association.
Company Limited by Guarantee: Shareholders are only liable to the extent of the amount of guarantee mentioned in the Memorandum of Association.
Unlimited Companies: In such kind of Private Limited Companies, members of the company have unlimited personal liability for the debt of the company. Moreover, members cannot be sued in this kind of company because such kind of comapnies also enjoy the status of separate legal entity.
Documents Required For Pvt Ltd Company Registration In India
Here is the list of the necessary documents required for Pvt Ltd Company
Identity Card: Directors and shareholders need to have valid identification, like PAN card, voter ID, Aadhar card, etc.
Memorandum of Association (MoA): It is a legal document mentioning the company's goals, registered office, and other important things related to the company.
Articles of Association (AoA): It mentions various internal rules and regulations of the private limited company.
Address Proof of Office of the company: You need to submit office address proof of the company, like rental agreement, and utility bills.
Digital Signature Certificate (DSC): It is a secure digital key for online signing of the documents.
Director Identification Number (DIN): It is a unique ID for directors of the company that is obtained through the online portal of the Ministry of Corporate Affairs (MCA).
Complete Process Of Pvt Ltd Company Registration In India
Here is the complete guide to registration of private limited company.
Obtain a Digital Signature Certificate (DSC)
Every director and shareholder of the company must have Digital Signature Certificate (DSC) issued by the government. For getting this, you need to have some essential documents, like passport-size photos, PAN, Aadhaar Card, phone number, and email address. Foreign nationals also required to obtain Digital Signature Certificate (DSC) for Pvt Ltd Company Registration in India.
Director Identification Number (DIN)
Everyone who wants to be a director in the proposed company must get a Director Identification Number (DIN). DIN is a must have document to register a company.
Reservation of Name of the Company
You need to reserve the name of the private limited company by filing the SPICe+ Part A form online. It includes the selection of type of the company, class, category, and sub-category, mentioning all the details about the business activities of the company. At least two names need to be submitted for it.
Submission of Company Details
For this step, you need to furnish all the details of the private limited company, such as capital, registered office address, details of directors, stamp duty, PAN and TAN details, and other essential documents for company registration.
Preparation and Submission of Incorporation Forms
Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) having important details of the company.
Certificate of Incorporation
After successful verification of all the documents submitted by you, the MCA will issue the Certificate of Incorporation (COI) for private limited company with the Company Identification Number (CIN), PAN, and TAN.
Proprietorship Registration
