India has seen tremendous growth in the business sector. When you start a business it is necessary you register your company to legalize its operations. Registration offers certain benefits and tax exemptions to a registered company. Private Limited Company registration is governed by the Indian Companies Act, 2013. The Act was enacted by the Ministry of Corporate Affairs. It provides rules for incorporation and registration of a Private Limited Company.
WHAT IS A PRIVATE LIMITED COMPANY?
A Private Limited Company is one of the many types of companies registered and governed under the Companies Act. It is a privately held small business entity. It does not trade its shares to the public.
The section 2(68) of the companies Act defines Private Limited Company as a company having a minimum paid-up capital of any amount or such higher paid up share capital as may be prescribed.
A Private Limited Company Registration offers numerous benefits. As the company is governed by Companies Act it has to follow certain rules and procedures.
REQUIREMENTS OF A PRIVATE LIMITED COMPANY
To incorporate a Private Limited Company it is important to fulfill the following requirements-
- Number Of Members
A Private Limited Company should consist of a minimum of two shareholders to complete the registration process. It should have a minimum of two and a maximum of 200 members.
- Number of directors
A Private Limited Company should have a minimum of two directors. Each such director shall possess a Director Identification Number (DIN). The Companies Act, 2013 allows a maximum of 15 directors to be part of the company. A director should be a person of sound mind who has attained the age of eighteen years. Nationality is no bar to appoint a Director.
- Paid up Capital
A paid up capital is nothing but the amount raised by the company to issue its shares. The paid up Capital indicates the dependence of the company on equity for its financing. After the amendment in the Companies Act, 2013, under the new Companies (Amendments) Act, 2015 there is no minimum limit of Paid-up capital to form a Private Limited Company but the Authorized capital of minimum Rs. 1 lakh is mandatory.
- Government ID proof – Voters’ ID or passport
- Bank statement
- Passport size photograph
- Electricity bills
- Latest bank statement
ONLINE REGISTRATION PROCEDURE FOR PRIVATE LIMITED COMPANY
- A Digital Signature Certificate or DSC is an essential prerequisite for Company registration. It is the electronic format of a physical certificate. It is essential to obtain a Digital Signature Certificate for Private Limited Company Registration.
- It is important to choose a company name which is unique to its niche and represents the brand. The applicant has to file an application to reserve the company name. The application can be made using the website named RUN (Reserve Unique Name). Once the MCA approves the application, the name is reserved for a period of 20 days.
- The documentation is the most important part of the Private Limited Company Registration procedure. Memorandum of Association and Article of Association lays down the structure, function and other details of the company. It is important to have a well drafted MoA and AoA for the registration process.
- It is necessary to submit the required documents and SPICe Form on the MCA portal within 20 days of receiving the approval for company name reservation. The SPICe Form INC-32 (Simplified Proforma for Incorporating Company Electronically) helps in incorporation of a company by the use of a single application.
- Once the application is filed along with the registration fees. The Central Registration Centre (CRC) verifies the application. If the application is approved the applicant receives the Certificate of Incorporation.
ADVANTAGES OF A PRIVATE LIMITED COMPANY
- LIMITED LIABILITY
Private limited companies are a separate legal entity to their shareholders and directors. In a private limited company, the liability of each member or shareholder is limited. This protects the interest of all the members involved in the company.
- PERPETUAL SUCCESSION
Perpetual succession means that the company continues its existence even if any owner or member dies, goes bankrupt, exits from the business and transfers his shares. With perpetual succession the company becomes a safe place for investments and assures the investors the return on their money.
- NO MINIMUM CAPITAL
Raising a capital for the company is a humongous task; but at the same time it is easy to raise a capital for a Private Limited Company. It can be started with zero paid up capital as there is no minimum capital required for incorporating a private limited company.
- Increased borrowing capacity
A private limited company has more opportunities to secure investment and funding. A private limited company receives better financial benefits and assistance than a partnership firm or proprietorship.
A Private Limited Company is governed by The Companies Act, 2013. The Act has provisions for the entire procedure of incorporation. It ensures that the company follows and complies with the requirements and norms.
ARE YOU PLANNING TO REGISTER YOUR PRIVATE LIMITED COMPANY?
ezyLegal can help you register and incorporate your Company and provide you with the right legal guidance. You can schedule your Consultation with an ezyLegal Lawyer and know the detailed process and advantages of registering your company.