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Private Limited


A private limited company is a voluntary association of not less than two and not more than two hundred members, whose liability is limited i.e. the transfer of whose shares is limited to its members and who is not allowed to invite the general public to subscribe to its shares or debentures. The Indian Companies Act, 2013 contains the provisions regarding the legal formalities for setting up of a private limited company.

Advantages Of Private Limited Company

  • Risk in the business minimizes due to limited liability If the company experience financial distress because of normal business activity, the personal assets of shareholders will not be at risk of being seized by creditors.
  • Tax burden reduces There are many allowances and tax- deductible costs that can be offset against the profits of a company and the tax would be paid after deducting many costs incurred by you.
  • Continuity of existence People may join or leave the company, but the company is permanent. Whether or not you are there, your dream enterprise exists eternally, unless it is dissolved.
  • Scope of expansion is higher Scope for expanding the business becomes high, as the authorized capital can be increased over Rs. 1,00,000/-.
  • Transfer of company is easy You can transfer the entire share holding to the intended people as an ongoing concern. These changes of ownership, saves the time and money and also stamp duty.

Pre – Requisites For Registration Of Private Limited Company

  • Min. two directors (Indian/ NRI/ Foreigner).
  • Min. two share holders/ promoters (individual/ body corporate).
  • Min. authorized capital should be Rs. 1,00,000/-
  • DIN (director identification number) for all directors.
  • DSC (digital signature certificate) for any one director.
  • Registered address (owned/ rented).

NOTE: The directors can also be the share holders.

Information Required For Registration Of Private Limited Company

  • Qualifications of directors.
  • Authorized capital for company
  • Proposed company names (1+5).
  • Significance of proposed company name
  • Main objective of company (nature of business).
  • Registered address of the company
  • Ratio of shares distributed amongst share holders.

Documents Required:

  • Completed Professional Letter of Engagement
  • Passport size photograph (one for each director) for minimum 2 proposed Directors
  • Any ONE Document to evidence Proof of Identity (List A) and Proof of Address (List B) from each proposed Director

List A Identity Proof

  • Passport
  • Voter's ID
  • Driving License
  • Photo PAN Card(Mandatory)

List B Address Proof

  • Passport
  • Voter's ID
  • Driving License
  • Life Insurance Policy
  • Electricity Bill
  • Telephone (Landline/Mobile) Bill
  • Bank Account Statement

Major Steps Involved In Registration Of Private Limited Company

Step I : Getting DIN
DIN can be obtained by making an application online. All the existing and intending Directors have to obtain DIN within the prescribed time-frame as notified in Sections 266A to 266G of Companies (Amendment) Act, 2006.

Step II : Getting DSC
Digital Signature can be obtained from any of the Certifying Authorities in India. It is required as all the filings done by the companies under MCA21 e-Governance programmed are need to be filed online with the use of Digital Signatures by the person authorized to sign the documents.

Step III : Name Filing
After finalization of name, an application of name availability has to be filed in form 1. Please note that selection of name is subject to Guidelines issued by MCA.

Step IV : Drafting Of MOA & AOA
MOA is a document that sets out the constitution of the company. It contains the main objectives, incidental/ ancillary objectives for the attainment of the main objectives, other objectives and the scope of activity of the company and also describes the relationship of the company with the outside world.

AOA contains the rules and regulations of the company for the management of its internal affairs. It states the authorized share capital of the proposed company and the names of its first/ permanent directors

NOTE : While the Memorandum specifies the objectives and purposes for which the Company has been formed, the Articles lay down the rules and regulations for achieving those objectives and purposes.

Step V : Filing Of Form 1, 18 & 32
Form 1 – It is an application or declaration for incorporation of a company along with MOA & AOA.

Form 18 – It is an application to be filed by one of the directors of the company informing the ROC the registered office of the proposed company.

Form 32 – It is an application stating the fact of appointment of the proposed directors on the board of directors from the date of incorporation of the proposed company and is signed by one of the proposed directors.

Getting Certificate Of Incorporation

The ROC will issue Certificate of Incorporation after careful review of documents submitted in the above stated steps. Section 34(1) cast an obligation on the ROC to issue a Certificate of Incorporation, normally within 7 days of the receipt of documents. A Private Limited Company can start its business immediately on receiving the Certificate of Incorporation.

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