A Guide to Private Limited Company Registration
The most common and popular corporate legal entity in India is the private limited company. The Companies Act of 2013 and the Companies Incorporation Rules of 2014 governs the establishment of private limited corporations. In this post, we’ll go over the steps for forming a private limited company and the documentation you’ll need.
What exactly is a Private Limited Company?
The shareholders own a private limited company. The stockholders own it privately, and the maximum number of shareholders shall not exceed 200. A private limited company’s liability structure is similar to a limited partnership, with a shareholder’s responsibility restricted to the number of shares they own.
The stockholders are not responsible for anything other than the share values. The goals of a private limited corporation are established before registration. Similarly, the Ministry of Corporate Affairs is in charge of such a corporation (MCA).
Advantages of Private Limited Company
1. Limited liability
There is limited liability, which implies that its members are not at risk of losing their assets. If the business fails, the shareholders are not obligated to sell their assets to make a profit.
2. Fewer shareholders
In contrast to a public corporation, which requires seven shareholders, a private limited company can be formed with just two.
3. Ownership
Because investors, founders, and management hold the company’s shares, they have the freedom to transfer and sell their shares to others. There can be minor complications and misunderstandings as a result of this.
4. Uninterrupted existence
The business is a legally recognised entity. As a result, the company continues to operate until it is officially closed down, even after the death or departure of any of its members.
Features of a Private Limited Company
The following are the features of a private limited company:
1. Membership
A private limited corporation must have at least two shareholders. 200 is the maximum number of members. Necessarily, the business should be controlled by two directors.
2. Limited Liability Structure
Each member or shareholder’s responsibility in a private limited corporation is restricted. As a result, even if the company suffers a loss, its owners are not required to sell their assets to make up the difference. Similarly, the stockholders’ assets are not jeopardised.
3. Separate Legal Entity
A private limited corporation is a separate legal entity that exists in perpetuity. Even if all of the company’s members die or the business becomes insolvent or bankrupt, the corporation stays according to law. Furthermore, the company’s life will be eternal, unaffected by the lives of its owners or members, unless terminated by resolution.
4. Minimum Paid-up Capital
A private limited corporation must have a minimum paid-up capital of one lakh rupees. It may alter from time to time, as required by the MCA.
5. Minimum Subscription
Subscription refers to the money obtained by the firm via the issuing of shares during a specific period. As a result, a firm must receive 90 per cent value of all claims within a specified time frame before the start of the business. Similarly, in the absence of a minimum subscription, the start-up of a firm is not permitted.
How to Register a Private Limited Company
Startups profit from company registration since it gives them an edge over others who have not registered. The registration is complicated and requires several compliances. However, as long as you have Corproots, you don’t have to worry since our specialists assist you with every stage of the private limited company registration procedure.
1. Get a DSC
2. Make a DIN application.
3. Request for the name’s availability
4. To create a private limited corporation, you must submit a Memorandum of Association (MOA) and an Articles of Association (AOA).
5. Request the company’s PAN and TAN.
6. A certificate of incorporation with a PAN and TAN is issued by the ROC.
Documents required for Registration
1. At least two adults must serve on the company’s board of directors.
2. A minimum of two directors is required, with a maximum of fifteen directors.
3. At least one of the directors of a private limited company must be an Indian citizen or a resident of India.
4. Foreign nationals may serve as the other director(s).
5. A company’s shareholders must consist of two people.
Conclusion:
We, at Corproots, can help you with the registration of your private limited company. Visit our website to get expert advice at the earliest.
Suggested Reading: Difference between private limited company Vs LLP
