Company registration in India begins with the meaning of a Private Limited Company can be also recognized as Pvt. Ltd., which is the initial step towards company registration. A private limited company is formed by two or more directors, who meet their hand together with a common shared goal, as outlined in the MOA or Memorandum of Association. The term ‘Private’ signifies that the equity shares of the company are not publicly traded, and the term ‘Limited’ limits the liability of shareholders to their unpaid share capital.
Once you have prepared the necessary documents, the company registration needs to be registered with the (ROC) Registrar of Companies, under the Companies Act 2013. This registration process grants the company the status of a legal entity.
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What is known as Private Limited Company Registration in India?
Private Limited company registration in India is governed by the Companies Act, 2013. The Act states a Private Limited Company is the type of company that has at least two and a maximum of two hundred members, and its shares are not publicly traded.
The steps involved in the registration process are getting a Director Identification Number (DIN) and Digital Signature Certificate (DSC) for each director, choosing a distinctive name for the business, drafting the Articles of Association (AOA) and Memorandum of Association (MOA), and submitting an application for incorporation to the Registrar of Companies (ROC). If all the requirements are satisfied, the ROC reviews the application and issues a certificate of incorporation.
What are the advantages of a Private Limited Company?
Private Limited Company incorporation offers various kinds of benefits to the entrepreneurs, hence making it a popular choice for starting their own business. Some of the key advantages of company registration in India are:
Limited Liability Protection: The shareholders of a Private Limited Company have their liability limited, which refers to their assets that are protected in case of any liabilities or business debt. This is a significant benefit for entrepreneurs, as it minimizes their financial risk.
Ease of fundraising: Private Limited Company can raise funds through the issuance of shares to their investors. It makes the process comparatively easy for entrepreneurs to raise funds and capital for their business's expansion and growth.
Separate legal identity: A private limited company is a separate and distinctive legal entity from its owners. It can file and sue in its name, enter into contracts, conduct business, and acquire assets. This provides the company with credibility and a better image in the market.
Better control and Management: Private Limited Companies have a well-defined management structure because they have a board of shareholders and directors. This makes sure that there is proper decision-making, better accountability, and efficient management of the company.
Perpetual succession: A private limited company also has a perpetual existence, which means that it continues to exit even if the original directors and shareholders leave the company. This ensures the continuity of operations of the business.
Tax Benefits: Private Limited Companies are also eligible for various kinds of tax benefits, such as deductions on business expenses, tax exemptions on investments, and reduced tax rates for small companies.
Registration Procedure of a Private Limited Company in India:
Digital Signature Certificates: First, you have to get a Digital Signature Certificate for all the directors and shareholders of the company. A Digital Signature certificate is required for filing the documents online with the government authorities.
Director Identification Number: Each director of the company is required to obtain a DIN or Director Identification Number from the MCA (Ministry of Corporate Affairs). This unique identification number is compulsory and mandatory for holding the position of a director.
Name reservation: Choose a unique name for your company and apply for its reservation through the MCA’s (Reserve Unique Name) RUN service. The proposed name should comply with the naming guidelines and should not be similar or identical to existing companies.
Articles of Association and Memorandum of Association: Prepare the Memorandum of Association and Articles of Association which state the company’s rules, regulations, and objectives. These documents need to be drafted and signed by the shareholders and directors.
Filing Registration Documents: Once you get your name approved, file the registration documents, including Form (Simplified Proforma for Incorporating Company Electronically) SPICe, with the (ROC) Registrar of Companies. This form contains information about the directors, the company, shareholders, and the registered office address.
Payment of Stamp Duty and Fees: Submit the prescribed fee and the stamp duty based on the authorized share capital of the company. The payment can be made online through the Ministry of Corporate Affairs (MCA) portal.
Certificate of Registration: After verifying all the documents, the ROC will issue a certificate of Incorporation. This document serves as proof of the company’s incorporation and includes important details such as the Company’s (Corporate Identification Number) CIN and the date of registration.
Eligibility Criteria for a Private Limited Company
If you want to be eligible for Private Limited Company registration in India, the following criteria must be met:
· Two Directors (Minimum)
· Minimum two Holders
· At least one of the directors should be in India
· Company name availability
· Registered Office
· Director Identification Number
· Digital signature certificate
Let us discuss about what are the documents required for private limited company registration.
We are providing you with the list of the documents that are required for Private Limited Company registration in India:
Identity Proof: Voter ID, PAN card, Aadhar Card, Driving license of all the shareholders and directors.
Address Proof: Utility Bill or Property Tax Receipt or Updated bank statement or rent agreement of the registered office.
Photographs: Passport-sized photographs of all the directors
Bank Statement of Directors: Updated bank statement for company registration
Mobile Number and Email ID: Every director should have a valid email ID and mobile number.
Conclusion:
A company structure that provides limited owner liability is a private limited company. It is suitable for a limited number of shareholders and permits up to 200 members with adjustable shareholdings and shares. Creating a private limited company, which limits ownership while offering limited liability to its shareholders, is one of the most highly advised business formation strategies in India. The partners will oversee it when it is an LLP. However, directors and shareholders may operate as distinct legal entities under the terms of a private limited company registration.
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