Pvt Ltd Company Registration: Features, Requirements, Process & Benefits
A Private Limited Company can be defined as one that is owned primarily by small businesses. These days, in India a private limited company happens to be the most prominent form of companies out there. In fact of all the different kinds of corporate legal entities being formed in India this happens to be the most popular one out there as well.
While registering a Pvt Ltd company, you need to consult an effective and proficient consultant so that they can clarify and aware you about your business creation and complete your registration within a time frame.
For this you must know and understand all the process how is it carry out.
We used to make simple and right technique for private limited company registration and it is easy with us; so that you can get your registration in right time.
In India, the formation of Pvt Ltd Companies is regulated by the Ministry of Corporate Affairs and the Companies Act, 2013, and the Companies Incorporation Rules 2014. You need at least a couple of shareholders as well as a couple of directors in order to form such a company. In these companies, only a proper individual can be a Shareholder as well as a Director, while a Corporate Legal Entity can only be a Shareholder.
These days, foreign nationals can become Directors and foreign nationals and Companies can also become shareholders through FDI (Foreign Direct Investment). So doing business in India is simpler now.
This is the reason why these companies have become so popular with Foreign Investors looking to make their presence felt in the Indian market. These facilities are available for the non resident Indians (NRIs) as well.
It needs to be stated in this particular context that it is the unique features of this type of Company that have endeared them so much to investors all over the world. This is especially true for the millions of small and medium businesses in the world today.
Features of Private Limited Company
It has been already stated that you need to have at least 2 members in such a company. The maximum number in this case is 200.
One of the major traits of a private limited company the liability of a shareholder is restricted only to the number of shares held by a shareholder in case of Company Limited by Shares. This implies that in case the Company faces any financial problem as such the shareholders would not have to sell their assets to make the payment. The dues in such a case would have to be realized by using the assets owned by the company in question.
Never, under any circumstance, would the assets owned personally by the members of the company would be under any threat in such circumstances. As per laws, these companies continue to exist even in case the members die, become insolvent, or go bankrupt. They can go on and on.
Normally, the names of these companies have three components – the name, the words private limited company, and the kind of business that they are doing and it ends with the word Private Limited or Pvt Ltd.
Benefits and Advantages of a Private Limited Company
As per Companies Act, 2013; a Pvt Ltd company has the rights to utilize the following benefits of organization.
- Discrete legal entity
- Limited liability to shareholders and directors
- Easy transferability of shares
- Easy transferability of ownership rights
- Privilege to raise equity funds
- Ownership of acquired property
Discrete legal entity
One of the first benefits of private company is that it can operate as a separate legal entity. This means that it is regarded as a separate individual as per the laws of India. This is the reason why it can perform functions like starting a bank account, hire employees, take on equity, or even get licenses or more.
As such the members of the company like the shareholders and the Directors do not have any personal liability to the creditors of the company for any of the debts incurred by the same.
Easy transfer-ability of shares & ownership
Apart from these facilities, the Private Limited Companies can stay on till the time they are dissolved formally and they can be transferred quite easily as well. This means that you need to transfer the shares of such a company and you are basically transferring the ownership of the same. In this case, all you need to do is sign, file, and then transfer the share transfer form as well as share certificates.
Privilege to raise funds
However, in such a company you also need the consent of the other shareholders of the company in order to perform such a transaction. In India, these Companies are allowed to raise equity funds. They are also allowed to issue equity shares, debentures, preference shares, and take deposits with the permission of the Reserve Bank of India (RBI). Normally, financial institutions such as banks like to fund companies instead of proprietary companies or partnership firms as such.
Rights for own property
Since these are independent legal entities they are allowed to own property in their own names. Apart from owning property they can acquiring and owning property they can enjoy it or sell it at any time they choose to. They could own any kind of property such as the following:
- Intangible Assets
- Residential Property
Minimum Requirement to Form a Private Company
As has been stated already, you need at least two shareholders of the company as well as two Directors. The directors have to be natural people while both human beings and companies can act as shareholders of such a company. Apart from that you also need to have a registered your office in India. This comes in handy at the time of registering the company. You also need a paid up capital of INR 1 lakh.
How to Choose the Name of a Private Limited Company?
In India, in general the rules and regulations for naming the companies are formulated by the Companies Act 2013. And when you are forming a company in Bangalore; things need to keep in mind regarding name approval.
The first rule in this case is that the proposed name of the new company should not be same as any other company. It should not be undesirable as well. This implies that it should not flout the Emblems and Name Act and any trademark as such. It should also not have any offensive words as well.
It should not include the words British India, should not include any association with a foreign embassy, consulate, or government. It should not also imply any patronage as well. The name also needs to be clear – it should not be abbreviated or vague.
Procedure for Registering a Pvt. Ltd. Company in Bangalore
The step-wise process for registration of private company under Companies Act, 2013
A private limited company can be incorporated with the following 6 easy and simple steps:
- The first step is registering such a company started as per the amendment from January, 2018; it has mandated that apply for name approval through RUN (Reserve Unique Name). You can apply 2 names at a time along with one re-submission for 2 other names.
Proposed name/objects should not include the words like Finance, Insurance, Credit, NBFC, Stock Exchange, Venture Capital, Asset Management, etc., without declaration from RBI/SEBI/MCA according to the incorporation rules 2014.
In case the name you want is available you will be approved but if not you would receive an objection along with suggestions on available names. You have to choose from one of them and use the same application with a new name.
- In second step, you need to apply for DSC (Digital Signature Certificate) for Directors; for the purpose of signing in on various documents during the business process. It is must required for every company.
- Third step is for incorporating the company through the SPICe form and here you need to apply for DIN for Directors, PAN and TAN for company; for this you have to prepare several documents, make the necessary payments, and submit them.
DIN (Director Identification Number) is required for those who don’t have DIN. The important documents in this case could be enumerated as below:
- DIR-2 Consent to act as Directors
- Declaration by Directors
- Declaration by Professional
- In fourth step, you need to prepare for online drafting of MOA and AOA as there is a separate forms spice-33 MOA and spice-34 AOA; you can download the above Forms from MCA website, fill and submit it along with digital signature with spice-32.
- Fifth step is for getting the registration certificate of company, after rechecking and verification by ROC department; if everything is ok, then you will get an email about the Certification of Incorporation (COI) from your regional ROC department.
- Final step to receipt of Company Incorporation Certificate from Registrar of Companies (ROC) bearing with PAN and TAN number.
Documents Required for Registration of Pvt Ltd Company
You need to have valid identity (PAN) as PAN is mandatory to register a Company and permanent and temporary address proofs as well as registered office proof in order to start a private limited company in India. Identity and address proofs are necessary for all the members of the company at the time when the company is being incorporated. As far as Indians are concerned they have to provide their PAN (permanent account number) and for foreigners it is a notarized or apostilled copy of the passport. All these documents have to be valid. Documents such as electricity bill or bank statement can serve as proofs of residence but they should not be more than 2 months old. In fact, passport, driver’s license, and Aadhaar Card can serve the same purpose as well.
As far as registered office proof is concerned an applicant needs to furnish documents such as recent copy of electricity bill, water bill, or receipt of property tax. Along with utility bills the applicants also need to submit sale deeds or rental agreement along with a letter of consent from the landlord that states that the concerned individual has agreed to let the applicants use said premises as a registered office of the applicant. The applicants also need to provide signed incorporation documents such as hard copies of signed digital signature application documents. Other incorporation documents can be signed and uploaded as soft copies.
Compliance Related to Private Company in India
A private limited company in India needs to be compliant in the following areas:
- Appointment of auditor within 30 days of incorporation
- Conducting statutory audit of accounts every year
- Filing annual returns using Form MGT-7 every year
- Filing financial statements using Form AOC-4 every year
- Organizing annual general meetings once in a year
- Preparing director’s reports once in a year
In these cases, the auditor will have to be filed for 5 years and the Form ADT-1 will have to be filed for the same time period as well. The first auditor has to be appointed within a month from the date on which said company was incorporated.
All these companies would have to prepare their accounts and get them checked by Chartered Accountants. This needs to be done on a compulsory basis at the end of each financial year.
The auditor shall provide audit reports and audited financial statements, and these would be filed with the registrar.