How To Register A Private Limited Company

With the startup environment booming across the country and an increasing number of people wishing to start their businesses, it is critical to be familiar with the various business proprietorships, limited liability companies, and private limited companies that are all available as registration alternatives. 

In legal terms, Section 2 (68) of the Companies Act, 2013, defines a private company as a corporation with a minimum paid-up share capital as may be prescribed,—

(i) restricts the right to transfer its shares

(ii) except in the case of a One Person Company, limits the number of its members to two hundred; and 

(iii) bans any invitation to the public to subscribe to any of the company’s securities.

Characteristics of Private Limited Company

Now that you know what a private limited corporation is, the next step is to understand its qualities.

• Membership: To form such a corporation, a minimum of two shareholders are necessary, just as with any other. However, because it remains a small business, the maximum number of members is limited to 200. In addition, two directors are required to administer the company.
• Limited liability structure: In a private limited company, each member or shareholder has a limited liability. As a result, even in the event of a loss, shareholders must sell their assets to repay their creditors. However, the stockholders’ personal and individual assets are not at stake.
• Separate legal entity: This is a separate legal entity that exists indefinitely. This means that even if all of the members die or the firm becomes insolvent or bankrupt, the company remains legally viable. The company’s life will be indefinite, unaffected by the lives of its shareholders or members, unless dissolved by resolution.
• Minimum Paid-Up Capital: A private limited corporation must have and maintain a paid-up capital of ₹1 lakh. It could go higher as directed by MCA from time to time.

How to register a Pvt Ltd Company?

It is critical to understand the registration process for private limited companies. To register a private limited company in India, you must take the following steps:

• Select a Unique Name: Choose a distinctive name that expresses your firm’s identity and goals but is not already in use or trademarked by another company. You can check the availability of a name on the Ministry of Corporate Affairs (MCA) official company registration website or with the applicable regulatory authority in your state or territory.
• Obtain Digital Signatures: To register a Pvt. Ltd. firm, obtain Digital Signature Certificates (DSC) for the potential directors and shareholders from any authorized agency or vendor registered with the MCA or the Certifying Authority (CA) under the Information Technology Act of 2000.
• Get a Director Identification Number (DIN): Apply for a Director Identification Number (DIN) online through the MCA portal by completing Form DIR-3 and providing the appropriate papers, such as identity evidence, address proof, and pictures for each of your company’s directors.
• Prepare a Memorandum and Articles of Association: The MOA is a document that outlines your company’s major objectives, scope, and operations, whereas the AOA establishes the rules and regulations for your company’s management and administration.
• Obtain Consent and Declarations: Directors must consent to act as directors by filling out the DIR-2 form and attaching their DSC.
• Apply for approval of the company name: Submit the name approval application along with the necessary documentation to the Registrar of Companies (RoC) in the state or union territory where your company will be formed.
• Documents of Incorporation: You can file the incorporation documents for an LLC online through the MCA site using the SPICe+ form and pay the prescribed fees.
• Pay registration fees: The registration fees vary according to the amount of permitted share capital and the state or union territory where your company is registered.
• Verification and Approvals: The RoC will carefully review the paperwork, and if they match all standards, they will issue the certificate of incorporation, which may be accessed on the MCA portal.
• Obtain the PAN and TAN: Apply for a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN) online at the MCA portal utilizing the AGILE-PRO form and payment mechanism.
• Open a bank account: Open a bank account in your company’s name and deposit the appropriate capital. Private limited companies require a minimum capital of ₹1 lakh.
• Obtain business licenses: The licensing and permission requirements can vary based on the nature of your firm.
• Ensure tax compliance by registering for GST and meeting other obligations. Register for GST if your annual revenue exceeds ₹40 lakh. Commence Business Operations.

Advantages of registering a Private Limited Company:

• Legal entity: A company is a legal entity that exists in real life. It is a legal entity that exists independently of its directors and stockholders. It is a legal entity formed under the Companies Act. The term “juristic person” refers to the acknowledgment of a thing as a person by law. It can both sue and be sued under its name.
• Perpetual succession: As previously stated, it is a separate legal entity unaffected by the death or leave of any of its members. Whatever changes occur, such as membership, members, personnel, or shareholders, nothing of the type can impact its existence; once established, it remains alive by the Companies Act.
• Limited liability: Limited liability refers to a legal obligation to pay a set number of debts. The members’ culpability about the company’s debts is restricted.

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