What is a Private Limited Company?
A private limited company is a business entity registered under the Companies Act, 2013 and owned and managed by a group of members known as shareholders.
The characteristics of a private limited company include:
- Ownership: The shareholders are the owners of a private company.
- A number of members: A private limited company can register with a minimum of 2 and a maximum of 200 members.
- Number of Directors: A private company must appoint at least 2 directors.
- Cannot accept deposits: A private limited company cannot approach the public for loans or deposits.
- Limited Liability: In a private limited company, every shareholder’s liability is limited to the value of shares he has subscribed for.
- Separate legal entity: A private limited company is a separate legal entity whose existence is independent of the shareholders or directors.
- Non-transferability of shares: Shareholders are not allowed to transfer shares.
Benefits of Company Registration in India
Private limited company registration in India has the following benefits:
- Protection of the company’s assets
- Protection against personal obligations
- Protection against threats and losses
- Greater opportunities for growth and development
- Business stability
- Easy to attract investors
Step-by-Step Private Limited Company Registration Process
- Obtain DIN and Digital Signature:
You must obtain a DIN- Director Identification Number for the proposed directors of your private limited company. You must also obtain Digital Signature for one of the proposed directors.
- Submission of Proposed name:
The promoters of the company must discuss and give suggestions on how the private limited company will be called. While deciding on the company name, the promoters must make sure that the suggested name has a suffix Private Limited Company, is not prohibited under ‘Emblems and Names Act, 1950, and is not similar to an existing company name. Once a company name is finalized, it has to be submitted to the Registrar for approval. The registrar takes 3-5 days for approving the company name.
- Filing for Incorporation of the company:
Once the company name has been approved, promoters must submit the application form along with the Articles of Association, Memorandum of Association, Declaration from Directors, and Affidavits of the Directors. The incorporation fees had to be paid along with the application. The promoters can submit the address of the registered office along with the application or within 15 days of submitting the application.
- Subscription of shares:
Interested investors must subscribe to the shares of the company by paying the share value, signing the Memorandum in the presence of a witness, and furnishing personal description, occupation, address, number of shares and value of shares.
- Certificate of Incorporation:
After assessing all documents submitted by the promoters, the Registrar of Companies issues the Certificate of Incorporation.
List of Documents needed for Private Limited Company Registration:
The private ltd registration documents include:
- Identification proof of the company’s directors and shareholders
- Address of the company’s directors and shareholders
- Electricity bill/Property tax receipt or water bill of the registered office
- In the case of owned property, Sale deed / Maintenance receipt
- In the case of rented property, a letter from the landlord granting permission to use the space for office use.
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