Overview
In India, a Private Limited Company is a popular business structure regulated by the Companies Act, 2013. Entrepreneurs aiming to establish a company in India find it crucial to undergo Private Limited Company registration. This not only fosters the development of a strong business framework but also offers directors the advantage of limited liability. To register a company under the Companies Act, 2013, it needs to be registered with the Registrar of Companies (ROC) as per the guidelines and norms laid down by the Ministry of Corporate Affairs (MCA).
A Private Limited Company is the most prevalent and popular type of corporate legal entity in India. It is a privately held business entity, owned by shareholders, with the maximum number of shareholders not exceeding 200. The liability arrangement in a Private Limited Company is similar to that of a Limited Partnership, where the shareholders’ liability extends only up to the number of shares held by them. Typically, a Private Limited Company in India does not offer or trade its shares to the general public on the stock exchanges; instead, the company’s private stock is traded or owned privately.
A Private Limited Company Incorporation is one of India’s most popular business structures. It offers several advantages, let us explain.
Limited Liability
Shareholders’ responsibility is restricted to the extent of their capital contribution, safeguarding personal assets from the company’s financial obligations and liabilities.
Distinct Legal Identity
A Private Limited Company possesses an independent legal identity distinct from its proprietors. It has the capacity to own assets, engage in contractual agreements, and initiate or defend legal actions under its own name.
Continuous Existence
The company’s existence persists irrespective of shifts in shareholders or directors. Its existence is not contingent upon the lifespan of its associates.
Ease of Funding
Raising capital by issuing shares to investors, venture capitalists, or angel investors is easier. This structure attracts external investment.
Tax Benefits
Private Limited Companies may qualify for various tax benefits and exemptions, making them tax-efficient entities.
Credibility and Trust
Having “Pvt. Ltd.” in your company name often instills more confidence and trust in customers, suppliers, and partners.
Comparison Chart
Features | LLP | |||
Definition | Unregistered type of business entity managed by one single person | A formal agreement between two or more parties to manage and operate a business | A Limited Liability Partnership is a hybrid combination having features similar to a partnership firm and liabilities similar to a company. | Registered type of entity with limited liability to the owners and shareholders |
Ownership | Sole Ownership | -Min 2 Partners -Max 50 Partners | Minimum 2 Designated Partners | |
Registration Time | 7-9 working days | 7-9 working days | 7-9 working days | 7-9 working days |
Promoter Liability | Unlimited Liability | Unlimited Liability | ||
Documentation | - LLP Deed - Incorporation Certificate | |||
Governance | Under Partnership Act | |||
Transferability | Non Transferable | Transferable if registered under ROF | Transferable | Transferable |
Compliance Requirements | Income tax filing if turnover is more than Rs.2.5 lakhs | ITR |
Check Lists
Director & Shareholders Documents | Proof of Registered Office Address |
Passport Size Colour Photo | Proof of Registered Office address should not be older than two months. The utility bill must have the full name and full address. Any one document from below is acceptable : - Electricity Bill - Telephone Bill - GAS Bill - Mobile Bill |
Pan Card (Mandatory) | NOC from the Owner of Premises |
Aadhar Card (Mandatory) | |
Proof of Identity (any one of the Below): - Passport - Aadhar Card - Driving License - Voter ID | |
Proof of Address (Any one of the below): Every promoter of the company (Director as well as a shareholder) must submit any one document which is not older than two months as their Residential Address proof : - Bank Statement - Electricity Bill - GAS Bill - Telephone Bill - Mobile Bill |
Frequently Asked Questions (FAQs)
1. What is the minimum cash needed for Private Limited Company Registration?
Minimum Capital Requirement: The Companies Act, 2013 erased the idea of minimum capital requirement for Private Limited Company Registration, allowing firms to be established with any amount of capital.
2. Can a foreign person be a director in a Private Limited Company?
Foreign National Directors: Yes, a foreign person may be a director of a Private Limited Company, subject to at least one Indian resident director on the board.
3. How long does it take to create a Private Limited Company?
Registration Time: Registering a Private Limited Company usually takes between 7 to 15 days, based on the speed of paperwork preparation and filing.
4. What are the legal standards for Private Limited Companies?
Compliance Requirements: Private Limited Companies must stick to several compliance requirements under the Companies Act, 2013, including having yearly general meetings, filing annual reports, hiring accountants, and more.
5. Is it needed to have a real office for starting a Private Limited Company?
Physical Office Requirement: It is needed for a Private Limited Company to have a listed office address in India, which might be a private property.
6. What are the Documents Required for Company Registration in India?
To register a company in India, certain essential documents are required for all promoters and the registered office. This includes identification proofs like PAN and Aadhaar cards, address proofs for all promoters, Digital Signature Certificates for directors and shareholders, and documentation concerning the registered office, such as proof of its address and a No Objection Certificate from the premises owner. These documents are fundamental to the registration process, ensuring legal compliance and verification of all involved parties. below is a list of all the required documents that you will need to provide for all the promoters and the registered office address:
- PAN Card
- Aadhar
- Identity and address proofs of all promoters
- DSC of all directors and shareholders
- Proof of registered office address
- No Objection Certificate from the owner of registered premises.
7. What is a Digital Signature Certificate (DSC)?
A Digital Signature Certificate (DSC) is a secure electronic identification that provides a digital signature for individuals or entities involved in online transactions. In the context of online company registration in India, the Ministry of Corporate Affairs (MCA) requires the use of DSC for filing electronic forms on its portal. It enhances transaction security by validating the accuracy of the submitted information using cryptographic keys, including a private key and a public key. The DSC is issued by authorised Certifying Authorities, which play a vital role in ensuring the integrity of digital communications and transactions.
8. Is Private Limited Company Registration in India Mandatory?
Private Limited Company Registration in India is mandatory and needs to be done with the Registrar of Companies. The process is quick, easy, and can be completed online. The new SPICE Plus Application has also made it more convenient for applicants to file their applications.
9. Who is Eligible for Pvt Ltd Company?
To understand the eligibility for Pvt. ltd company registration, one must know any individual or group of individuals, including foreigners, can be eligible to form a Private Limited company in India. However, there are certain criteria that need to be met, such as having at least two directors and two shareholders. The shareholders can be individuals or corporate entities.
10. How can I check if a company is registered?
You can check the company registration process in India by visiting the official website of the Ministry of Corporate Affairs (MCA) or using the MCA21 portal. There, you can search for the company’s name or Corporate Identity Number (CIN) to verify its registration details.