Private Limited Company Registration Online In India
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When setting up a business in India, choosing a private limited company is often the preferred option. This structure provides shareholders with limited liability protection while ensuring specific ownership constraints. In contrast to LLPs, where partners manage the business, private limited company registration allows for a clear distinction between directors and shareholders.
At TaxClue, we offer a cost-effective service designed to facilitate the seamless registration of your company in India. We handle all legal formalities, ensuring strict compliance with the regulations set forth by the Ministry of Corporate Affairs (MCA).
What is a Private Limited Company?
In India, a private limited company is a privately held entity with limited liability, and it ranks among the nation’s most favoured business structures. Its popularity is primarily attributed to numerous advantages, including limited liability protection, ease of formation and maintenance, and its status as a distinct legal entity. Here are the key characteristics:
- Limited Liability Protection: Shareholders’ assets remain safeguarded, even in cases of financial setbacks incurred by the company.
- Separate Legal Entity: The company possesses its own distinct legal identity, allowing it to own property, engage in contracts, and initiate or defend legal actions under its unique name.
- Minimum Number of Shareholders and Directors: A private limited company must have a minimum of two shareholders and two directors, with at least one director being an Indian citizen.
- Minimum Share Capital: The company must maintain a minimum paid-up capital of Rs. 1 lakh or a higher amount as specified.
- Name of the Firm: The private limited company’s name must conclude with the words “Private Limited.”
- Compliance Requirements: Private limited companies are obligated to adhere to various legal and regulatory obligations, including maintaining proper financial records, conducting annual general meetings, and filing annual returns with the ROC.
Types of Private Limited Companies:
- Company Limited by Shares: Shareholders’ liability is limited to the nominal share amount mentioned in the Memorandum of Association.
- Company Limited by Guarantee: Member liability is limited to the amount of guarantee specified in the Memorandum of Association. This guarantee is invoked only during winding up.
- Unlimited Companies: Members of unlimited companies have unlimited personal liability for the company’s debts and liabilities. However, they are still considered a separate legal entity, and individual members cannot be sued.
Company Registration Process
Digital Signature Certificate (DSC)
Director Identification Number (DIN)
Name Reservation for the Company (SPICe+ Part A)
Submission of Company Details (SPICe+ Part B)
Preparation and Submission SPICe+ MOA and AOA
Certificate of Incorporation
Document Checklist
For Indian Nationals
Self-attested PAN card copy, passport-sized photo, Aadhaar Card, proof of identity, and address proof.
For Foreign Nationals
Notarized documents, passport-sized photo, passport, and address proof.
Registered Office Documents
Proof of business address, copy of the rent agreement (if applicable), and owner’s no objection certificate.
Advantages of a Private Limited Company
A Private Limited Company is one of India’s most popular business structures, offering several advantages:
- Limited Liability: Shareholders’ responsibility is restricted to 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, capable of owning assets, entering into contractual agreements, and initiating or defending legal actions under its own name.
- Continuous Existence: The company persists regardless of shifts in shareholders or directors.
- Ease of Funding: Raising capital through shares is easier, attracting 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 creates more confidence and trust in customers, suppliers, and partners
Disadvantages of a Private Limited Company
A Private Limited Company is one of India’s most popular business structures, offering several disadvantages:
- Compliance Burden: Face regulatory demands, including financial reporting, filings, and audits.
- Complex Setup: Process and cost for managing are higher than more superficial structures.
- Share Limits: Restricted share transfers; max 200 shareholders in India
- Public Disclosure: Financial info is publicly viewable, impacting privacy
- Exit Complexity: Selling or leaving is more complicated than other structures.
- Slower Decisions: The involvement of shareholders and directors may slow choices.
Requirements for Registering a Company in India
Directors and Members
A minimum of two directors and 200 members are required, with at least one director being an Indian resident.
Company Name
The name should reflect the principal activity of the business.
Registered Office
The company must provide the permanent address of its registered office for business operations and documentation maintenance.
Post-Registration Compliance
Open a bank account in the name of the company and deposit the minimum required capital.
Within 30 days of incorporation, appoint an auditor for the company. The first auditor is appointed by the Board of Directors and ratified by the shareholders at the first Annual General Meeting (AGM).
Conduct the first board meeting within 30 days of incorporation. Discuss and approve the company's operational matters, appointment of key managerial personnel, and other essential issues.
Issue share certificates to shareholders within two months of incorporation.
Maintain statutory registers such as Register of Members, Register of Directors, and Register of Contracts.
If applicable, register the company for Goods and Services Tax (GST) within 30 days of crossing the threshold limit.
File the Annual Return and Financial Statements with the Registrar of Companies (RoC) within 60 days of the AGM.
Hold at least four board meetings in a year, and one AGM annually. Ensure compliance with the Companies Act regarding the frequency and quorum.
File the income tax returns of the company before the due date.
Ensure compliance with other applicable laws, such as the Shops and Establishments Act, labour laws, and environmental laws.
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Frequently Asked Questions
Registering a private limited company in India offers advantages such as limited liability protection, a distinct legal identity, ease of raising capital, tax benefits, and enhanced credibility among customers and partners.
A private limited company must have a minimum of two shareholders and two directors. At least one director must be an Indian citizen.
Yes, foreign nationals can be directors and shareholders in a private limited company in India. They may need to obtain a Director Identification Number (DIN) and follow specific procedures for compliance.
The process involves completing the SPICe+ Part A form to secure a unique company name. You will need to propose two names for approval, ensuring they align with your business activities.
After registration, private limited companies must adhere to various legal and regulatory obligations, including maintaining proper financial records, conducting annual general meetings, and filing annual returns with the Registrar of Companies (ROC).
The timeline for registration can vary, but it typically takes a week to complete all the necessary steps, including document verification by the Ministry of Corporate Affairs (MCA).
Yes, TaxClue offers support for post-registration compliance, helping you streamline your company’s operations and fulfill regulatory requirements.
A DSC is essential for secure online transactions and document submission during the company registration process. It is required for all directors and shareholders.
To begin the process of registering your private limited company with TaxClue, please contact us. Our experts will guide you through each step and provide personalized assistance to meet your specific business needs.