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Private Limited Company Registration in India

A private limited company in India is governed under the Ministry of corporate affairs (MCA). Registering a company is easy through IndiaFilings, as it is done completely online. To register a company in India a minimum of two people are required to act as directors and shareholders. To register a Private limited company in India the Director's PAN card, address proof, and the bank statement are required with the address proof of the registered office.

Section 2 (68) of the Companies Act, 2013 defines a private company as:

A company having a minimum paid-up share capital as may be prescribed, and which by its articles,

  • restricts the right to transfer its shares;
  • except in case of One Person Company, limits the number of its members to two hundred;
  • prohibits any invitation to the public to subscribe to any securities of the company.

It is highly recommendable to get a private limited company registration as this type of company offers limited liability to the shareholders with certain restrictions that are placed on the ownership.

Private Limited Company is the most popular type of business entity in India. Over 20 lakh companies have been registered in India as of October 2020 and 12 lakh companies are classified as active. All companies registered in India are governed by the MCA (Ministry of Corporate Affairs) under the Companies Act, 2013.

Requirements to register a Private Limited Company in India

No of Shareholders- 2 individuals
No of Directors- 2 individuals ( Can be 3)
Authorized Capital- Rs. 1 lakh minimum
Paid-up capital- Rs. 10,000

NOTE: This is just a primary requirement the no of directors can be increased to 15 and the number of shareholders can be increased to 200.

Documents required for obtaining the Private Limited Registration in India

Identity proof the 2 Directors and submit the documents that are mentioned below:

PAN Card: PAN Card copy of the proposed Directors of the Company will be required for Company Registration.

Address Proof: The address proof submitted must have the name of the Director as mentioned in the PAN Card and the most current address of the Director.

Residential Proof: The residential proof must also contain the name of the Director as mentioned in the PAN Card and must not be older than two months.

Registered Office Proof: In addition to providing identity, address, and residential address for the Directors, proof must be provided to validate the registered office address of the Company.

  • The registered document of the title of the premises of the registered office in the name of the company;
  • OR
  • The notarized copy of lease/rent agreement in the name of the company along with a copy of rent paid receipt not older than one month;

In addition to the above, the following must also be provided as proof of registered office:

  • The authorization from the Landlord (Name mentioned in the Electricity Bill or Gas Bill or Water Bill or Property Tax Receipt or Sale Deed) to use the premises by the company as its registered office. This is usually referred to as NOC from Landlord;
  • AND
  • Proof of evidence of any utility service like telephone, gas, electricity, etc. depicting the address of the premises in the name of the owner or document, which is not older than two months.
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How IndiaFilings will help you in registering a Private Limited company in India?

IndiaFilings can help you in incorporating a Private Limited Company in India in less than 10 days but this is subject to government processing the availability of the documents.

  • Step 1: Once a request is received a business consultant from IndiaFilings reaches to you and understands your business requirements. And suggests the best suitable entity for you.
  • Step 2: An relationship manager is assigned to the engagement. Who will collect all the necessary documents.
  • Step 3: An application is submitted for obtaining the Digital Signature Certificate. Simultaneously a name request is sent for approval to the MCA.
  • Step 4: Once the name request is approved the incorporation documents are drafted. These incorporation documents need to be signed by all the Directors and the shareholders.
  • Step 5: Once they are signed they are sent to the MCA for approval.
  • Step 6: Once the company is incorporated an Incorporation certificate is provided along with the PAN and TAN for the Directors.
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Features of a Private Limited Company

Members

To register a Private Limited Company in India a minimum of 2 members are required and a maximum of 200 members are required as per the provisions of the Companies Act,2013.

Limited liability to the partners

The liability of each member of the shareholders is limited. In case if the company is facing any loss under any circumstances then the shareholder is liable to sell Company's assets. His personal assets are not at risk here.

Perpetual succession

The Private limited company that is once registered keeps on existing in the eyes of the law even in the case of death, bankruptcy, or insolvency of any of the members. The life of the company keeps on existing forever.

Index of the members

A private limited company has a privilege over the public company as they do not need to maintain the index of the members whereas the Public limited companies are required to maintain the index of the members.

Number of Directors

A private limited company in India is required to have only two directors. With the existence of 2 directors, a private limited company can begin with its operations.

Memorandum of Association

The Memorandum of Association represents the charter of the company. The MOA is the legal document that is prepared during the formation and the registration process of the company. The MOA specifies the relationship between the shareholders and it specifies the objectives for which the company is formed.

Articles of Association

The AOA lays the rules and the regulations that are set for the internal management of the Company. The duties, rights, and powers of the management of the company are specified in the AOA. An article of association is a subsidiary of the Memorandum of association.

Benefits of registering a Private Limited Company in India

Before starting a business it is important to decide the objectives of the company, the business structure, and the operations based on which the company has been chosen. The private limited company is a privately held entity and is preferred by most entrepreneurs. The Private limited company registered in India can have 50 shareholders and limit the liability of the owner to their shares and restrict from publicly trading the shares.

Limited Liability

When the businesses see unseen financial crises and are on the verge of closure, the shareholders of the private limited company do not face the risk of losing their assets. Only the amount that is invested while starting the business is lost and the director's assets are safe.

Access to funding

The private limited companies easily accommodate the equity funding as there is a difference between the shareholders and directors. Venture capitalists and private equity funds are likely to invest in any other structure.

Borrowing capacity

The private limited companies in India enjoy the privileges of borrowing more funds than the LLPs as there are more options of taking debt. Banks help in assisting with financial aid to the private limited companies than the OPCs and the LLPs as the debenture issue and convertible debentures are always available. The banks and the financial institutions welcome the private limited companies better than the partnership entities.

Greater credibility

A private limited company is required to make a lot of information about the structure, operations, and financials available to the Registrar of the companies. This information ends up in the public domain. Therefore the vendors, lenders, employees can find the information that is relevant to the company such as the authorized capital, name of directors, registered office, etc. This information makes the businesses more credible than the entities that done furnish this information.

Easy exit

Private limited companies in India can be sold or transferred, either partially or in full to other individuals or entities without any disruption to the current business.

International expansion

If the business developing product on a global scale and aiming for expansion of operations across the world, then it is important to get the investments and the form of collaborations with foreign establishments. One of the advantages of the private limited companies in India is that 100% through the automatic route, which means there is no requirement of any government approval for foreign companies to make investments in India. The partnerships, LLPs need acceptance from the government.

Scope of multiple opportunities

Successful entrepreneurs are always on the lookout for opportunities wherever they are possible. The private limited companies have the scope of utilizing the chances as the business grows over time whereas the sole prop[rietorshiips and the partnerships cannot take up as they are tied up.

Better governance

As private limited companies are regulated by the Companies Act 2013 and are required to follow all the stringent procedures, disclose norms, and also comply with the various legal requirement, they are more organized in creating value.

A private limited company offers many advantages over other entities, it is always best to get the registration done by experts to avoid any discrepancies.

How to check company name availability?

You can check the availability of company name availability on MCA using IndiaFilings platform.

Register your company and get LEDGERS accounting software.

Compliances for a Private Limited Company in India

All the companies registered in India are required to maintain the compliances under various regulations. Failure to maintain the compliances can lead to penalties or disqualification of the directors.

IndiaFilings can help you with the accounting solution and the maintenance of the statutory compliances for the Company at a very affordable price.

Other than the mandatory compliances that need to be done depending on the timeline of the company. Here are some of the important compliances that need to be maintained.

Know more
  • 1

    Statutory Auditor appointment

    30 Days after the incorporation

    The Board of Directors must appoint a practicing Chartered accountant within 30 days of Incorporating a Private Limited Company in India.

  • 2

    Commencement of Business (Know more)

    180 days of Incorporation

    The capital that is mentioned in the MOA (Memorandum of Association) is to be deposited in the bank and the commencement of business certificate is to be obtained from the Ministry of Corporate Affairs.

  • 3

    Income Tax Filing

    30th of September

    The private limited companies that are registered in India must file the income tax return each year in Form ITR 6.

  • 4

    Company annual returns

    31st of October

    Companies registered in India are required to file the MCA annual return each year informs AOC 4 and MGT 7.

  • 5

    DIN KYC

    30th of April

    The DIN KYC procedure is to be completed each year for the directors of the Private limited company.

  • 6

    Other event-based compliances

    These are triggered by the happening of certain events. There is paperwork that is to be done for the same and various deadlines are to comply with. In case of non-compliances or a missed deadlines, there are penalties, additional fees, or even compounding of the offense. Hence, it is necessary to track the happening of such events and to meet the compliances on tome.

    • Change in Director/ KMP
    • Increase in the authorized share capital
    • An increase in the paid-up share capital
    • Change in the registered office
    • Change in secured borrowing
    • change in the name of the company.

Choose the right type of business

Features Private Limited Company Limited Liability Partnership One person company
Ideal for Businesses that have high turnover, entrepreneurs who need an external source of functioning Businesses that are service-oriented, and have low investment needs Proprietors who are wanting to limit their liability and also have complete control.
Minimum number of members required 2 2 1
Registration A private limited company will be registered with the MCA under the Companies Act,2013. Limited Liability Partnerships are registered with the MCA under Limited Liability Act,2008 Person Companies in India will be registered with the MCA under the Companies Act,2013.
Liability of the members The shareholders here have limited liability and is limited to the extent of their share capital The partners have limited liability and are only limited to the extent of their share capital The Director and the Nominee have limited liability and are liable only to a certain extent of their capital.
Foreign ownership Foreign investment up to 100% can be with the automatic approval route in most sectors. FDI is permitted under the automatic route in the LLPs that are operating in the sector or the activities, 100% FDI is allowed through the automatic route, and there are not FDI-linked performance conditions. Directors and Nominee cannot be foreigners
Transferability Ownership can be transferred by the way of share transfer. Ownership can be transferred Ownership can be transferred.
Taxation Private Limited Company profits are taxed at 30% plus surcharge and cess as applicable. LLP profits are taxed at 30% plus surcharge and cess as applicable. One Person Company profits are taxed at 30% plus surcharge and cess as applicable.

What is the Price I Need to Pay for Registering a Company?

The Cost of Incorporation / Registration a Company would vary from INR 6899/- to INR 29899/- depending upon the plan you choose.

Pay as you go grow pricing

All Inclusive Pricing - No Hidden Fee

Basic

6899

all inclusive fees

  • 2 Digital Signature - 2 Year Validity 1
  • 2 Director Identification Numbers
  • Name Approval 2
  • Authorised Capital Fee 3
  • Incorporation Fee
  • Stamp Duty 4
  • PAN & TAN
  • LEDGERS Billing Software 5
  • Bank Account Opening
  • Commencement of Business

Standard

19899

all inclusive fees

  • 2 Digital Signature - 2 Year Validity 1
  • 2 Director Identification Numbers
  • Name Approval 2
  • Authorised Capital Fee 3
  • Incorporation Fee
  • Stamp Duty 4
  • PAN & TAN
  • LEDGERS Billing Software 5
  • Bank Account Opening
  • Commencement of Business
  • GST Registration
  • Auditor Appointment Support
  • Bookkeeping for 1 Year
  • Financial Statements & Board Reports
  • ITR-6 Filing for Company
  • MCA DIN eKYC for Directors
  • MGT-7 & AOC-4 Filing
  • Digital signatures from eMudhra with 2 year validity along with ePass 2003 token.
  • Upto 4 name options can be given in 1 RUN name approval request.
  • Authorised capital is the amount of shares a company can issue at anytime and can be increased further in the future. Paid-up capital is the amount invested by shareholder and can be even Rs.2.
  • In case of incorporation in Madhya Pradesh, an additional stamp duty of Rs.7500 will be applicable. In case of incorporation in Punjab, an additional stamp duty of Rs.10, 000 will be applicable. In case of Kerala, an additional stamp duty of Rs.3000 will be applicable.
  • Premium LEDGERS Accounting Software with GST Portal Integration and eWay Bill Software.
  • Statutory Auditor fee is payable on actuals directly to the Independent Auditor appointed by the Board of Directors. IndiaFilings will only be responsible for accounting, preparation of financial statements and filing of returns on behalf of the Company.
  • Additional Directors can be added for an additional price of Rs.999 - if DSC & DIN is available. In case no DIN or DSC is available, cost for adding additional Director will be Rs.1999, inclusive of GST.
  • Additional authorised capital can be purchased if requried at time of incorporation.

Private Limited Company Bank Account Opening

ICICI Logo

Open a new or link your existing ICICI bank current account with LEDGERS for seamless bank account reconciliation, account balance check and sending of payments through NEFT / RTGS / IMPS.

Open a new or link your existing DBS bank business account with LEDGERS for seamless bank account reconciliation, account balance check and sending of payments through NEFT / RTGS / IMPS.


How to Open Private Limited Company Bank Account

Opening a current account for a private limited company is easier when compared to opening of current account for a sole proprietorship firm as a company is a registered legal entity – recognized by law. Therefore, once a company is incorporated, a bank account can be opened in the name of a company with the incorporation certificate of the company and identity/address proof of the Directors.

What is authorised capital and paid up capital?

Authorised capital is the maximum value of equity shares that can be issued by a company. On the other hand, paid up capital is the amount of shares issued by the company to shareholders. Authorised capital can be increased any time after incorporation to issue additional shares to the shareholders.

What is limited liability protection?

Limited liability is the status of being legally responsible only to a limited amount for debts of a company. Unlike proprietorships and partnerships, the liability of the shareholders with respect to the company’s liabilities is limited.

Can NRIs and foreign nationals or foreign entities register a company?

Yes, NRIs, foreign nationals and foreign entities can register a company and invest in India, subject to the Foreign Direct Investment norms set by the RBI. However, incorporation rules in India require for one Indian national to mandatorily be a part of the company on the Board of Directors.

Is an address required in India for starting a company?

Yes, every company registered in India must have a registered office where all official communication is sent by the MCA, governmental agencies, financial institutions, etc., The registered office of a company can be in any state of India.

How do I check the availability of name for my company?

You can use the IndiaFilings company name availability search tab to search for available names in India. It is important to note that IndiaFilings would just provide available choices, based on identical names already registered.

How do I open a current account?

Once the company is incorporated, a current account needs to be opened in the name of the company for transactions. Your advisor will guide you through the process of choosing the bank that you want to open the account with and get the documents like certificate of incorporation, Memorandum and Articles of Association, board resolution, copy of PAN allotment letter and utilities bill.

Is GST registration mandatory at this stage?

GST registration is mandatory for certain businesses. Companies dealing with e-commerce operations or any other interstate activity and companies with turnover of more than Rs. 40 Lakhs are required to obtain the same. GST registration takes just 3-5 working days with IndiaFilings.

What about the compliance for a private limited company?

A company is required to maintain certain compliances once it is incorporated. An auditor needs to be appointed within 30 days and income tax filing and annual return filing needs to be done every year. Apart from these, mandatory compliances like ‘Commencement of Business’ forms, and DIN eKYC also needs to be done.

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Last updated: Sep 20, 2021

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