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.
A company having a minimum paid-up share capital as may be prescribed, and which by its articles,
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.
|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.
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.
In addition to the above, the following must also be provided as proof of registered office:Know more
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.Know more
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
The Board of Directors must appoint a practicing Chartered accountant within 30 days of Incorporating a Private Limited Company in India.
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.
The private limited companies that are registered in India must file the income tax return each year in Form ITR 6.
Companies registered in India are required to file the MCA annual return each year informs AOC 4 and MGT 7.
The DIN KYC procedure is to be completed each year for the directors of the Private limited company.
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.
|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.|
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
The Board of Directors is required to appoint a practicing Chartered Accountant within 30 days of Incorporating a Private Limited Company.
The Private Limited Companies that are registered in India have to file the ITR returns each year in Form ITR 6.
The companies registered in India are required to file the MCA annual return each year informs AOC 4 and MGT 7.
Minimum 2 number of members are required to start a Private Limited Company which can be extended to 200 members.
The ownership of a Private Limited Company can be transferred by the way of shares.
Private Limited Companies are taxed at 30% plus the surcharge and cess as applicable.
The MCA and Companies Act,2013 controls the functioning of a Private Limited Company.
There are various of registering as a Private Limited Company like Limited Liability, Access to funding, borrowing capacity, greater capacity, easy exit, and scope of multiple opportunities.
Last updated: Nov 16, 2021