Private Limited Company Registration As Per Indian Law

Private limited company registration can be done online and off online mode. Private limited signifies that incorporation is privately owned and has limited liability. The liability of the owner is limited to their shareholdings. It’s the highly used way to start a business in India.

The registration of the company as a private limited gives the business legal recognition and protection. It’s the most suitable way to limit liability. This company has universal acceptance and as such is the best way to start the business. The company needs to be incorporated under the company’s act. All the affairs of the private limited company in India are regulated by the ministry of corporate affairs.

Provisions For Private Limited Company Registration in India

The word company does not occupy any technical or legal meaning. In the purview of terms of the company act, a company means a company formed and registered under the company act.

A corporation or body corporate includes a company incorporated outside India. But it does not include the corporate society registered under the law relating to the corporate society.

Section 3 of the company’s act speaks of the formation of the company, and a private company means when two or more people form the company is known as a private company.

When the word limited is added to the private company it signifies the privilege of limiting liability for the business debts which is an advantage associated with private limited company registration.

Limited liability companies can be limited by the shares or by guarantee.

The registration of the company is obtained under the provisions of the company act by applying with the registrar of the company section 7(1) the application must be submitted to the registrar in whose jurisdiction the registered office is to be situated.  The section requires the filling of the affidavits by each of the subscribers to the memorandum of association and the person’s name as the first director.

The Pvt ltd company registration documents required are –

• Memorandum of association
• Article of association
• A copy of the agreement, if any which company proposes to be appointed as managing or whole-time director or manager.
• Declaration to the effect that all the requirement of the act is complained with.

These are the important document required for a private limited company in India.

On successful incorporation of your private limited company registration, the certificate of incorporation is issued, this brings the company into existence as a legal person. The company is born when the certificate is issued. 

The subscribers of the memorandum and other persons which are a member of the company from time to time will consist of the incorporated body. The certificate of incorporation is inconclusive proof that all the requirement of the act is complained with by the company.

Online Company Registration in India Process thereof -

Private limited companies are well known to everybody, these companies require a minimum of two directors and two shareholders, among two directors one must be an Indian citizen. The directors can be a shareholder and the registered office of the company be in India.

Documents required as proof of identification are –

• Permanent account number mandatory for Indian nationals and passport, driving license, ration card, Aadhar card, bank statement, electricity bills, and phone bills.
• Passport from foreign nationals is required mandatory, driver’s license, bank statement, residential card, electricity, and phone bills.

The private limited company registration process involves the following steps –

 Step 1. Application is needed to be submitted to the ministry of corporate affairs to reverse the name of the company.

• In the application must submit the name of at least two or three with the business objectives.
• If your name is rejected, you can resubmit two or three names.
• Normally ministry approves the application for name approval within five working days.

Step 2. Digital signatures of the directors –

• The digital signatures are mandatorily required before the incorporation from the directors.
• The ministry does not approve the wet signatures.
• All the signature filling with the ministry must be digital which is approved by the certificate authority in India.
• Digital signature must be from the authorized certifying authority
• To obtain the digital signature director must submit a copy of the identity proof and need to complete the KYC process.
• In case the director is a foreign national the passport and other documents submitted must be verified by the local embassy.

After the private limited company registration name availability and digital signature comes the turn of the Incorporation application.

Step 3. Submission of incorporation application

• After obtaining the digital signature incorporation application is filled in the SPICe form to the ministry of a corporation with the relevant documents.
• Along with the application of incorporation the AOA and MOA are attached.
• If the application is complete and correct then an incorporation certificate is issued.

Private limited company registration can be done online and off online mode. Private limited signifies that incorporation is privately owned and has limited liability. The liability of the owner is limited to their shareholdings. It’s the highly used way to start a business in India.

The registration of the company as a private limited company in India gives the business legal recognition and protection. It’s the most suitable way to limit liability. 

This company has universal acceptance and as such is the best way to start the business. The company needs to be incorporated under the companies act. All the affairs of the private limited company in India are regulated by the ministry of corporate affairs.

Illustration: Private limited company registration fees in India-

You can register your company as a limited company. The cost of establishing the private limited varies from Rs 6000 to 30,000. The registration process fee differs according to the number of directors, members, and the share capital and professional fees which further depend upon the complexity of the task which is required to be performed.

Compliances of a Private Limited Company –

On the successful incorporation of the company, various compliances are required to be maintained from time to time so that penalties and prosecution can be avoided.

The compliances that the company is required to perform are mentioned below.

• Appointment of auditor –

The companies registered in India must appoint a chartered accountant who is practicing and holding a license in India within 30 days of the incorporation of the company.

• Directors’ identification number –

The directors on the incorporation of the company are allocated with the directors’ identification number. Are required to perform the director identification number KYC annually to validate the email address and phone number with the Ministry of Corporate Affairs, private limited company registration also requires this.

• Annual filling with the Ministry –

The companies registered in the country must file a statement of finance with the ministry of corporate affairs in each financial year. For Instance, if the company is formed between January to march the company can file the annual return as part of the next financial statement with the ministry of corporate affairs. The annual return consists of Form MGT-7 and AOC 4 both of which must be signed by the directors through digital signatures.

• Commencement of business –

When private limited company registration is successful it must be within 180 days of incorporation to open the current bank account. The shareholders are required to deposit the subscription amount which is mentioned in the Memorandum of the association of the company. For instance, if the company is incorporated with one lakh Rs as a paid-up capital then shareholders must deposit the one lakh in the company’s account with a bank. The bank statement must be filed with the ministry of corporate affairs to obtain the certificate of commencement of business certificate.  

• Filling out Income Tax-

The companies must file income tax returns with Form ITR 6 in each financial year. The filing of the income tax must be done before the due date irrespective of the incorporation date of the company. The return of the income tax must be digitally signed by one of the directors.

Pros & Cons of the private limited company registration -

Some of the pros and cons of private limited companies are mentioned below, do have a look at them before starting the company –

Pros -

• The personal risk is limited in the case of private limited companies
• They offer the separate legal entity
• The liabilities of the members of the company are limited 
• The company, which is limited by shares, can transfer its share to the other person by the shareholders.
• The company can sue in its name and can be sued
• The company has the perpetual succession
• There is no minimum capital requirement in the case of a private limited company registration process.
• Raising funds is easy in limited company registration in India.

Cons -

• One of the disadvantages of the private limited is that it restricts the transfer of shares by the articles
• The number in this business structure can not exceed two hundred in any case
• The issuance of the prospectus to the public is not possible
• Shares cannot be quoted on the stock exchange.

Concluding Remark :

Private Limited company registration in India is not a very complex process, you can easily get it done through various online platforms. The procedure is also quite clear to understand and simple if you are aware of some basic concepts of the company laws in India. 

The information on the incorporation of a company is also available on the official website of the ministry of corporate affairs. The private limited can be used by people who want to engage either in small business or in huge corporate business.

The registration of the company is a mandatory requirement you must follow the law and regulations framed in this regard by the company law in India. The company registered in India must have its registered office within India.