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private limited company

Private Limited Company refer to a company with a minimum share capital that is paid up as per its articles.

(i) Restricted right to transfer shares

(ii) The number of members of a Private Limited Company is limited to two hundred, except in the case of a One Person Company.

(iii) Prohibits the invitation of the public to subscribe to any securities of the company

Incorporation Private Limited Company

A Private Company is the most popular way to set up a business in India for startups or businesses with high growth potential. A Private Limited Company is an Indian company that is registered under the Companies Act 2013. It is managed by the Ministry of Corporate Affairs in India. It is a registered corporate structure that gives businesses an independent legal identity.

It can be registered with a minimum of two directors and subscribers/shareholders. Indian citizens and Indian residents must be directors for such a private limited business. Foreign nationals can also serve as directors. Private limited companies must have at least two shareholders. A Private Company can have both natural and artificial shareholders. The shareholders/members in a Private Company are only liable for unpaid shares.

To Incorporate the Private Limited Company, The Following Steps Must Be Taken

First, verify the availability of the company's name

Check that the MCA website has the chosen name available

Step 2 - Obtain DSCs for subscribers and directors

Digital Signature Certificates are the digital key that authenticates the identity of the certificate holder. To verify one's identity, access online data, or sign documents electronically, a digital certificate can be given electronically.

Step 3 - Draft MoA & AoA for the PRIVATE LIMITED COMPANY

A Memorandum of Association is the legal document that binds the company. It is an official document that has been authorized by the government and used to establish the company's relationship with shareholders.

An Article of Association (AoA), outlines the rules and regulations for the company's internal management. It describes the management's duties, rights, and powers.

Step 4 - File SPICe form - INC 32 and Form AGILE with the Roc

SPICe Form (INC-32) is for single applications for reservation of name, incorporation, and/or allotment or application for PAN/TAN. This e-Form comes with supporting documents such as details of Directors & Subscribers, MoA, AoA, and others.

After the e-Form has been processed and is found complete, the PRIVATE LIMITED COMPANY will be registered and a CIN assigned. Directors who don't have valid DINs are issued DINs. This integrated form can be used by three directors to file applications for the allotment or reduction of DIN. The company would also receive TAN and PAN.

Formula AGILE is a form for registration of GST number, Employees State Insurance Corporation registration (ESI), and Employees Provident Fund (EPF registration).


When a company is registered as a Non-Profit Organization, (NPO), it is called a Section 8 Company. When it promotes arts, commerce, education, charity, or protection of the environment.

NPO income cannot be used to pay dividends to company members. It must be used to promote charitable objectives.

The Central Government can issue a license in such a manner and under such conditions as may be prescribed to allow a person or group of persons to register as a limited company as required by this section.

This section allows a private limited company to be registered and enjoy all the rights and obligations that come with limited companies.

The Central Government must approve any amendments made by a company to its memorandum and articles registered under this section.

After complying with the prescribed conditions, a company registered under this section can be converted into a company of any type.

The rules state that failure to fulfill the Central Government's responsibilities could result in the company being closed down. If the company's objectives are not met, the government may take legal action against the entire company.

Eligibility for Section 8 Companies

If the company has the below-mentioned purposes or objectives of a private limited company, an individual or group of individuals can be registered as a Section 8 Company. The Central Government must approve the objectives.

  • If the company plans to promote science and commerce, education, arts, sports, research, or similar objectives.
  • If the company intends to invest all profits if any, or any other income earned after incorporation in the promotion of such objects only
  • If the company doesn't intend to pay any dividends to its members.

Incorporation of a Section 8 Company

You can incorporate Section 8 companies by either reserving names under part A of Spice+, followed by part B on the Spice+ form, or directly filing Spice+.

Attachments for the private limited company should be included in the following:

  • No. INC - 13: Company's Draft Memorandum of Association and Articles of Association (AOA). Form no. INC - 13 (as per Act) together with the affixation o subscribers' photos.
  • Formula no. INC-14 - Form no. INC-14 The declaration that the draft MOA & AOA comply with section 8's provisions & norms and have met all requirements has been made.
  • Formula no. INC-15 - Each member of the company must sign Form No. INC-15 must be signed by every member of the company applying.
  • In Form DIR-2, consent to be a director of a company
  • KYC for all subscribers and directors
  • Address proof of registered office (Rent Agreement/Sale Decree)
  • Latest Utility Bill of Registered Office (Electricity/Telephone/Gas)
  • NOC of the Registered Office Owner Consent of private limited company.


Section 406 and Company Nidhi Rules 2014 govern Nidhi Company. These rules have the sole purpose of encouraging thrift and saving among its members.

Only Nidhi companies can take deposits from members and lend to members. The funds for a Nidhi Company are not available to its shareholders (members), and can only be used by the shareholders.

Nidhi Company, a class of NBFCs, is authorized by RBI to issue directives to them regarding their deposit acceptance activities. The RBI exempted these notified Nidhis, because they only deal with their shareholders same as private limited companies, from the core provisions and other directions applicable to NBFCs. Nidhi Company is a great entity to lend to and take deposits from.

Restrictions on Nidhi Company, Rule 6 of Nidhi Rules 2014

(1) Continue to be a chit fund manager, hire-purchase finance, leasing finance, insurance, or acquire securities issued by any corporate entity.

(2) Issue preference shares, convertible debentures, and any other form of a debt instrument in any name or form of Nidhi & private limited company;

(3) Open any existing account with its members.

(4) Purchase or acquire securities of another company, control the composition of the Board of Directors of other companies in any way or make arrangements for the management change.

(5) Any business that is not related to borrowing or lending under its name.

(6) Accept deposits from and lend to anyone other than its members.

(7) Assure any assets that its members have pledged as security.

(8) Make deposits or lend money to any corporate body;

(9) Enter into any partnership agreement in connection with its borrowing or lending activities.

(9) Issue or cause to issue any advertisement in any form soliciting deposits for Nidhi & private limited company are same:

Except that fixed deposit Scheme details are not made available to the public by the Nidhi, the information is not to be used to solicit deposits.

(10) Pay any brokerage or incentive to members for mobilizing deposits or for the deployment of funds, or for granting loans.

(11) To raise loans from financial institutions, banks, or other sources for members of Nidhi to advance loans.

Incorporation by Nidhi Company

In India, a Limited Company is required to form a Nidhi Company. This Limited Company must be incorporated under the Companies Act 2013. To start the Limited Company incorporation process, you will need at least three Directors and seven shareholders. The Memorandum of Association states that the Limited Company must be incorporated to protect the Nidhi company's object of saving and thrift among its members. It can also receive deposits from its members and lend to them.

1. Name approval in the 'RUN" facility for Nidhi and private limited company. Applicants must file name availability in the RUN facility of the MCA portal. Each company that is proposed to be incorporated as a Nidhi shall include the last words "Nidhi Limited" as part of their name.

2. Digital Signature Certificate (DSC). The Directors proposed to be promoted/applicants of Nidhi Company must obtain a Class 2 DSC.

3. Fill out form SPICe32 after approval of your name. Attach the following attachments to the file form SPICe32 for incorporation as Nidhi Company.

  • Memorandum of Association Articles of Association
  • Subscribers PAN Card
  • Id Proof of First Directors
  • Attestation of the First Director
  • Address proof of registered office (Rent Agreement/Sale Decree)
  • Latest Utility Bill of Registered Office (Electricity/Telephone/Gas)
  • NOC of the Registered Office Owner Consent
  • DIR-2 - Declaration from the first Director
  • In form INC-9, the self-declaration from the first directors and subscribers


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