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Things to Know About Private Limited Companies


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A minimum of two shareholders and directors are required to register a private limited company. MCA recently made significant modifications to the process, making it much easier to start a business.


The most common and widely used corporate legal entity in India is the private limited company. The Companies Act of 2013 and the Companies Incorporation Rules of 2014 govern registration of private limited companies. The procedure of forming a private limited company and the documents required are discussed in depth in this article.


What Is a Private Limited Company?


A Private Limited Company is a business entity held by small group of people. It is registered for per-defined objects and owned by a group of members called shareholders. Startups and businesses with higher growth aspiration popularly choose Private Company as suitable business structure.


The business entity gets recognized as a Company through its registration under Companies Act of 2013 in India. The governing body is Ministry of Corporate Affairs, widely known as MCA. The definition of Private Company under the Act is provided here to understand its basics. Section 2 (68) of the Act defines a Private Company as under.


Advantages of Private Limited Company


Limited liability


There is limited liability, which means that the company's members are not at risk of losing their personal assets. If a business fails, the shareholders are not obligated to sell their assets to make a profit.


Fewer shareholders


In contrast to a public corporation, which requires seven shareholders, a private limited company can be formed with just two.


Ownership


As the company’s shares are owned by investors, founders and management, the owners are at the liberty of transferring and selling their shares to others. Through this, there is also less complexity and confusion.


Existence without interruption


The corporation is a legally recognized entity. As a result, the corporation continues to operate until it is officially closed down, even after the death or departure of any of its members.


Characteristics of a Private Limited Company


A private limited company has the following characteristics:


1. Membership


A minimum of two shareholders are required to form a private limited company. However, because it is a small business holding company, there is a limit on the number of members, which is set at 200. A minimum of two directors is also required to administer the business.


2. Limited Liability Structure


In a private limited company, the liability of each member or shareholder is limited. Therefore, even in the case of loss under any circumstances, its shareholders aren’t liable to sell their own assets for payment. Likewise, the personal assets of the shareholders are not at risk.


3. Separate Legal Entity


A private limited company is a separate legal entity and continues in perpetual succession. Meaning that even if all the members die, or the company becomes insolvent or bankrupt, the company still exists in the eyes of the law. Additionally, the life of the company will be perpetual, not affected by the lives of its shareholders or members unless dissolved by way of resolution.


4. Minimum Paid-up Capital


A minimum paid-up capital of one lakh is required for a private limited corporation. It may change as the MCA directs from time to time.


5. Minimum Subscription


The amount obtained by the corporation through the issuance of shares in a specific period of time is referred to as subscription. As a result, a corporation must receive 90% of the entire value of all shares within a certain length of time prior to the start of the business. Similarly, if the minimal subscription is not met, the company would not be able to start doing business.


How to Register a Company Online – the Registration Process


Start-ups profit from company registration in India since it gives them an advantage over others that have not. The process of registering your business is lengthy and involves numerous regulations. However, as long as you have Pick My Advisor on your side, you won't have to worry because our advisors can assist you with every stage of the private limited company registration procedure.


  1. Obtain DSC

  2. Apply for the DIN

  3. Application for the name availability

  4. Submission of MoA and AoA to register a private limited company

  5. Apply for the PAN and TAN of the company

  6. RoC issues a certificate of incorporation with a PAN and TAN

What Are the Requirements for Private Limited Company Registration?


The requirements for registering a private limited company are as stated below:

  1. A minimum of two adult persons are required to act as directors of the company

  2. Minimum of 2 directors and can have a maximum of 15 directors

  3. One of the directors of a private limited company has to be an Indian citizen and Indian resident

  4. The other director(s) can be foreign nationals

  5. Two persons are required to act as shareholders of a company

Conclusion


So, if you are planning to register a private limited company, we appreciate you on behalf of Pick My Advisor. Further, we can help with setting up your company by making private limited company registration easy for you.

 
 
 

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Starting a Business

Many founders are confused about what kind of entity to register when they start their business. Should it be a private limited company, limited liability partnership, partnership firm, one person company or a sole proprietorship. Each of these has very specific advantages and disadvantages. There is no one type for all businesses. A private limited company registration, for example, would be a good fit for any venture that will look for funding at a later stage. You can contact Pick My Advisor for all the advice you need. We assure you of great service at a reasonable price. You can find a company name availability here.

Intellectual Property

In modern business, there is no other asset as valuable as intellectual property, and yet so many startups end up neglecting it. But this is surely not advisable, as trademarks, copyrights and patents ensure that you have sole rights to your creation, be it your brand, your designs or your inventions. At Pick My Advisor, we are well equipped to handle all your IP requirements. We facilitate trademark applications in just three days, copyright registration for all your software, pictures, audio and video content, and can connect you to patent attorneys to conduct a patent search and file your patent applications. You can find a Trademark availability here.

Government Registrations

In India, you need a license for everything in business. Started a manufacturing business? You need a GST Registration and a Trade License. For a food business, you need an FSSAI license. Have employees? You need a Professional Tax registration and Shops & Establishments Act Registration. If that's not enough, you also need to file GST Returns and Professional Tax Returns.

Legal Documentation

The worst way to approach business is to just get into new partnerships and arenas without examining consequences. By getting a lawyer to draft contracts or agreements with new vendors, employees and investors, you're ensuring that you have all the downsides covered. At Pick My Advisor, we connect you to lawyers who will deliver complex documents, from shareholders agreements and founders' agreements to terms of service/privacy policy and non-disclosure agreements, at a reasonable cost in a few days' time. Well-known startups have chosen to connect with a lawyer through us for their documentation work.

Mandatory Compliance

It's not enough to have started a private limited company or an LLP. You need to comply with all the requirements of the Ministry of Corporate Affairs and Income Tax Act once you do. You need to inform them of every relevant change you make, whether it is adding a director, removing a partner or increasing authorised share capital. You also need to file annual returns and maintain your accounts. In the case of a private limited company, you even need them audited. At Pick My Advisor, we facilitate all these services completely online. Which means you can engage a professional on retainer for the year and we'll ensure that all the formalities are completed for you while you focus on your business.

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