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Private Limited Company Registration in India: A Comprehensive Guide for 2024

Private Limited Company Registration.

September 28, 2024 | Team Brydgework

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Registering a Private Limited Company (PLC) in India is one of the most preferred choices among entrepreneurs and businesses. This business structure provides limited liability protection, credibility, and the ability to raise funds. It’s essential to understand every aspect of the registration process to navigate smoothly and ensure full compliance with Indian laws.

This guide will cover everything you need to know about Private Limited Company Registration in India in 2024: what it is, how to register, who can register, benefits, and post-registration compliances.

What is a Private Limited Company (PLC)?

A Private Limited Company (PLC) in India is a corporate structure where the liability of shareholders is limited to the extent of their shareholdings, and shares cannot be publicly traded. This structure is most suitable for startups, small businesses, and medium-sized enterprises.

Key Features of a Private Limited Company:

1. Limited Liability Protection: The personal assets of shareholders are protected, limiting their liability to the value of shares they hold.
2. Separate Legal Entity: The company has a legal existence separate from its shareholders and directors, allowing it to own property, enter contracts, and file lawsuits.
3. Perpetual Succession: The company continues to exist even if the shareholders or directors change or pass away.
4. Restriction on Share Transfer: Shares of a PLC cannot be freely transferred; shareholders must consent to the transfer, making it a more controlled entity.
5. Minimum and Maximum Shareholders: A Private Limited Company must have at least two shareholders and can have a maximum of 200 shareholders.

Eligibility Criteria for Private Limited Company Registration

Before you begin the registration process, it’s important to ensure that your company meets the legal requirements set out by the Ministry of Corporate Affairs (MCA).

Minimum Requirements:

1. Minimum 2 Directors: You must have at least two directors. One director must be a resident of India (residing for at least 182 days in a calendar year).
2. Minimum 2 Shareholders: At least two shareholders are required. Directors can also be shareholders.
3. Unique Name: The company’s name must be unique and not identical or similar to any existing company or trademark. The name must comply with MCA’s naming guidelines.
4. Capital Requirement: As of now, there is no minimum capital requirement. However, companies typically start with Authorized Capital of INR 1 lakh.

Who Can Register?

• Indian Citizens: Both individuals and legal entities (like companies) can register a Private Limited Company.
• Foreign Nationals: Foreign nationals and NRIs can also register a PLC, provided at least one director is an Indian resident.
• Entities: Other businesses, including LLPs and other private limited companies, can be shareholders.

Documents Required for Private Limited Company Registration

The documents required for registering a Private Limited Company in India must be prepared carefully to ensure the process is smooth. These documents are submitted online as part of the registration procedure.

Documents for Directors and Shareholders:

1. Identity Proof: PAN Card (mandatory for Indian nationals), Passport (for foreign nationals).
2. Address Proof: Driver’s license, Aadhaar card, Voter ID, or passport.
3. Residential Proof: Bank statements or utility bills (electricity, water, or telephone) not older than two months.

Documents for Registered Office:

1. Proof of Registered Office: Rent agreement (for rented premises) or sale deed (if owned).
2. Utility Bill: Latest electricity or water bill of the office.
3. No Objection Certificate (NOC): If the office is on rented premises, a NOC from the property owner is mandatory.

Other Important Documents:

• Digital Signature Certificate (DSC): Mandatory for all directors to sign digital forms.
• Director Identification Number (DIN): Every director needs a unique DIN, which can be applied along with the registration.

Step-by-Step Process to Register a Private Limited Company in India

The registration process of a Private Limited Company involves several steps that need to be followed through the Ministry of Corporate Affairs (MCA) online portal.

Step 1: Obtain Digital Signature Certificate (DSC)

All directors must obtain a Digital Signature Certificate (DSC) as it is required to sign documents electronically. This can be procured from government-certified agencies.

Step 2: Apply for Director Identification Number (DIN)

The Director Identification Number (DIN) is a unique identification number for every director. It is issued by MCA and can be applied for along with company registration.

Step 3: Name Reservation via RUN

To reserve a name for your company, you need to file an application using the RUN (Reserve Unique Name) form on the MCA portal. You can propose two names, and one will be approved based on availability.

Step 4: Filing SPICe+ Form for Incorporation

The incorporation form known as SPICe+ (Simplified Proforma for Incorporating Company Electronically) is a web-based form that allows you to:

• Incorporate the company
• Apply for PAN and TAN
• Register for GST, EPFO, ESIC, and Professional Tax

Attach the following documents with the SPICe+ form:

• Memorandum of Association (MOA): Defines the objectives of the company.
• Articles of Association (AOA): Contains the rules and regulations governing the company.
• Declaration by Directors: A legal declaration by directors confirming compliance with the Companies Act, 2013.

Step 5: Obtain the Certificate of Incorporation

Once the SPICe+ form is approved, the Registrar of Companies (ROC) will issue the Certificate of Incorporation, along with the Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).

Post-Incorporation Compliance for Private Limited Companies

After successful incorporation, your responsibilities as a Private Limited Company extend beyond just running the business. The company must adhere to annual and periodic compliances to remain in good standing with the authorities.

Mandatory Compliances:

1. Appointment of Auditor: An auditor must be appointed within 30 days of incorporation.
2. Bank Account Opening: Open a current account in the company’s name for all financial transactions.
3. Issue Share Certificates: Issue share certificates to shareholders within 60 days of incorporation.
4. GST Registration: Apply for GST registration if the turnover exceeds INR 20 lakh (service providers) or INR 40 lakh (goods providers).
5. Annual Filings: Submit annual returns and balance sheets to the Registrar of Companies (ROC). Also, file income tax returns.

Benefits of Registering a Private Limited Company in India

1. Limited Liability Protection

The major benefit of a Private Limited Company is that the personal assets of the shareholders remain protected. Their liability is limited to their shareholding in the company.

2. Separate Legal Entity

A Private Limited Company is a separate legal entity from its owners. This provides a shield against legal claims on personal assets and also allows the company to own property, take loans, and enter into contracts in its name.

3. Ease of Raising Capital

Private Limited Companies can raise capital easily compared to partnerships or sole proprietorships. They can issue shares and take investments from private investors, venture capitalists, and angel investors.

4. Perpetual Succession

Since the company exists separately from its owners, it has perpetual succession. This means that the company will continue to exist even if the shareholders or directors change or pass away.

5. Enhanced Credibility

Private Limited Companies are seen as more credible by investors, government bodies, and financial institutions. This credibility boosts the chances of securing loans and business partnerships.

Conclusion: Why Register a Private Limited Company?

Registering a Private Limited Company in India offers numerous advantages, from protecting your personal assets to enhancing business credibility. While the registration process can seem daunting, the Ministry of Corporate Affairs (MCA) has streamlined the process through the SPICe+ form, which integrates various compliance requirements into a single form.

If you’re an entrepreneur or business owner looking for a structured, scalable, and legally compliant business structure, registering a Private Limited Company is the way to go.

By ensuring you follow the steps carefully and meet the necessary post-incorporation compliances, you can enjoy a smooth registration process and operate your business in India without hassles. For expert assistance and hassle-free company registration, contact Brydgework Consultants for a personalized consultation.